Denver attorney and Amendment 64 co-writer Rob Corry is mad about taxes and he gave away free joints to let everyone know it.
The issue is Colorado’s Proposition AA, which seeks to impose a 15 percent excise tax on marijuana, on top of a 10 percent sales tax that could be raised to 15 percent later; then there is a separate proposal in Denver for a citywide 3.5 percent sales tax that could be raised to 15 percent as well.
So Corry and others gathered on Monday at Denver’s Civic Center Park to hand out free joints to anyone 21 and older. The Denver Post reported some 4,000 joints were given away as Corry shouted, “It is legal to hand out marijuana to people in Colorado, and it is legal to do it without paying a penny in taxes!” Corry’s complaint is that “Regulate Marijuana Like Alcohol” is a bait-and-switch if we tax marijuana at far greater rates than alcohol.
In Washington State, high pot taxes are also a concern. Initiative 502 set taxes at 25 percent at three levels -- grower, processor, and retailer -- in addition to the state and local 8.75 percent sales tax average. What do all these taxes mean to you, the marijuana consumer?
In an analysis produced by BOTEC, the consultants hired to manage Washington’s pot industry, it is estimated that if a grower sells for $2,000 per kilogram (about $907 per pound), taxes will bring the retail price up to $17 per gram or roughly $482 per ounce. Their analysis includes 100% (double your money) markups at each stage, however. If the weed market behaves more like a liquor store, where 31% markups are the norm, then the price of Seattle sativas and Issaquah indicas will run $7.46 per gram or roughly $211 per ounce.
Currently the going price for marijuana in the Pacific Northwest, where this writer is based, runs from $150 to $250 an ounce, depending on quality and supply. I’m not going to spend twice as much on legal weed and the analysts at BOTEC note that. “In reality, the legal market must compete with the black market, medical marijuana and grow-your-own,” they wrote, leading us to believe competition will force those Washington businesses to keep markups low.
But too little taxation can also endanger the popular support for marijuana legalization. Washington voters were sold legalization partially on the hope it would raise $450 million in taxes for the state. BOTEC’s head Mark Kleiman told the Seattle Times in March that maybe half that much would be raised, and that’s at the $17 per gram level.
Compared to the huge taxes included in I-502, Corry’s complaints are softened a bit. Colorado State University estimates that weed will be sold at $185 per ounce if the proposed taxes Corry opposes are included. CSU also supposes a 25% producer markup and a 175% processor/retailer markup. At these rates, the state will only raise $21.7 million of the $40 million that was promised to Colorado voters to fix schools as a result of legalizing and taxing recreational marijuana.
What will become of future states’ campaigns to legalize marijuana if tax revenue promises to voters in Colorado and Washington fail to materialize? How will we mobilize marijuana consumers to support future legalization if it raises the prices of marijuana too much? Perhaps the next legalization campaigns should soft-pedal the tax windfalls and focus instead on the simple fact that forcing marijuana consumers into a criminal market is wrong.