International Cannabis Business Conference

Taxing Pot: How Much Is Too Much?

Prop AA
Joints were given away at a No on Prop AA rally in Denver.

Back in the mid-to-late '80s, NORML promoted tax day protests as a way of protesting marijuana prohibition. The argument was that legal cannabis would be a tremendous source of revenue for the Feds as well as for states. Tax and regulate, even back then, was the mantra.

The economic argument for legalization is a strong one, and in politics an appeal to greed can be quite effective. That's why, for years, many reform leaders have focused on the revenue which could be raised through legalization. Sure, “savings” was another argument - money wasted chasing pot smokers and chopping down marijuana plants which could be used for treatment or education programs has a nice sound - though it was always a pipe dream because law enforcement would ultimately retain the lion's share rather than any monies being redirected.

There's also a social justice argument for legalization: Arresting someone simply for using a particular drug is wrong, it's arbitrary and it's usually counterproductive. That argument hasn't been an easy sell to the U.S. public. A variation on that theme has, on the other hand, had resonance: that putting someone in prison merely for drug use is also counterproductive and a waste of resources. Unfortunately, that argument has led to creation of a monolithic drug court movement and a treatment-alternative-to-incarceration industry. It hasn't stopped people from getting busted for the crime of being a drug user; if anything, it's made it easier to process drug users, which means it's easier to arrest more drug users, and the cycle continues.

So, the movement continued to rely on the economic argument. In the '80s, back when marijuana was simply illegal and it felt like there were only a handful of us involved who really believed that things were going to change in our lifetimes, we talked about how much money the marijuana crop was worth and how much revenue we could raise if it were legal and taxed. We continued that approach through the '90s and into the last decade.

In 2012, economic arguments were the cornerstone of successful legalization campaigns in Colorado and Washington. Tax revenues, which these would raise, were key arguments in convincing mainstream voters to support the measures.

With all of this in mind, why would anyone be surprised that some officials are trying to see how much money they can make from legal marijuana?

Colorado's Amendment 64 allowed the state legislature to set an excise tax on marijuana of up to 15%. Proposition AA, which is on the Nov. 5 ballot, if passed will impose a 10% sales tax on marijuana in the state as well as the 15% excise tax. The marijuana sales tax would be in addition to the state's already-existing sales tax, and that additional sales tax could even get hiked up to 15% if the legislature decided to do so.

Opponents, including Colorado NORML, are concerned that this is too high a tax burden. They've drawn national attention by giving away joints and dab hits at demonstrations around Denver.

Supporters, including legalization advocate Brian Vicente, argue that the extra money is required in order to have effective regulation - which is what the Feds are insisting on in return for standing back and letting the state proceed with regulating and taxing adult social-use marijuana.

Is Prop AA too much? Ultimately, the proof will be in the canna-pudding. If the illegal market continues to flourish because taxes bump up the price of legal pot too far, then the state will be shooting itself in the foot. If, on the other hand, people are willing to pay a premium in order to have safe, legal access, they'll be seen as geniuses.

Whichever way it turns out, to me there's no question that the marijuana legalization movement is the victim of its own success. We're the ones who've worked for decades to convince voters that marijuana legalization would mean a boost to the economy. The economy finally cooperated by tanking so badly that lawmakers and voters are listening, and more than listening, they're giving our ideas a try. We only have ourselves to blame.

On that cheery note, here are some resources to learn more about the measure:

The Committee on Responsible Regulation, which supports Propo AA.

The No Overtaxation Committee, which opposes Prop AA.

• The state of Colorado's official ballot analysis of Prop AA.

• The measure as it appears on the ballot.

• The full text of the measure, House Bill 13-1318.

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Doug McVay

Doug McVay

Writer and KBOO radio host based in Portland, Ore. He's also editor of DrugWarFacts.org.