Passing I-502 Would Generate Over a Half-Billion Dollars a Year

Comments

1
Ack, is 12$ a gram a resonable price for you USians?
2
So after the 25% excise tax at each level of distribution, how much is that "average" gram of shitty government weed?
3
Every bit helps
4
Will the half billion dollar revenue be on the ballot? I can't imagine this not winning with numbers like that.
5
Subtract the cost to jail 10,000+ people a year from state costs.
6
@1: that works out to about $340/ounce, which is on the high side but not alarmingly so for high-quality weed.

@5: this.
7
Ha, he said 'chronic' budget.
8
The story didn't mention that the half billion dollars will come from DUI fines against medical marijuana patients who ever get in a car, even if they just want to go to their granddaughter's piano recital :(
9
@8, crippled granddaughter, you mean, who just wants to play Chopin for gam-gam. Ah, gam-gam, whom the little girl wishes wasn't too proud to carpool to the recital with the rest of the family, and too cheap to take a taxi.
10
@6: But that's without taxes, which will contribute significantly to the cost, and it's for "average" weed, not high quality. From the linked report:

"I-502 also levies a new marijuana excise tax equal to 25% of the selling price on each producer, processor, and retailer. The marijuana excise tax will be administered by the LCB. As with other tangible personal property, general state and local sales and use taxes, and business and occupation (B&O) taxes, will also apply to the sale of marijuana and marijuana-infused products."

So, if the price estimates are correct, expect to pay closer to $20/gram for "average" weed, and upwards of $500 for an ounce. Considering that the very best currently goes for about $400/ounce, these prices are terrible.
11
@10: "... if the price estimates are correct ..."

The price estimates are consistent with current prohibition-inflated, black market prices. Legal, licensed business owners have plenty of room to adjust their prices to be competitive and still make a respectable profit.
12
If they would have legalized marijuana years ago, we could have paid for many bridges, built new ones, replaced old ones, built enough homeless shelters, sent every child to College and still helped other less fortunate of the World. But as long as we have some idiots sitting around in a room trying to make a decision, wasting our money, (like the approval for a new tunnel)? Just sayin....why are we surprised! Oh wait....we do need a new prison.....Nooooooot!
13
Those processor and retailer price assumptions look way too high to me. While it's impossible to predict production costs for a market that doesn't exist yet, the best numbers I've seen were in a working paper published by RAND (J.P. Caulkins, "Estimated Cost of Production for Legalized Cannabis", 2010) that estimated $1 per pound in production costs for outdoor cultivation and $20-35 per pound processing costs, or about $2 an ounce. That's a far cry from a price of $6 per gram, but the $6 assumption plus an assumption of a 100% retail markup does make the estimated future tax revenue look really nice.
14
@11: True, we are paying drug war prices, and some costs associated with production will certainly go down. But other costs will surely rise. Legit growers will have to comply with zoning regulations, which will mean higher rent in most cases. They'll have to pay for permits and licensing, security (because theft will still be a major issue), costs associated with non-under-the-table labor, health and safety, and whatever fines the LCB decides to hand out. And don't forget, the DEA will still be a wildcard for any grower who tries to go legit, especially if Romney (or, uh, Santorum) somehow manages to get elected.

So, the production costs might go down, but they could go up. Who knows for sure? One thing is certain though, taxes on dope will go way up. And it's hard to see how prices will be any cheaper after all the various taxes are added on. Exorbitant prices will only ensure the survival of the black market- and how would that affect this $.5B revenue projection?
15

If you legalized it, first of all, the big manufacturers would come in and monopolize the business. Then they'd ask for tax breaks and cut all your revenue to nil...in fact, you'd end up subsidizing the weed, and the quality would fall until it's the most watered down shit you ever toked.

16
@15, yeah, just like alcohol. No way anyone could make a profit or get a buzz.
17
I think the important thing here is to establish that post-legalization, the sky will stubbornly refuse to fall down. Just like with "gay marriage".
18
I don't mind paying a bit more for the stuff if it means it's helping our economy recover and keeps me and other citizens out of jail.
19
I'll pay terrible prices to not be thrown in jail for buying the stuff. Stop whining about price, if you don't like it grow your own.
20
@19: But it will still be illegal to grow your own under 502. And I will not be whining about price, I'll just continue to buy the same black market weed as before. Most others will do the same.

Oh, and how many times have you been thrown in jail? That must have been horrible for you!
21
it seems as if everyone here is missing the point. this will be the FIRST YEAR OF LEGALIZED CANNABIS. after a year or two of figuring the market out and creating a stable balance between taxes, revenue, and what the consumer is willing to pay, the price will come down to a reasonable sum. we should all just be happy that the baby steps are over with, and we're finally taking a huge leap to legalize cannabis for recreational use.
22
A recession is a good time to make it happen; people can be startlingly rational when they are broke. I have no problem with a sin tax. Who wouldn't pay a premium for a change like this, for the individual user, and the economy, which includes those who don't? Haters should recognize that capitalism will ensure competitive prices, and Uncle Sam will still get a share/shake of the take/toke, reducing our indebtedness and ultimately, our other taxes, while improving services. It's absurd that the biggest cash crop is not part of the market.
23
$12 a gram isn't so bad compared to, IDK...jail? losing your job? child endangerment laws? loss of property? loss of public assistance if your disabled?

Besides, a 6pk of beer is now $10 considering tax+deposit and a decent 750ml bottle of wine is $10+.

Not to mention, the $500,000,000 in retail tax revenue. Add to that the income tax paid from people who distribute, haul product, cashiers, stock help, trimmers/growers, maintenance positions. Tradesmen who build and set up the brick & mortar establishments. All people who will be contributing to the tax base and the local economy becasue they have gainful employment which in turn helps the other local buisness increase their income levels and contribute more to the state coffers.

Also consider the amount of enforcement & incarceration costs involved being lessened.

A truely positive snowball effect for all involved.

Besides, just like those homebrew beers kits you can buy' I'm sure backyard growing will be overlooked as long as your not a major opperation, and at worst would become a minor violation instead of a life altering felony if your garden did get to big for personal consumption.
24
Just for a reality check. If I could consistently get cannabis at $20 a gram without risking being busted for drug dealing I would be absolutely thrilled. Even if it was average quality.

If I could not have the stigma of being a criminal, if I could not have to worry about loosing my job if I get caught doing something alone in my apartment that does not involve anyone else, if I could put myself on the same level as someone who has a drink from time to time, I would be thrilled.
25
Don't know what the heck good it would do at those prices... the black market for cheaper stuff would still have to exist for folks that don't make that kind of money!
26
@15 oh sure, because the level of nicotine in cigarettes has gone down over the years. Oh yeah- that hasnt happened at all.

@24 is exactly right.

27
Perhaps I am moving in the wrong circles, but this black market for cheaper pot argument seems to be somewhat falsified by the almost complete lack of an organized illegal booze trade driven by taxes and price.
28
Just like medical weed now ranges from pretty cheap to exorbitant in price, I expect the same will be true once a legal retail market develops.

Retail will be far more convenient, and rather than wait for Wednesday when I can hook up with my very lovely dealer I'll just stop by the store on the way home from work. Hell, I might even call them ahead of time and say "Hey, do you have Purple Urple in today? I'm thinking of picking up a quarter ounce." and NOT A FUCK WILL BE GIVEN BY ANYONE.

29
The drug war kills people. The drug itself does not. Cannabis is completely non-toxic, nobody has ever died from an overdose. This, alone, is reason enough to end prohibition.

There's no way legal pot can maintain a $12-$20 per gram price point though. It just doesn't cost anywhere near that much to produce, and once the risk of production goes down, the price will come down too. Still, taking 25% at each transaction is an incredibly steep tax. By the time a $10/gram makes if from grower to user, the state could easily end up collecting another $10/gram or more in taxes off the entire distribution chain; a ~50% total tax.

While full legalization is desperately needed, and even at usurious tax rates is much better than the damage of prohibition, such heavy taxation schemes won't exactly kill the black market. Just make it more competitive.
30
lmfao yes im sure everyone will definately want to pay over 420 dollars an ounce get real who the hell thinks anyone will be able to afford that of shitty buds. get reeallll
31
@30: You lose when you're forced to make up ridiculous numbers to justify your cause.
32
@9 so, genius...medical marijuana patients give up the right to drive because they choose to live a life free of pain and sickness, all because of their medication. Carpool? too cheap for taxis? Jesus, it just never stops.

I-502 won't pass. It'll get the blue vote in Western WA but the neanderthals in Eastern WA will kill this bill in droves. Without the DUID provisions, it may have had a chance but egos win out over evidence in this case.

Instead of putting a good bill to the voters that addresses legalization and the production of cannabis within the law, we have a cardboard cut-out of one that's doomed from the start. Now, we are left with a political chasm within the anti-prohibition forces, one that will ensure that marijuana will remain illegal for a long, long time. It didn't have to be this way but getting a gold star was more important to Dominic and Alison than passing a good bill.

I-502 is a bad law. No matter how much frosting you put on this cowpie, it'll never be a birthday cake.
33
Everyone seems to be forgeting that there is a whole Tobacco industry out there that is limping along due to the harmfull nature of their current product line. I think they will JUMP at this oppurtunity, and how expensive do you think it will be to switch feilds and equipment over? I imagine it will be a drop in the bucket compared to profits reaped. These guys will certainly keep costs down as they are better equiped to handle this kind of product. 20 pack of filtered grade A Camel doobies? You bet!
34
I-502 creates a direct conflict with the federal controlled substances act. a state cannot be forced to accept taxes from an illegal on-the-federal-level substance. it will be destroyed in court.

We'll never see a DIME of this money, and Alison Holcomb herself knows this (I don't think I need to bring up her quote saying it was preemptable, as I'm sure most have read it by now).
35
and #5 what are you talking about? that 10,000+ number isn't just for minor misdeameanor possession its for everything, and since i502 only stop the arrest of 1 ounce, not for growing, driving while unimpaired, passing a joint to a friend, etc, than it's quite ridiculous to use that number when we have no idea how many of those will continue if 502 passes.
36
@33: "Everyone seems to be forgeting that there is a whole Tobacco industry out there that is limping along due to the harmfull nature of their current product line. I think they will JUMP at this oppurtunity"

Oh yeah, good point. Keep it illegal forever, broseph!
37
the 12 a gram price for retail was before the last 25 percent tax, with that included the price would be 16 a gram which multiplied by roughly 28 is 425 dollars an ounce. @31, 30 wasn't making up the number, just using the estimate.

The state estimates 3 a gram as a pre-tax wholesale price, which is a bit over 1300 a pound. Under full legalization that figure seems way to high, but bear in mind growers would have to avoid the feds (no role for philip-moris yet, although I don't understand how their evilness will make their weed suck) making the system much more analogous to CA's minimally regulated (but pretty awesome!) medical system. I remember reading stories of $2000 pounds that couldn't be sold because of a glut so the estimate seems roughly reasonable. What seems unreasonable is that consumers are going to spend 16 a gram. That would be over 60 an 1/8th a markup of over 500%. I live in NY where production is 100% illegal and people pay around that. Yeah, it'd be nice to buy it once or twice for the novelty of the legality, but I'm pretty sure the presence of growers legally selling thirteen-hundred dollar pounds is going to bring down the gray market price. If the state wants to maximize revenues they're going to have to lower taxes. I hate to say it but I think we're on the wrong side of the laffer curve for once.
38
Why are the cartels and others engaged in the marijuana industry? Massive profit. Marijuana costs very little to grow and it sells at a mark-up unrelated to actual production costs.
39
@david aquarius

The neanderthals in Eastern WA say vote YES on I-502. Come on over and meet the neanterthals sometime!
40
There are Three very big things that make I-502 a problem for me, even though I am a patient and even though I would imbibe without a medical allowance to do so.

1. Should I-502 pass, only those who have certified, COMMERCIAL grows (giant warehouse) will be ALLOWED to produce their own medicine-All self producers and small collectives-those that aren't making money hand over fist-would be illegal and shut down. A lot off people talk about the number of dispensaries who are not "in it for the medicine" and are "just trying to make money" and talk as if I-502 will stop this-it will do the opposite-giving them all the power to grow and be the only people who can afford my second objection.

2. Should I-502 pass, Cannabis prices will DOUBLE instantly just from the excise tax. 25% excise tax to producers+25% excise tax on wholesalers,+25% tax on retailers, and lastly a 25% tax to the consumer. (Add this to shutting down the small timers and the price goes even higher-just like with anything else). Just imagine--that $35 you spent this week-will be $70 or more as soon as these taxes go into effect.

3. All patients would constantly be guilty of DUI, or would have to choose to give up their right to drive.

Rev. Momma Glo