Part 2: MMJ limits cannatax to a fraction of what it could be
When your state signs up to be an MMJ state, everyone in your state automatically forfeits all but an ineffectual fraction of the cannatax which could be collected in a fully legal and regulated landscape.
Going down that road — instead of repealing prohibition altogether — means your state will now receive a complimentary ball and chain, available in any color you like, as long as it’s black. The iron orb, with its chain encircling the earth, limits the cannatax your state collects to maybe five percent of what it could be, wants to be, and deserves to be.
Cannatax figures don’t get around much. So, no one knows what they’re missing.
The few figures which have been released by academic forecasters beholden to the DEA — who can’t tell a rolling paper from a Post-it note — are low. As in way low. Read all about it in “Cannatax Demystified,” which also provides ballpark figures and a breakdown of how they were compiled.
Meanwhile, the old guard press keeps perpetrating the hoax.
A perfect example ran in the March 24, 2011 edition of The Denver Post, “Medical marijuana sales to reach $1.7 billion in 2011, report says.” That’s for the entire USA, not the state of Colorado. Let’s zoom in on the story:
Medical marijuana will become a $1.7 billion market in 2011, according to a new report released today by See Change Strategy LLC, an independent financial analysis firm that specializes in new and unique markets.
This typically brief blurb provides not one detail about how that figure was calculated, presuming, per usual, that no one could possibly follow the math. Certainly no one The Post’s editorial staff can follow it. The Post regurgitated the statement without questioning the number in any way, shape, or form [not that any other “great metropolitan daily” did, either].
Fortunately, Cannabis Commerce is here to question it in every way, shape, and form.
Want reaction? That’s what I’m here for.
I suppose The Post provided its $1.7 billion figure to pique my interest, and to impress me on some level. Otherwise, why print the story? Stories like “Dotted White Lines Don’t Need Repainting” don’t get a lot of ink. So, am I impressed by $1.7 billion?
I’m sickened by $1.7 billion.
I’m repulsed by $1.7 billion.
I’m disgusted by $1.7 billion.
It piques my interest, all right. Because with the crippling adjective in “medical marijuana” surgically removed, and prohibition laid to rest, that anemic annual sales figure could be doubled every week.
In fact, it is doubled every week — untaxed. What a wonderful world for Mexican cartels and outlaw US growers! Vaya con dios!
But in a world without prohibition, wouldn’t those zany, Uzi-toting scofflaws just keep on keeping on, avoiding paying taxes on the lion’s share of cannabis sales? No, they wouldn’t. Skirting authorities is a major inconvenience and a major expense both cartels and outlaw botanists could live without. They’d both accept partially reduced gains — in exchange for freedom to transact without facing incarceration— in a heartbeat.
Why am I sickened, repulsed, and disgusted . . . as opposed to impressed?
According to Jon Gettman, author of the classic Lost Taxes and Other Costs of Marijuana Prohibition, one of the most lucid voices in the cannabis chaos — over $113 billion worth of marijuana is going to be sold in 2011. Want that from a national news source? CNBC states that the figure may be $120 billion on its Marijuana and Money website.
So wtf is $1.7 billion?
I can tell you what $1.7 billion in MMJ sales isn’t: it isn’t even two percent of total MJ sales. $1.7 billion is newt piss!
If $1.7 billion were part of a cannabis crumb cake, it wouldn’t even be the crumbs. It would be the dusting of sugar on top.
So, how much cannatax is possible for that amount of sales? Good question.
Economics 101 tells us that the amount of “government receipts” [i.e. personal and business state and federal income taxes; local, county, and state sales taxes, FICA etc.] individuals and businesses wind up paying on any given product averages 28.70%.
Therefore, the cannatax on $1.7 billion works out to about $487 million.
The cannatax on $113 billion comes out to about $32 billion. Or sixty times as much. There’s actually lots more potential cannatax — “sin tax” springs to mind. For the moment, let’s remain plaid-pants conservative.
When an industry wants to contribute a bare minimum of $32 billion in annual cannatax, and presently it’s chipping in maybe $487 million, it’s hauling around a ball and chain.
Forgive me if I’m not dancing the Charleston with a lampshade on my head over the tremendous inroads the MMJ “industry” is making. Quotes since industries in chains don’t count as industries in my book.
And industries in chains can’t do a lot to prop up vital services and maintain infrastructure.
Consider the following:
- It would be nice if libraries could stay off the extinction watch, which currently includes rural US Post Offices. Surely cannatax collected in a fully legal, regulated landscape could pay someone to open the doors, turn on the lights, and stack the shelves? Is that a psychedelic thought? Forgive me if I’m reaching too high.
- Maybe I’d like to spend five minutes at a soon-to-be-extinct post office instead of a half-hour every time I have to buy stamps. Stamps no longer come in a machine, cause vending machines require tending to by humans that there is no money to pay.
- If I need a duplicate title for my car, it would be refreshing if the harried customer service rep over at the Department of Motor Vehicles didn’t have to tell me, “Our computer system from the 80’s is down again, so we’ll have to mail it to you in a few weeks, that is, assuming someone still knows how to fix it.”
- The current budgetary crisis has forced states to slash mental health services. Who knows what certain individuals currently receiving mental health services will do when that is no longer the case?
Cannatax collected in MMJ states isn’t going to make much of a dent on any of that.
Conversely, if MJ cannatax was collected, the city of Denver could build marble post offices or erect a Cannabis Exchange in the Greek Revival style.
Ironically, states are already dependent on liquor and tobacco taxes to maintain vital services — yet they’re barely hanging on. According to Stephanie Saul, writing for The New York Times:
The government has become a financial stakeholder in smoking, some would argue, even as public health officials warn people about its deadly consequences. The reliance of government coffers on the taxes smokers pay, and on the tobacco settlement money, essentially provides a financial cushion for state governments and could be viewed as a government guarantee for the survival of the tobacco industry. Would politicians shut down an industry that supplies so much money?
Yes. The cannabis “industry.”
To be precise, politicians haven’t completely shut down the stuttering trickle of commerce they — in their infinite munificence — permit.
They just put it in bondage.
From what I’ve seen, even with the tobacco settlement money and sin taxes from alcohol and tobacco, whatever “cushion” states have that Ms. Saul is referring to can’t be very comfortable. Everyone knows how well vital services are being maintained. Things are so desperate, politicians are running around with their heads chopped off, trying to identify fresh sources of revenue.
Duh!!!!!!!!!!!!!!
The potential rewards of collecting unfettered MJ cannatax are off the charts. Here’s where it would come from:
- City sales tax, usually around 3.9% of the sale price.
- County sales tax, usually another 3.9% of the sale price.
- Personal federal income tax, around 25% for most workers.
- Personal state income tax in most states, around 10%.
- Corporate federal income tax from huge entities like Big Pharma, Big Food, Big Agra, Cosmetics, et al.
- Corporate state income tax from huge entities like Big Pharma, Big Food, Big Agra, Cosmetics, et al.
- Import/Export taxes
- Licenses and Fees, which vary but can add up in a hurry considering most MMCs [medical marijuana carecenters including dispensaries, clubs, co-ops, collectives] need separate licenses for retail, cultivation, and medibles.
- Sin tax, a.k.a. excise tax, which often runs fifty percent or higher for sin twins alcohol and tobacco. Taxing a healing herb at those rates would ruffle a lot of feathers, but it could happen.
There’s more, but nosh on that on for now.
There’s ample pot-ential cannatax to keep things humming along “the American way” until karma catches up. Or there would be, if we rise up and repeal prohibition.
Table of Contents:
Part 1: Dynamic MMJ laws force businesses onto the streetPart 2: MMJ limits cannatax to a fraction of what it could be
Part 3: MMJ limits job incubation to a fraction of what it could be
Part 4: MMJ limits cannabis' contribution to GDP to a fraction of what it could be
Part 5: Ironically, MMJ blocks clinical research into cannabis’ healing properties
Part 6: It's taking the tranquilizing drug of gradualism
Part 7: The foot-in-the-door theory is flawed
Part 8: Emphasizing MMJ in the present pushes true legalization back to the future
Part 9: MMJ trivializes recreational and industrial use
Part 10: Fuck the patients
[Bonus] Part 11: It keeps 45,000 pot "offenders" imprisoned
[Bonus] Part 12: It keeps the DEA in business
[Bonus] Part 13: Cities and counties can vote it out anytime
7 comments
Thomas Chong says:
Jul 25, 2011
You must remember medical marijuana has opened the door that can never be shut again so rather than oppose or criticize the the “medical approach”, embrace it. The truth is we all smoke for a medical reason whether we know it or not. Stress relief is probably the number one “medical” reason we healthy people smoke it. “It relaxes me”. ” Helps me enjoy my time off” or helps me enjoy doing boring things. Airline pilots use it for long flights. Athletes use it to wind down after a hard game or practice. Stress relief. But the most compelling argument has to be the “take it or leave it” qualities. Pot is not physically addicting. Studies have shown people who smoked for years can and have stopped cold turkey with no physical side effects. And the good news is stopping a heavy pot habit can be beneficial to ones well being. So don’t get cute and knock the medical approach and realize the number one harmful addiction in America is junk food.
This addiction is killing Americans faster than drunk drivers. Over eating leads to heart problems, diabetics, and a host of other ailments that is encouraged by our so-called American culture of television ads and sit/coms that promote unhealthy habits as a way of life rather than a way of death. Pot, hemp, cannibis was given to us by our Creator when the Universe was created.”I give thee Green Herb and it shall be for meat” Genesis 29. And it was the disgraced President Nixon who gave us the DEA criminal gang and the money draining drug laws. So lets support the medical approach toward pot and educate the masses about the many ills pot can help with instead of trying to be ultra clever with the outlaw comedian approach….tc
Lory Kohn says:
Jul 25, 2011
I could take exception to several of your points. However, you are the co-author of the immortal lines:
mama try to tell me
try to tell me how to live
but I don’t listen to her
cause my head is like a sieve
So you can write whatever you want, whenever you want to write it, and I’ll be grateful for the contribution. Thank you for taking the time to comment.
Don McAdams says:
Oct 15, 2011
Len Richmond’s movie is excellent. Under your picture of the youtube video, you state that, “Schedule 1 drugs can’t be tested on humans.” This is actually not the case. NIDA has a mandate that no Schedule 1 drugs can be tested for any benefits, but tests for potential harm are ran all the time. For a host of research, I recommend, well, Len Richmond’s movie. As something just as valuable, if not more so, is this 20 minute seminar from Dr. Abrams, http://projectcbd.org/Medicine.html#CME . He has over 30 years of NIDA funded MJ research that he talks about, as well as other research being done around the world, Dr. Guzman’s work from Spain being the most ground-breaking to date, mitigating glioblastoma multiforme, or brain tumors. Then I would suggest Dr. Tashkin’s NIDA funded 30+ year study confirming no link to MJ and lung cancer – it even suggested a protective effect from the cigarette smokers. I agree with Tommy Chong and Jack Herer – all use is medical. That being said, the MMJ initiatives may have a huge flaw of not offering enough, especially in the way of research, but it was a necessary step. We would never be talking about full legalization or repealing Prohibition 2 in a serious tone today if it wasn’t for the MMJ road paved for US. And yes, certain indicas high in CBD are better for physical treatments, while sativas high in THC and THCV are better for mental treatments, so recommended strains for the ailments isn’t entirely voodoo… You do bring up a necessary reminder for US all, though – no matter if we’re doing a medical or recreational attempt, research should always be included in the wording…
Lory Kohn says:
Oct 19, 2011
I disagree with your theory that MMJ is paving the way for full legalization, as opposed to blocking it — but respect your opinion. More on this soon. btw, is cannabis effective against spam?
Don McAdams says:
Oct 25, 2011
There is some truth that if Cali would have fully legalized cannabis in ’96, we could likely have 16 legal states today instead of medical states. The growing plethora of medical research could very likely have kept cannabis in a medical box for some time, and may have slowed the repeal / legalize progress. Considering how rigid the government still is on “legalizing,” though, medical really was (and unfortunately still is for the most part) the best avenue to get some freedom. I agree that there needs to be a break from medical to legal, and that would have been nice to see happen already. I believe that its lack of harm and vast medical efficacy will create a rapid shift from medical to repeal very soon, though, and that, almost unarguably, would have never been possible had cannabis not been a hot topic already these past several years, and that would have never happened without mmj initiatives being passed by the People. Perhaps it’s not really a paved road. It’s more like a dirt trail, and we need to get on the interstate. I agree with your sentiment of abandoning the medical model now, that time has come, but it’s not as easy to say for the 34 states that have no mj allowances… Our legalization init is lagging in Ohio, and still has all the hoops to get through yet, while the medical init here has jumped through the last hoop and is now collecting the half million signatures needed to get it on the ballot for 2012. I’m still gonna support both efforts, even though I have no qualifying medical condition…
Lory Kohn says:
Oct 25, 2011
Don, thanks for providing those links and sources to the groundbreaking research that has been performed.
You seem to like to write a bit — how’s about writing an article for CC clarifying what research can and can’t be performed on Schedule One drugs in the USA, and perhaps contrasting those regulations with international regulations?
I will admit that there have been benefits that have evolved from the flirtation with MMJ. For example, it has really pushed the envelope in medibles. I’ll be at my “caregiver,” Evergreen Apothecary today, listening to customers’ tales of how medibles have been helping them with their conditions, a variation on the “treat yourself” theme …
air jordan 11 says:
May 27, 2016
I want to say – thank you for this!