marijuana, pot, weed
marijuana, pot, weed

BC Director, Canadian Taxpayers Federation

Fourteen years ago, B.C. Marijuana Party candidate Joshua McKenzie ran in the staunchly conservative provincial riding of Fort Langley-Aldergrove. He spent a memorable all-candidates meeting answering every question with one sentence: “If government legalized and taxed marijuana, there would be plenty of money for health care, education and other priorities.” By the end of the meeting, people were chanting his answer along with him.
McKenzie only drew 674 votes, but the belief that legalizing and taxing marijuana could pay for everything has only grown since 2001. The examples south of the border, however, seem to suggest that the truth is very different.

With Prime Minister Justin Trudeau’s campaign promise to “design a new system of strict marijuana sales and distribution, with appropriate federal and provincial excise taxes applied,” Canada is closer than ever before to seeing what kind of tax money can be wrung out of the pot industry. And while the Canadian Taxpayers Federation does not oppose legalizing marijuana, it certainly isn’t a government cash crop.

A 2012 study estimated national marijuana sales at $4.6 billion per year. That’s total revenue, notpotential taxes. Indeed, the taxes generated from marijuana are likely to be far less than suggested in recent years. If you’re hoping that pot will fund a new school in every community or a subway to your door, it won’t.

In Colorado, the first U.S. state to legalize pot, tax revenue from marijuana is on pace to hit $126 million this year on $923 million worth of sales. If Canada used a similar tax rate, it would generate $628 million in taxes per year. That might sound like a lot of money, but considering the federal government is projecting to collect $290 billion in revenue this year, the additional cash from marijuana would amount to an increase of 0.22 per cent.

“The big lesson we tell other states is you probably shouldn’t legalize marijuana if you want to make money — that’s not why you do it,” a Colorado official told the Huffington Post.

In Washington state, the revenue generated from taxes is even less, $65 million over the first 10 months of this year. “When you’re looking for billions of dollars, tens of millions doesn’t solve the problem but it certainly doesn’t hurt,” explained an staffer in Washington Governor Jay Inslee’s office.

Marijuana legalization advocates often argue that enforcement costs will dip, too. However, that isn’t the case thus far in Colorado, as police there have asked for more resources to try to stamp out the organized crime networks that controlled marijuana production and sales for decades. Further, the black market is still in operation as people seek cheaper, tax-free marijuana.

And that’s the real Catch-22. How do you regulate and tax marijuana when the black market can provide it so much cheaper? If you push marijuana taxes to tobacco levels, will you keep people buying contraband? Would a critical mass of people pay a premium for pot when they can get it the old fashioned way at much lower prices?

There’s still an illegal market for cigarettes in Canada — 15 to 33 per cent of smokes are contraband, and many fall into underage hands. “Kids have less money and they are amazing communicators on social media,” an industry expert explained to the Victoria Times Colonist. “As soon as one finds out where you can get tobacco for half price or less, everybody knows.” Marijuana is — and would remain — the same, unless the price of the legal product was lower than the black market price, which would only happen if the government decided to forgo some of its potential tax revenue.

Given the difference in usage patterns, and the precedents of Washington and Colorado, it seems highly unlikely that marijuana taxes will generate nearly as much revenue as tobacco taxes.

Marijuana legalization is coming, thanks to Prime Minister Trudeau. It will be a fascinating experiment in public safety and taxation policy, one that will be studied for decades to come. But no politician should start writing cheques until they see how many zeros marijuana taxes actually produce.

3 thoughts on “Pot not the cash crop its supporters claim”

  1. Fear of Marijuana Legalization Nationwide is unfounded. Not based on any science or fact whatsoever. So please prohibitionists, we beg you to give your scare tactics, “Conspiracy Theories” and “Doomsday Scenarios” over the inevitable Legalization of Marijuana Nationwide a rest. Nobody is buying them anymore these days. Okay?

    Furthermore, if all prohibitionists get when they look into that nice, big and shiny, crystal ball of theirs, while wondering about the future of marijuana legalization, is horror, doom, and despair, well then I suggest they return that thing as quickly as possible and reclaim the money they shelled out for it, since it’s obviously defective.

    The prohibition of marijuana has not decreased the supply nor the demand for marijuana at all. Not one single iota, and it never will. Just a huge and complete waste of our tax dollars to continue criminalizing citizens for choosing a natural, non-toxic, relatively benign plant proven to be much safer than alcohol.

    If prohibitionists are going to take it upon themselves to worry about “saving us all” from ourselves, then they need to start with the drug that causes more death and destruction than every other drug in the world COMBINED, which is alcohol!

    Why do prohibitionists feel the continued need to vilify and demonize marijuana when they could more wisely focus their efforts on a real, proven killer, alcohol, which again causes more destruction, violence, and death than all other drugs, COMBINED?

    Prohibitionists really should get their priorities straight and/or practice a little live and let live. They’ll live longer, happier, and healthier, with a lot less stress if they refrain from being bent on trying to control others through Draconian Marijuana Laws.

  2. The “War on Marijuana” has been a complete and utter failure. It is the largest component of the broader yet equally unsuccessful “War on Drugs” that has cost our country over a trillion dollars.

    Instead of The United States wasting Billions upon Billions more of our tax dollars fighting a never ending “War on Marijuana”, lets generate Billions of dollars, and improve the deficit instead. It’s a no brainer.

    The Prohibition of Marijuana has also ruined the lives of many of our loved ones. In numbers greater than any other nation, our loved ones are being sent to jail and are being given permanent criminal records which ruin their chances of employment for the rest of their lives, and for what reason?

    Marijuana is much safer to consume than alcohol. Yet do we lock people up for choosing to drink?

    Even The President of the United States has used marijuana. Has it hurt his chances at succeeding in life? If he had gotten caught by the police during his college years, he may have very well still been in prison today! Beyond that, he would then be fortunate to even be able to find a minimum wage job that would consider hiring him with a permanent criminal record. Let’s end this hypocrisy now!

    The government should never attempt to legislate morality by creating victim-less marijuana “crimes” because it simply does not work and costs the taxpayers a fortune.

    Marijuana Legalization Nationwide is an inevitable reality that’s approaching much sooner than prohibitionists think and there is nothing they can do to stop it!

    Legalize Nationwide! Support Each and Every Marijuana Legalization Initiative!

  3. Politicians who continue to demonize Marijuana, Corrupt Law Enforcement Officials who prefer to ruin peoples lives over Marijuana possession rather than solve real crimes who fund their departments toys and salaries with monies acquired through Marijuana home raids, seizures and forfeitures, and so-called “Addiction Specialists” who make their income off of the judicial misfortunes of our citizens who choose marijuana, – Your actions go against The Will of The People and Your Days In Office Are Numbered! Find new careers before you don’t have one.

    The People have spoken! Get on-board with Marijuana Legalization Nationwide, or be left behind and find new careers. Your choice.

    Legalize Nationwide!

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