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A Budget Cure: Marijuana Taxes?

Discussion in 'Political Zone' started by ConcordCowboy, Apr 30, 2009.

  1. ConcordCowboy

    ConcordCowboy Mr. Buckeye

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    A Budget Cure: Marijuana Taxes?

    In this desperate economy, some argue that legalizing and taxing marijuana could plug multibillion-dollar holes in federal and state coffers.


    As Washington breaks the bank on Wall Street bailouts, President Barack Obama's stimulus package and other spend-now, pay-later measures, most observers agree that politicians will eventually need to increase revenue or cut spending to cover the federal government's debts.

    Stein believes Washington could begin to balance its books now if politicians would take a serious look at his industry. The owner of two retail outlets that he claims generate $1 million in revenue annually, Stein says he pays around $80,000 a year in sales taxes to the state of California. But the federal government, which does not acknowledge Stein's sales as legitimate commerce, gets nothing from his business.

    Sound odd? Not if you know that Stein sells marijuana. See inside a cannabis dispensary

    In fact, because federal authorities have spent time trying to close his and other medical-marijuana clubs, Washington is losing money on him.

    Imagine how much the feds would save if they stopped cracking down on sellers, Stein says. Lawyer: Why US should legalize pot

    "Cannabis is good for the economy," he said. "It's been here the whole time, but it's had a bad rap the entire time."

    As more people begin to see the merits in Stein's logic, that bad rap is changing. While legalization, decriminalization and the medical use of marijuana continue to be debated in terms of public health, lawmakers and policy analysts are increasingly touting the economic benefits of regulating and taxing weed, which the Office of National Drug Control Policy says is the most popular illegal drug in the U.S.

    Critics of legalizing marijuana say the potential economic benefits of regulating and taxing the drug would obscure the less-tangible, long-term downsides of making it more prevalent in society.

    "The argument wholly ignores the issue of the connection between marijuana and criminal activity and also the larger picture of substance abuse," said David Capeless, the district attorney of Berkshire County in Massachusetts and the president of the state's district attorneys association. "It simply sends a bad message to kids about substance abuse in general, which is a wrong message, that it's not a big deal."

    A 2004 report by the drug policy office said drugs cost Americans more than $180 billion related to health care, lost productivity and crime in 2002. That study lumped the effects of marijuana in with more-dangerous drugs, such as cocaine and heroin.

    But marijuana advocates say history is on their side. They muster arguments similar to those that led to repealing Prohibition during the Great Depression.

    "In the early 1930s, one of the reasons that alcohol was brought back was because government revenue was plummeting," Harvard economist Jeff Miron said. "There are some parallels to that now."

    Definitive figures on the size of the untapped marijuana market don't exist. It's a gray market, after all. But there are plenty of studies indicating we are not talking about chump change.

    In a 2007 study, Jon Gettman, a senior fellow at George Mason University's School of Public Policy, valued the American marijuana trade at $113 billion annually. Between drug enforcement and potential taxes, the federal government and the states were losing almost $42 billion a year by keeping marijuana illegal, the study indicated. Gettman is a former staff member of NORML, the National Organization for the Reform of Marijuana Laws, a nonprofit that lobbies on Capitol Hill for marijuana legalization.

    "It's a very large, significant economic phenomenon, and it is diverting an incredible amount of money from the taxable economy," Gettman said.

    Miron says he is interested in the topic as a libertarian who believes the government shouldn't ban any drugs. He offers more-conservative numbers, estimating that federal and state treasuries would gain more than $6 billion annually if marijuana were taxed like alcohol or tobacco. At the same time, relaxing laws against use of marijuana would save nearly $8 billion in legal costs, he says.

    The Obama administration seems to be inching toward a more permissive stance on marijuana. Last month, U.S. Attorney General Eric Holder announced he would end raids on clubs like Stein's, fulfilling a pledge Obama had made on the campaign trail.

    "It's a major break from the 'just say no' mentality," said Allen St. Pierre, the executive director of NORML, referring to Holder's announcement.

    Stein is somewhat relieved. The raids had been wreaking havoc on California's budding marijuana industry, he says. Two years ago he was forced to move one of his clubs, The Higher Path, to a new location on Sunset Boulevard in Los Angeles, after the Drug Enforcement Administration sent his landlord a letter saying agents could seize the building.

    "Medical marijuana is very, very satisfying, but it's very nerve-racking and dangerous," Stein said.

    St. Pierre says 13 states have adopted laws to allow medical marijuana, while an additional handful have decriminalized possession, meaning the penalties associated with marijuana are negligible.

    Of course, critics of decriminalization are also vocal. Calvina Fay, the executive director of the Drug Free America Foundation, says Gettman, Miron and others fail to account for marijuana's adverse side effects, from lethargy to impaired driving to tendencies among weed smokers to try more-serious drugs. "Those who are using drugs are less productive than those who aren't," Fay said.

    A spokesman for the drug policy office declined to comment, saying the office wanted to wait until the Senate has confirmed Obama's drug czar nominee, Seattle Police Chief Gil Kerlikowske.

    But according to the FBI's most recent data, approximately 870,000 people nationwide were arrested on marijuana violations in 2007. Nearly 15 million Americans use marijuana on a monthly basis, according to the latest National Survey on Drug Use and Health. The same study found that more than 100 million Americans had tried marijuana at least once in their lives. Advocates of decriminalization say those statistics argue against the vision of mass lassitude put forward by their opponents.

    "Most people either did the drug themselves or their friends did," Miron said. "They know those extremes are not right."

    California has come closest to outright legalization of the marijuana industry. Sacramento already collects around $18 million in sales taxes a year from $200 million worth of medical-marijuana purchases, according to data supplied by California's State Board of Equalization. Now Assemblyman Tom Ammiano, a San Francisco Democrat, is sponsoring new legislation that would legalize marijuana completely -- and tax it. The state estimates the proposal could generate $1.3 billion a year.

    "The war on drugs has failed," Ammiano said. "It seems to me there is across both aisles that assessment, and California is in an egregious economic abyss. The economic situation makes (legalization) viable."

    The pro-marijuana lobby argues that U.S. agriculture could expand significantly if farmers were allowed to openly cultivate weed. In a 2006 study, Gettman calculated that marijuana was one of the biggest cash crops in the U.S., with 56 million plants worth almost $36 million.

    In the United Kingdom, where restrictions on marijuana research are less onerous than in the U.S., companies such as GW Pharmaceuticals are moving quickly to develop other drugs from the plant. In the company's 2008 annual report, GW executives said they had received approval to market Sativex, a cannabis-derived painkiller, in Canada. The report said the company is seeking approval of the drug from European regulators and is working with the U.S. Food and Drug Administration as well.

    A spokesman for the company, John Dineen of the London public-relations firm Financial Dynamics, says executives would prefer not to be quoted in a story about the economic consequences of marijuana legalization.

    David Goldman, a patron of the Green Cross, a medical-marijuana dispensary in San Francisco, had no such compunctions. To Goldman, medical marijuana looks like a godsend that should be studied and expanded. After groin surgery a few years ago, he found he had troubling reactions to other painkillers, and he turned to marijuana.

    "The constant pain is something I need to accept and is something for which cannabis has been invaluable," he said. "Why should we cede medical cannabis research to the U.K. when some of the best minds in medicine are in this country?"

    http://articles.moneycentral.msn.co...budget-cure-marijuana-taxes.aspx#pageTopAchor
  2. iceberg

    iceberg detoxed...part 2 Zone Supporter

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    interesting. add it to the SIN TAX and just look at what cigs and alcohol gets in revenue and you've got a good ballpark figure of what to expect.
  3. ConcordCowboy

    ConcordCowboy Mr. Buckeye

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    When they compare it to bringing back Alcohol because of money woes...it is something to consider.

    It would be a Pot full of cash.
  4. Doomsday101

    Doomsday101 Well-Known Member

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    But the so called Sin Tax is very high with the purpose of forcing people to quit. Look at the Tax on cigarettes people would be better off buying from a black market than paying the 6, 7 or 8 dollars they are paying now for a product that does not cost that much to produce. I think these high taxes will open the door for people buying illegally
  5. ConcordCowboy

    ConcordCowboy Mr. Buckeye

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    While that may be what they say...it's REALLY to make money.
  6. Doomsday101

    Doomsday101 Well-Known Member

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    I'm not saying it can't make money I'm saying as the price continues to rise there will be many who will look for cheaper prices legal or illegal. Same with Weed, if I buy a oz for say 80 bucks and we make it legal but the Government taxes it to where you are paying 150 to 200 bucks an oz who do you think the buyer will buy from? Some will many will not
  7. ConcordCowboy

    ConcordCowboy Mr. Buckeye

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    Well I expect the price to be high but lower than you would have to pay illegally.

    Otherwise it won't work.
  8. Doomsday101

    Doomsday101 Well-Known Member

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    And I'm saying the Government both fed and state will tax the hell out of it. We have more and more anti smoking legislation being introduced which is placing heavy taxes on a legal product which has doubled the price from a year ago. Make weed legal and yes the the buyer will see a very large tax thrown on it which will deter many from buying legal.
  9. ConcordCowboy

    ConcordCowboy Mr. Buckeye

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    And I'm saying that (I know it's rare in Washington) people have to use some common sense.

    You CAN'T...no matter what make it more expensive to buy legally that you would pay illegal...it's ******** to think otherwise.

    If you do then forget the whole thing...cause it ain't going to work that way.
  10. Rogah

    Rogah Well-Known Member

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    My comment here isn't so much about taxing marijuana as much as it is about the nature of many state governments (as well as the federal government).

    No matter how much tax revenue is generated, our politicians will always find a way to overspend by ridiculous amounts. Even if we completely ignore the societal and finanical costs such a move would make, to paint taxing marijuana as a "budget cure" is just not based in reality because no such creature exists. No much how much revenue is raised from whatever sources, we will never see real, permanent solutions to our budget problems when spending is allowed to increase exponentially.
  11. Doomsday101

    Doomsday101 Well-Known Member

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    It may be ******** but how can you push for anti smoking and then make weed legal with a lower tax? The argument does not fly and the anti smoking crowd is not going to back away. This is not even getting into state where they too will tax weed as they do other so called sin products.
  12. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    Yep. Give them 5 trillion and they will figure out a reason to spend 10. It's long since time for a Constitutional Amendmant that makes it Constitutional Law to balance the budget annually. Of course, this assumes that the current Administration does not declare the Constitution UnConstitutional.

    :D
  13. ABQCOWBOY

    ABQCOWBOY Moderator Staff Member

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    LOL.....

    Yep.
  14. Doomsday101

    Doomsday101 Well-Known Member

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    Controlling spending would do more than anything. We don't need more taxes we need leaders who know how to control their spending we can't have give away programs like we currently do.
  15. Rogah

    Rogah Well-Known Member

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    With all due respect, it is pretty ridiculous to make such a blanket statement. If you tax something enough, you could easily create a situation where the black market has lower prices than legitimate sources.

    When I lived in a New England about 5 years ago, they had a problem with cheap (tax free) black market cigarettes being sold by the Native American Naragansett tribe in Rhode Island. This practice continued for quite a while and they made some pretty decent money.

    But they ended up overplaying their hand. They claimed their soverign status allowed them to do whatever they wanted and they eventually went so far as to brazenly open up a store on tribal land. This store was raided and closed, which made local headlines for a short while.

    I believe the issue is still being argued in courts to this very day.
  16. hairic

    hairic Well-Known Member

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    It'd be a triple whammy in regards to taxes too. More income from the sell, less expenditure from having to house the highest prison population on Earth, and a couple million more laborers added to the economy paying other taxes.
  17. Doomsday101

    Doomsday101 Well-Known Member

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    I agree you could have a savings in terms of prison space if it were made legal but again buyers who already have a connection to buy weed why would they turn around and spend twice as much for weed?
  18. the kid 05

    the kid 05 Individuals play the game, but teams beat the odds

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    i read that in 2006 if we had taxed mariju we would have seen a 3 billion dollar industruy. unbelievable how we haven't done this yet
  19. Rogah

    Rogah Well-Known Member

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    "Couple million"..? Do you seriously believe there are a "couple million" people in jail right now on exclusively marijuana related offenses..?
  20. ConcordCowboy

    ConcordCowboy Mr. Buckeye

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    This can be done...it's far from impossible.

    It's not going to be perfect...but even if some people did buy it illegally...the Govt will still make massive amounts of money from it.

    Any amount will be better than nothing and it will be far from nothing and then you add up the money saved from not fighting to stop it and you got something.

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