Heavily taxing and regulating a plant that anyone can easily grow in their homes doesn’t really sound like wise public policy. But California is currently attempting it, and I suspect the situation is going to end in only one way: a massive black market in homegrown, untaxed marijuana. Which means California will actually lose out on millions in revenue. But while California’s rate is $9.25 per ounce, Washington taxes its weed at a mindboggling $50 per ounce. How is that really any different from straight-up prohibition? Cartels, or the elderly couple down the street, will step in and provide tax-free weed, and make a fortune.
This provides a pretty good example of the nature of economics, which is truly is nothing more than refined, and consistently applied, common sense, as Joseph Schumpeter explained to the world. If it can be easily grown in your home, why not just do that rather than buy an expensive product from a third party? This isn’t the cure for baldness, or cancer, or the iPhone they’re trying to tax at this rate. It’s a small plant that anyone can grow, anywhere. Policy makers should ruminate on that for at least a moment before they wave the tax wand.
Ed: It’s my belief that marijuana should be legalized completely, with no tax rate other than the usual sales tax that we pay for everything else. The only regulation being a prohibition on selling it to kids. Why not just allow a multi-billion dollar industry to spring up, flourish unrestrained, and create millions of high-paying jobs? It’s a plant that anyone can grow. How are you going to regulate and tax that? Just step back and let the market do its magic.
