The Black Market for Marijuana Still Exists Where it Has Been Legalized

An article at the Atlantic reports that the black market for marijuana still exists in states where it has been legalized. Along with the usual anti-White lies, the article attributes the black market to the high taxes on marijuana in the legal market. In Washington, the rate is 43.5 percent, while in Colorado it’s 25.9 percent.

I don’t think the tax issue really explains it. Yes, the legal producers have to pay the taxes, but they have a slew of theoretical advantages over illegal producers, most notably that they don’t have to hide their product or worry about it being seized and their employees arrested. The effective tax rate for the cheapest vodkas is >100% in some states, yet you don’t see a big black market for that.  [[Edit: I should note it’s lower for fortified wine]]

Rather than taxation, I think the reason why legal marijuana costs so much more is simply because the producers can get away with charging so much more. Demand for legal marijuana exceeds the supply. For now, there are a whole lot of roadblocks in the way of producing more marijuana. Landowners won’t lease land to grow it, banks won’t deal with producers, ect. The Atlantic article cites a (unscientific, as they admit) study of people who report how much more they would be willing to pay for legally sold marijuana, some said they’d pay twice as much and some said they wouldn’t pay anything extra. But a lot of people wouldn’t buy in the black market at all. They have no idea where it is, for starters. If people are willing to pay more, and the product is scarce, the sellers are going to charge more.

My prediction is that fifteen years from now there will no longer be a large “black market” for marijuana in the states where it is currently legal. The roadblocks will have been removed. Big companies will grow, process, and sell it on an industrial scale. A few people will still grow it at home and sell it to friends(growing at home is legal in some places) but, when considering the time and effort required, will not be able to make much money.

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2 Responses to The Black Market for Marijuana Still Exists Where it Has Been Legalized

  1. With the thoughts you'd be thinkin says:

    How small is the not-big blackmarket of illicit marijuana production? My thoughts are if it’s treated like alchohol in terms of sale and taxation there won’t be significant blackmarkets. While if it’s treated like tobacco the blackmarkets would be more significant, i.e. around 20% of cigarettes sold in Australia are smuggled in, UK is similar.

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  2. Anon7 says:

    Google “price of legal weed declines” there is a lot of evidence that the price of marijuana is going to get close to nothing, like bars hand out peanuts for free. It’s illegality that drives up the price.

    Like

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