Another Industry Destroyed by Taxes

2 mins read

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How many industries have been damaged or destroyed by high taxes and excessive regulation? A lot. But I have mixed feelings about this one: California cannabis industry on brink as buyers return to dealers.

The cannabis industry in California is on the brink of collapse because of high taxes and onerous regulations that have burdened legal operators and allowed illegal growers to flourish, campaigners have warned.
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About 75 per cent of cannabis consumed in the state comes from illegal sources, industry figures say. They blame taxes, too much regulation and a failure to tackle illegal competition, which is free from red tape and able to offer cannabis at much lower prices.

Marijuana is cheap and easy to grow. Legal sellers complain that police do little to enforce the laws against illegal dope, but once the government declares marijuana to be A-OK, there isn’t much reason to prioritize a crackdown on those who sell a legal product but dodge taxes. The case against legalized marijuana having been abandoned, legal sellers are in somewhat the same position as the taxi companies who tried to get Uber and Lyft banned in various cities.

The industry is trying to get tax relief, which would undermine a chief rationale for legalization: the prospect of massive tax revenue.

Not everyone is in favour of cutting or removing the taxes. Much of the money raised goes to social service programmes for young people across California and campaigners have warned that any changes would harm vulnerable children.

Smoke it for the children!

It strikes me that the situation in California and other states is playing out exactly as should have been foreseen once the ill-advised decision to legalize cannabis was made.

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