CO's Dope Taxes Up in Smoke?

[Timjoebillybob]

who cares taxes are evil. The less we pay the better.

While I agree in spirit, the Constitution says different. Now what the taxes are collected for and spent on is a matter of spirited discussion.

 

[churchmouse]

Ride that high horse............ambulance chaser!

 

[Timjoebillybob]

Ride that high horse............ambulance chaser!

While the ambulance chaser may have been a bit uncalled for, the horse Kirk rode in on is long dead. And beaten several times. Hell that damn thing has been buried and decayed by now. But this thread was bumped recently so I'm willing to give allowance for a necropost. But pass that popcorn.... I'll bring the rootbeer.

 

[churchmouse]

While the ambulance chaser may have been a bit uncalled for, the horse Kirk rode in on is long dead. And beaten several times. Hell that damn thing has been buried and decayed by now. But this thread was bumped recently so I'm willing to give allowance for a necropost. But pass that popcorn.... I'll bring the rootbeer.

I like rootbeer.

 

[Leadeye]

Good tobacco is a cranky plant to grow. Lots of hand work involved.

 

[AA&E]

So should we not have anti-fraud regulations? Or do we accept that a certain level of black market will always exist alongside a reality-based free market?

Full disclosure, I'm the great-grandson of a Pennsylvania moonshiner.

I doubt you view counterfeit Coach purses in the same light as the black market contraband we are discussing here. The bug spray is more closely associated with the purses then the weed.

 

[Timjoebillybob]

I like rootbeer.

I know. I have two decent rootbeer stands close. BK and Triple X. I can bring both.....

I doubt you view counterfeit Coach purses in the same light as the black market contraband we are discussing here. The bug spray is more closely associated with the purses then the weed.

I'm sure he doesn't but he is being an attorney.

 

[T.Lex]

haha

Actually, I do view them the same way at a conceptual level. Such items are illegal to own, produce domestically, or import from abroad. Of course, there are different reasons for the restrictions, and different societal costs, but legally the only difference in possessing them is the punishment. (And sometimes, not even that.)

 

[T.Lex]

Do you have a source for this?

Not really, that's why I said "it appears."

I know next to nothing about growing marijuana, but I don't believe for a moment that a farmer with a 100 acre field full of it couldn't produce it cheaper than a guy in his basement who's limited to X number of plants.

Thank you for accepting it, because it doesn't really help your position. An illegal producer is artificially limited in scale. Now while I just by myself could theoretically produce 10 gallons of peach schnapps a month and keep it quiet, I couldn't necessarily do it with 100 gallons (and I have never distilled alcohol). Which limits my quantity of scale. During prohibition they tracked sales of corn and sugar, bought too much and you were checked out. Not quite as bad as let's say sudafed today(and don't get me started on that please), but close.

[Total aside: I think there would be VERY little difference in our opinions about grownups allowed to buy stuff like that.]

Yes you can, or at least the plants. One member here mentioned trying to grow some this year. But most people who use plain tobacco for cigarettes buy "pipe tobacco" which has a much much lower tax schedule.

And, much lower demand these days. Which is kinda a shame.

I don't know much about it either, but the difference between indoor grow and out door grow per plant production is measured in pounds, not ounces. In favor of the outdoor grow. Think 2-5 oz per plant indoor to 2-5 lbs per plant outdoor. I've never grown, and never intend to. But I've known and talked to people that have. But you also have a quality difference, with the benifit going to indoor. So....

I didn't realize the difference was that big. So my point remains that treating it like any other agricultural commodity would result in so much cheap marijuana that the black market would effectively disappear.

The cost of sunlight/grow lamps is the only area where the farmer would have the advantage, I believe. Maybe, too, in watering, if it rains enough. But, as noted, I think the indoor stuff is actually regarded as better quality.

Anyway, my point is that, based on the CO experience, there is not a sufficient decrease in the cost of production to make up for the tax. From the various links, people can still get MJ cheaper or at the same cost, with roughly equivalent quality, on the black market. The incentive to buy legally is more for the tourists, it appears.

Also, domestically mass produced MJ has distribution costs that would be passed on the the consumer. Homegrows have very little distribution. Imported stuff is (apparently) produced so cheaply that the distribution costs still keep it cheap.

Plus, you'd have to convince farmers to switch to MJ from whatever crops they have going now. Last I checked, most (maybe all?) of those are subsidized by the gov't in some way. The margins would have to be better on MJ than those other cash crops. Yet, to drive out the black market, the prices need to be low. So, do we subsidize MJ producers like we do corn and soybeans? Or stop subsidizing all of them and adjust to higher prices on almost all foodstuffs?

 

[steveh_131]

Anyway, my point is that, based on the CO experience, there is not a sufficient decrease in the cost of production to make up for the tax. From the various links, people can still get MJ cheaper or at the same cost, with roughly equivalent quality, on the black market. The incentive to buy legally is more for the tourists, it appears.

Yes, because the government limits the number you can grow, etc. etc. It's all about regulation. It always is.

Plus, you'd have to convince farmers to switch to MJ from whatever crops they have going now. Last I checked, most (maybe all?) of those are subsidized by the gov't in some way. The margins would have to be better on MJ than those other cash crops. Yet, to drive out the black market, the prices need to be low. So, do we subsidize MJ producers like we do corn and soybeans? Or stop subsidizing all of them and adjust to higher prices on almost all foodstuffs?

Again, all about government interference. But subsidies aside, the margins would even out and marijuana may not end up as cheap as field corn, but it would still be a heck of a lot cheaper than the guy who's allowed to grow 6 plants at a time in his closet.

Honestly, think about this T.Lex. If it made economical sense to grow crops in your basement instead of in a field, why doesn't everybody do it? It's ridiculous to even suggest that this is an efficient way to produce anything.

 

[T.Lex]

Yes, because the government limits the number you can grow, etc. etc. It's all about regulation. It always is.

"Always" is a big word. It isn't always, IMHO.

Again, all about government interference. But subsidies aside, the margins would even out and marijuana may not end up as cheap as field corn, but it would still be a heck of a lot cheaper than the guy who's allowed to grow 6 plants at a time in his closet.

Honestly, think about this T.Lex. If it made economical sense to grow crops in your basement instead of in a field, why doesn't everybody do it? It's ridiculous to even suggest that this is an efficient way to produce anything.

Urban gardens are all the rage. My wife has a small garden for fresh herbs. Honestly, I'm not sure there's any savings between that and buying it, once you take into account the time it takes to tend.

Commercial farming is a huge industry that doesn't move very quickly. Without gov't subsidies, I'm not sure MJ can compete in the market.

 

[steveh_131]

"Always" is a big word. It isn't always, IMHO.

When it comes to black markets, 'always' is the correct word. Black markets do not exist absent government regulations.

Urban gardens are all the rage. My wife has a small garden for fresh herbs. Honestly, I'm not sure there's any savings between that and buying it, once you take into account the time it takes to tend.

No, of course there's not much savings. Specialized industries exist because things can be produced more efficiently in larger quantities. This is economic fact.

Commercial farming is a huge industry that doesn't move very quickly. Without gov't subsidies, I'm not sure MJ can compete in the market.

This is delusional. If properly deregulated, farmers would be tripping over themselves to start dedicating acreage to it ASAP.

 

[Ericpwp]

Monopolies, cartels can also form black markets.

 

[T.Lex]

When it comes to black markets, 'always' is the correct word. Black markets do not exist absent government regulations.

We can bicker about that some other time.

This is delusional. If properly deregulated, farmers would be tripping over themselves to start dedicating acreage to it ASAP.

Speaking of delusional, what does "properly deregulated" mean? As long as there is a gov't, there will be gov't regulation. For MJ to be economically viable to commercial farming, the margins would have to be better than what they're making now on corn and soybeans. Which, I believe, are subsidized by gov't.

To get the margins, several things would need to happen: the demand would have to be the same for corn and soybeans (keep in mind, a significant amount of those products are used in other products); the subsidies would have to be comparable; the cost to produce would have to be comparable.

I don't think it is realistic to expect ANY of those things to happen. Maybe the cost to produce, but as commented upthread, the outdoor grows are apparently poorer quality than indoor. So that's another issue to be dealt with.

 

[steveh_131]

Monopolies, cartels can also form black markets.

Interesting thought. Can you provide an example of a monopoly or cartel that caused a black market, absent government interference?

 

[steveh_131]

Speaking of delusional, what does "properly deregulated" mean? As long as there is a gov't, there will be gov't regulation.

Deregulated to the levels of alcohol regulation as a bare minimum, in my opinion. The fewer regulations, the less incentive to participate in black markets.

For MJ to be economically viable to commercial farming, the margins would have to be better than what they're making now on corn and soybeans. Which, I believe, are subsidized by gov't.

To get the margins, several things would need to happen: the demand would have to be the same for corn and soybeans (keep in mind, a significant amount of those products are used in other products); the subsidies would have to be comparable; the cost to produce would have to be comparable.

You're comparing a non-existent marijuana industry to an over-saturated, government subsidized corn and soybean industry. This is silly. Even with the subsidies, farmers don't make high margins on their corn or soybeans. The margins are nowhere NEAR what a field of marijuana would bring them. Obviously, these margins would drop down a bit as the market fills up with suppliers. And of course marijuana prices will have to stay above the prices of corn and soybeans in order to draw more farmers into the market.

If what you're saying is true, no farmer in America would currently be growing anything other than corn and soybeans. And yet... they do. You really need to rethink some of the economics.

 

[T.Lex]

Deregulated to the levels of alcohol regulation as a bare minimum, in my opinion. The fewer regulations, the less incentive to participate in black markets.

But that isn't the only factor!

You're comparing a non-existent marijuana industry to an over-saturated, government subsidized corn and soybean industry. This is silly.

Even with the subsidies, farmers don't make high margins on their corn or soybeans. The margins are nowhere NEAR what a field of marijuana would bring them.

Speaking of silly, can I borrow your crystal ball? You're basing future legal margins on current margins with a premium because it is illegal. In CO, it appears there is little, if any impact on the black market.

If what you're saying is true, no farmer in America would currently be growing anything other than corn and soybeans. And yet... they do.

Examples, dude. Feel free to use different examples that illustrate how you reach your conclusions.

You really need to rethink some of the economics.

Back atcha, babe.

Generally interesting:
Going legit a challenge for black market marijuana growers

 

[steveh_131]

Speaking of silly, can I borrow your crystal ball? You're basing future legal margins on current margins with a premium because it is illegal.

Of course it would drop, but it would never be as cheap as corn or soybeans. It requires more expertise and difficulty to grow.

In CO, it appears there is little, if any impact on the black market.

Colorado is heavily regulated. It does not represent a free market.

Examples, dude. Feel free to use different examples that illustrate how you reach your conclusions.

Tobacco, peppers, lettuces, kale, spinach, tomatoes, potatoes, sweet potatoes, beets. Seriously, why would anyone bother with these if corn and soybeans were the best option?

Let's assume that it was properly deregulated. Let's say that a farmer could grow it, indoor or out, as much as he wants.

Currently, supply is low and demand is high. Therefore prices are high. They will stay high until the supply increases.

High prices will draw producers. Production will ramp up. Prices will begin to drop, but peak efficiency won't be reached until the producers begin to develop the skills to grow it well. Over time, efficiency will increase further and the product will improve while prices drop. The buzz will begin to die down and we may see an over-saturation of producers in the market. Supply will overcome demand and prices will drop further. Some producers will drop out until supply and demand equalize at a realistic, market-set price point. They may even go back to growing corn and soybeans, and that's fine. The market can only support so many producers.

Where does a black market fit in to this? How can a black market even exist, absent the regulations that create it? Is the farmer's fruit stand by the side of the road a black market? If so, that may be the worst that we see.

 

[Ericpwp]

De Beers.

 

[steveh_131]

De Beers.

Would you please expand on this? This is a company, not a black market so I'm not quite sure where you're headed with this.