By Guy Page
This morning, two Vermont legislators assured me that if Vermont passes S.54, the tax and regulation of marijuana bill now in House Government Operations Committee, the black market will dry up. When I said the black market hasn’t decreased in other “tax and regulate” states, they both laughed and shook their heads.
It is an article of faith among some legalization supporters that consumers will choose legal pot over buying on the black market. To answer this question, one must see what’s happening in other “tax and regulate” states.
Colorado: Rocky Mountain PBS reported in Dec. 12, 2018 — “Five years ago, Colorado voters decided to stop sending adults to jail simply for using marijuana. People over 21 in the state can legally purchase controlled amounts of marijuana and grow it in their own homes for their own use. Proponents said the legalization of cannabis would have a healthy side effect: it would kill the sale of illegal marijuana in Colorado. But something unexpected has happened in the years since: more people are being charged with serious marijuana-related felonies (like cultivation and possession of large amounts of the drug) in Colorado than in the years before legalization.”
California: The Los Angeles Times reported February, 2019 — In an article headlined “California’s black market for pot is stifling legal sales,” the LA Times reports: “A new report from the state Cannabis Advisory Committee on the first year of legal pot sales in California says there is problem that requires urgent action: “Fragmented and uncoordinated” enforcement has allowed the black market to flourish, threatening licensed business with unfair competition.” Other reports show 80% of marijuana sales in California are illegal, with legal pot revenue lagging $345 million below 2018 projections.
Michigan: Detroit Metro Times reported February, 2019 — In article headlined “Why marijuana sales on the black market are blooming in Michigan after legalization,” the Times reports: “Dispensaries and growers are also required to pay new taxes and the steep price of testing all of their products for impurities. Since illicit retailers aren’t straddled with those costs, they can offer lower prices and undermine tax revenues.”
In fact, the only state where black market sales may have suffered is Washington State, where drastic over-production has dropped the cost (and state tax revenues) of legal pot so low that it’s actually cheaper in legal stores than on the black market. That wasn’t supposed to happen. It’s an anomaly that revenue conscious state officials and the marijuana industry are eager to fix.
These news stories all say the same thing: tax-and-regulate legal marijuana won’t reduce the black market. And, we already know it won’t raise revenue for anything more than its own regulatory maintenance, and maybe a few dollars for prevention programs. So, the problems that legalization were supposed to solve, won’t be solved. If anything, they will be worse.
So Vermont legislators and Gov. Phil Scott may well ask themselves — why are we doing this?
Statehouse Headliners is intended primarily to educate, not advocate. It is e-mailed to an ever-growing list of interested Vermonters, public officials and media. Guy Page is affiliated with the Vermont Energy Partnership; the Vermont Alliance for Ethical Healthcare; and Physicians, Families and Friends for a Better Vermont.