Pot Lucky
“The most terrifying words in the English language are: I'm from the government and I'm here to help.” ― Ronald Reagan
Imagine this. You’re a successful drug dealer in San Francisco. You’ll sell whatever people want: oxy, coke, meth, weed, you sell it all. Being this is SF your big seller is marijuana because SF still has a lot of burnt-out 60s hippies who are now mostly retired insurance salesmen and stock brokers but still smoke like it’s the summer of love.
Your life is pretty darned good.
Then it suddenly gets awesomely amazingly super-dooper fantabulously better than you could ever imagine.
What happened? The government legalizes the sale of marijuana and sets up legal dispensaries.
Huh? How could that be?
Well, up until pot was legalized, small dealers sold their product and, in a sense, only competed with each other. On the street, an ounce of pot (28.5 grams) might have sold for $150. The dealers had to buy their product and cover some basic expenses like protection, bribes and bail money. The rest was profit.
When pot was legalized, legal marijuana dealers had to buy their product and cover higher expenses like wages, rent and utilities. Plus, they got burdened with government regulations and taxes that the dealer on the corner just doesn’t have.
So, the pot dispensary might be selling their product at $250 per ounce. The dealer who was selling product at $150 can now raise his price to $200 or even $225, make a windfall profit and still undercut the legal guys. Ka-ching!
As almost always occurs with the government, market forces and the unintended consequences of rules and regulations are ignored, in favor of raising tax money.
The government’s object of legalization was one of greed in the form of taxes. According to the Orange County Register:
All cannabis legally sold in California comes with a 15% excise tax, a cultivation tax by weight and [the] regular state sales tax. Plus cities and counties can tack on their own taxes, which can be as high as 20%....
…But the state actually increased the industry’s tax rate Jan. 1 to match inflation and new market data, with marijuana retailers paying 12.5% more in taxes while cultivator taxes went up more than 4%.
According to the OC Register “Perhaps most notably, the state’s entrenched illicit market is still thriving, accounting for an estimated 75% of all marijuana sales. And with high taxes and regulatory costs keeping marijuana products at licensed businesses 30% to 80% pricier than products sold at underground shops, many consumers aren’t making the switch to the licensed industry.”
That’s just what happened in the local San Francisco market where the San Francisco supervisors recently voted unanimously to approve an ordinance to suspend the city’s Cannabis Business Tax through the end of next year, in an attempt to curb illegal marijuana sales.
The moral of this story is that every government regulation or tax has unintended consequences. Rarely are these consequences a positive and often the success of a regulation is muted by the effects of the regulation.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Oat Bran Kills!1
A few short weeks ago we reported that “Drinking just four small glasses of wine a week can raise the risk of developing dementia.” And that was after years of hearing that red wine in moderation is good for you, including “Wine can protect your brain from the effects of Alzheimer’s disease and dementia.”
Now we learn that science had done another 180:
So are you keeping score? Wine good, wine bad, wine good.
I’m rooting for wine good!
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Bet You Can’t Watch This and Tell Me What The Spokeswoman Said!
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
20 or 30 years ago, Clark de Leon wrote a daily column for the Philadelphia Inquirer. “The Scene” was a lighthearted look at Philadelphia, and society in general. One of Clark’s periodic stories was titled “Oat Bran Kills”, which spoofed science’s never-ending onslaught on established norms. He envisioned that eventually science will determine that one of the healthiest foods, oat bran, is actually deadly. We see this all the time today where one week eggs are deemed good for you and the next week some study says that eggs are poison that must be avoided at all costs.