Tax revenue from Colorado’s legal pot sales is falling far short of expectations:
When voters approved recreational marijuana sales the state predicted it would pull in more than $33 million in new taxes in the first six months. The actual revenue came up more than $21 million short.
The problem is that buying pot is less expensive on the streets where people don’t have to pay taxes or fees.
Medical marijuana is also less expensive than recreational pot, so those with medical cards are sticking to buying that way.
Don’t confuse legal pot with a free market for it. Supplies are constrained by a maze of legal restrictions on what is a weed that can grow most anywhere. Yes, the high-quality stuff is more expensive to produce, but not that much more expensive. Denver lawmakers very smartly put together a pot growers cartel, to which Denver holds the strings. And of course pot shops are similarly restricted. What we need is a modern Bill W. to found Rent Seekers Anonymous.
There might be something else going on here as well. It may well be that recreational pot just isn’t as popular as many people expected it to be. I suspect that most non-smokers didn’t imbibe because we had better things to do, and not because the stuff was illegal. I know for certain that I never met a smoker who was ever more than delayed by prohibition. Deterred? Only when a cop was actually present.
People who weren’t buying during pot prohibition are not the customers still buying the illegal stuff off the street from unauthorized dealers. While there might have been an initial rush of curiosity smokers early this year, they don’t seem to have become regular smokers, or else the tax revenues wouldn’t have fallen so drastically short of expectations. What we have here is at least some evidence that pot is hardly the “gateway drug” many people feared — even to just smoking more pot.
If Colorado’s experiment proves anything at this early date, it’s that black markets still function more cheaply than state-sponsored cartels. It also smashes that silly hippie notion that if we’d just legalize it and tax it, we could “eliminate the deficit, man!” Most importantly, our relaxed laws lend credence to the libertarian notion that the vast majority of Coloradans are adult enough to make their own recreational drug choices — and that most choose to just say no.