Some Marijuana Users Prefer The Un-Taxed Variety
In Colorado, the average Marijuana customer prefers to buy a ‘stash’ in a well-lit, regulated store. Despite some potential danger, it can be cheaper to buy Marijuana from an unlicensed drug dealer.
Colorado voters approved recreational sales in the state agreed to a 12.9% state sales tax and a 15% excise tax on it. Local jurisdictions can add their own taxes, all boosting the price to the consumer.
Medical Marijuana is also taxed, but at the lower rate of 2.9% on the sales.
Such taxes mean an 1 oz of Marijuana can go for $400 or more at a state licensed store, depending on quality and potency, 1 oz on the ‘Street” can run between $200 and $280, depending on how much a dealer wants to profit on the “Bud.”
Underground dealers are not burdened by complex rules, regulations and licenses fees.
The barriers to entry the legal Marijuana have created the platform for a “Black Market,” and with the taxes and overhead it makes that sub-Rosa market impossible to get rid of.
If some Colorado drug dealers have lost business to legal retailers, some also have made up for it by transporting Marijuana to other states.
Marijuana cases can be hard to prosecute and are not cost-effective, so police often prefer to focus attention on drugs like Heroin and Meth (methamphetamine) according to local law enforcement.
Some illegal dealers have taken the position that because retail sales are legal, authorities are looking the other way.
A public policy professor at the University of California, Los Angeles (UCLA), helping the State of Washington set up its legal Marijuana industry, said the “Black Market” survival has less to do with taxes than with a shortage of legal stores.
Colorado has more than 160 state-licensed stores, but they are concentrated in the Denver area. Many towns and small cities do not have any legal Marijuana stores.
“When there are more stores and more products in the stores and prices settle down, then we’ll see,” he said. “I would be very surprised if the illicit market can compete at all.”
Time will tell.
Stay tuned…
HeffX-LTN
Paul Ebeling
Paul Ebeling is best known for his work as writer and publisher of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly-regarded, weekly financial market letter, where he enjoys an international audience among opinion makers, business leaders, and respected organizations. Something of a pioneer in online stock market and commodities discussion and analysis, Ebeling has been online since 1994. He has studied and worked in the global financial and stock markets since 1984.
Some Marijuana Users Prefer The Un-Taxed Variety
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