Something that has always worried me is that when marijuana legalization is implemented, it will be taxed so high that the transition won’t be as successful as it could be. One of the biggest arguments that we have made for so many years in support of marijuana legalization is that it would demolish the black market. However, that will only work if legal marijuana prices are better than the black market prices for the same thing. Most people aren’t going to drastically change their spending habits to pay a significantly higher price.
I think it’s going to be hard to find a marijuana tax rate that pleases everyone. If it’s too low it won’t generate the revenue that was promised to the government, which opponents will point to early and often. On the other hand, too high of a tax will push customers away from the legal market and into the black market. What do readers think is a fair rate? I personally think that proposals for a 30%+ tax on marijuana is way too high in Colorado and Washington. I would personally feel more comfortable at about 10%, which is still very high compared to other taxed products.
The way the tax rates play out in Colorado and Washington will largely affect future legalized states and how they handle their tax rates. Below is a great video of TWB contributor Radical Russ Belville discussing this very topic: