Marijuana black market still thrives in Colorado, where pot is legal
Just because marijuana is legal in Colorado doesn’t mean the black market for the drug has disappeared. Rather, the opposite, police officials said.
“[Legalization] has done nothing more than enhance the opportunity for the black market,” said Lt. Mark Comte of the Colorado Springs police vice and narcotics unit, in The Associated Press. “If you can get it tax-free on the corner, you’re going to get it on the corner.”
Police are concerned that recent escalations in violence are tied to the legal recreational pot sales market. But their fears are only based on anecdotal evidence; nobody in state or federal government agencies is tracking the numbers of violent crimes that are tied to the marijuana market, AP reported.
Still others outside of the police community say concerns are unfounded, and that any black market residual will disappear once more stores open and the supply-demand curve is more balanced.I can see this going either way. If the black market can produce and deliver the pot cheaper by not paying taxes, the black market will stay. Of course the black-market will stay for the under 21 crowd. However, if a large enough number of suppliers are in business, and they don't form a cartel, supply and demand will keep the price low enough that its worth it to pay the tax.
Time will tell.
Legalize Marijuana!
ReplyDeleteIf there is a black market, the taxes are too high.
ReplyDeleteIf there is a black market, the taxes are too high
ReplyDeleteNormally that would be a safe bet. Except I don't think that the legal sellers set the price according to market. Waterboy can correct me if I'm wrong, but from what I've seen via merchant websites prices are determined by the use. Medical MJ is about half what recreational MJ costs. Rec MJ costs between $200 to about $400/oz depending on quality. Those prices are about $100 less than illegally sourced pot. I don't know how many leaves it takes to produce a oz of product, but we are talking about a fast growing plant. Production time/cost and transport of product is low. With it just becoming legal production probably isn't up to speed yet, and it's unlikely they have reached market equilibrium. This means there is plenty of room for more sellers to enter the market. When that happens prices will come down on their own.
Will they go down low enough to push out all illegal trade? Not for the under 21 crowd. Right now I don't think the taxes are the problem. Besides if you don't want to pay tax on it, you can still cultivate up to six plants of your own.
Res Ipsa: "If the black market can produce and deliver the pot cheaper by not paying taxes, the black market will stay."
ReplyDeleteYou bet -- just like it has for bootleg moonshine and cigarettes. Black markets are also unaffected by regulatory costs.
Giraffe: "If there is a black market, the taxes are too high."
Indeed. The biggest reason for the disparity in prices between medical (MMJ) and retail (RMJ) is definitely the taxes (~3% for MMJ, ~28% for RMJ). Until the state legislature decides to change this, it will remain a major factor contributing to a black market for pot.
Interestingly enough, a rate change could come rather quickly, because they may be making too much off the tax and might be forced to refund some it back to the taxpayers IAW our TABOR law. Which could also snowball -- lower tax rates means higher sales of legal pot (versus black market) which could actually increase overall tax revenue, having the exact opposite effect as desired (i.e., being on the right side of the Laffer curve).
Res Ipsa: "Except I don't think that the legal sellers set the price according to market."
Also true, to an extent. The other part of the higher retail production cost is regulatory compliance costs. The retail market is subdivided into three segments: cultivation, production, and sales. Each segment has its own regulations with which it must comply, thereby increasing the costs associated with each segment -- which may not even be by the same company.
But the medical industry, IIRC, does not have the same segmented requirement...meaning they typically have lower costs since one company can more easily control the whole process from start to finish.
The reason for the tougher regulation of the retail market is to appease the Feds, IMO. And as more and more states legalize retail sales, some of the regulatory burden may start to be eased back a bit. This will also encourage more businesses to open, and more competition will continue to lower prices.
It also occurs to me that the state has intentionally set the recreational tax so much higher in order to discourage pot tourism. If people can get illegal pot at home for not much more than they can get it legally here, then they're less likely to spend money travelling here to partake of it.
ReplyDeleteWB,
ReplyDeleteIf the RMJ is taxed at 28% is that reflected in the $400/oz price or on top of it?
If it is on top of the $400 it puts the pot in the same price range as the illegal at $480 to $550/oz. If the 28% is "hidden" in the $400/oz price than the product is still 20% cheaper than the illegal.
If I was a pothead, I would simply get myself a redcard and save 50%. As I understand it those aren't hard to come by.
I don't know if this is correct, but don't you have to be in a private residence to smoke pot? I didn't think you could smoke in any public building in CO. So if you are a pot tourist you have to have someplace to go to smoke it. Obviously you can take it out of state but then you are breaking the law.
On the subject of smoking; for my birthday my brother TOLD me that he was enjoying some Opus X that he got. Mind you he didn't bother to send me one, but he let me know how good they were.
I think it's on top of the listed prices.
ReplyDeleteYes, the MMJ cards are easy to get. But they also cost money (nominal doctor exam, annual registration fee), where RMJ is free from those charges. It's still more cost-effective in the long run to get the MMJ card, but then there's the concommitant database registration entry with your name on it.
Yes, you generally have to be on private property to smoke. I think there's an exception for designated smoking rooms in hotels (I get a smoking room so I can enjoy a cigar on rare occasion), but then it's up to each hotel's policy whether pot is allowed or not. And different municipalities have different regulations regarding whether or not you can smoke outside your home on private property.
Theoretically, a tourist could smoke pot on somebody else's front lawn without invitation and be guilty of nothing more than trespassing. Also, remember that pot can be consumed in other nearly indetectable forms, such as vapor inhalers or in food. It would be practically impossible to enforce the non-public consumption rules against these methods.
MJ possession has been outlawed in DIA, but I'm sure it's being put into both carry-ons and checked luggage. And enforcement at border crossings is a non-starter, as you've already noted.
Opus X is good...but after trying out a few of the higher-priced smokes (Opus X, God of Fire), I've decided that the taste difference isn't that great to justify the added expense. I can get a good smoke at a reasonable price among the "lesser" brands, so that's what I stick with. Still, your brother's a bastard to rub it in your face like that...especially on your birthday. :)
And Happy Belated, whenever it was.
The supply of cigars is very limited here. I have to get them mail order if I want one. In a way its a pain because I only have one every once in a great while. Getting a premium smoke is impossible in this town. My brother on the other hand has a very good cigar shop about a mile from his office. I've wanted to try an Opus X for a long time but when I've had a little extra cash I've not been able to find any via mail order.
ReplyDeleteThanks for the well wishes. It was the middle of last month.
ReplyDeleteDid you ever find a Man of War Ruination to try?
No, my local shop doesn't carry them. I also checked for the Ghurka Spec Ops that Nate recommended, but they don't have that either. I'm hesitant to order cigars through the mail because UPS is a frickin joke. I've lost count of how many times they've screwed up deliveries here that I've resolved not to use them any more, but so many online shops only ship that way.
ReplyDeleteThe Spec Ops are ok. Don't spend more than $5 for one. The Ghurka Warlord is a better cigar. At least you have a cigar shop. We have a couple of liquor stores with small humidors of whatever has the best margin when the guy thinks to order.
ReplyDeleteWB,
ReplyDeleteI don't know if you are still following this thread. If you are email me your home address and I'll send you a Spec Ops.
Thanks, man, I appreciate that, but save it for yourself -- good cigars are hard enough to come by up there, it would appear.
ReplyDeleteThe tobacconist I go to carries Gurhka, just not the Spec Ops. I'll see if they have the Warlord next time I go. Also, if you see anything on that list that catches your eye, let me know. We're trying to reschedule that Alberta fishing trip again in May/June, so I'd be coming by pretty close if I end up driving instead of flying.
Its not a big deal. The last time I bought, I got a whole box. Send me your address and I'll fire off a couple of them to you. I've smoked enough of yours over the years, consider it a small pay back.
ReplyDeleteI wish I had a place like yours where I could go get a cigar when I want one and pick out what I want to try. I've decided that there are a handful of makes that I enjoy and while I'd smoke one if it was offered to me, I can pass on the rest. I guess I'd rather have a cigar that I enjoy and I can skip the rest.
The stag lists the brands but not the names or prices. How can they offer Davidoff cigarettes but not cigars?