Are high government marijuana taxes really causing the persistent black market?

Cannabis advocates have argued for years that legalization is key to ending the black market pot trade. However, it has been more than a decade since Colorado became the first state to legalize the leaf for recreational use and the illegal marijuana market didn’t go anywhere.

Some reports show that 80% of cannabis sales in California are still produced on the black market despite full legalization. Nevertheless, legalization is not to blame, according to the advocacy groups. They make high taxes as one of the main reasons black market marijuana won’t die.

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“By increasing the price of marijuana for consumers, these costs undermine an important competing purpose of legalization: eliminating the black market,” claims a Political Study was published by the Reason Foundation last year. “As alcohol and cigarettes have shown, excessive taxation can influence consumers’ choices to patronize the black market.”

In many ways, even without the high tax rates, national marijuana legalization has fueled black market trafficking across the country. Aside from an influx of unlicensed pot shops operating in legal states – making it difficult for legal establishments to remain profitable – illegal growers are using liberal cannabis laws to produce surplus and illegal cannabis Areas to export.

As I wrote in a 2018 column for Forbes, Marijuana legalization makes the black market in prohibition states better. It allows cannabis users to purchase different strains, concentrates, edibles, and everything else in places like Indiana and Kentucky, where weed is still illegal as ever. This crucial part of the illegal trade has nothing to do with high taxes.

Everything revolves around demand.

Taxation rather than criminalization is what cannabis advocates have tried to sell for decades. It was the leading benefit long before anyone ever thought weed would eventually become legal. “Can you imagine how much money the government would make if they just legalized it?” was the typical gossip coming from the mouths of Doob defenders. But now they are complaining that the tax system is not all it is supposed to be. Still, it’s not even the case that local and state governments fail to make significant income from selling weed to adults aged 21 and over. Colorado continues to collect roughly $ 50 million per month from legitimate pot shops.

RELATED: Marijuana Legalization Makes Black Market Weed Cheaper, Heroin More Expensive

Nonetheless, the illegal pot trade doesn’t seem to be working anytime soon. As we’ve seen over the years, states that have legalized recreational marijuana are unwilling to give up tax dollars to cripple the black market. Illinois has one of the highest tax rates in the country. Meanwhile, Colorado voters will decide later this year to increase pot taxes to encourage extracurricular learning.

Will this migration drive more customers to the black market? Some industry experts argue that Colorado cannabis users are too invested in legal weed to return to the black market now.

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“Even if taxes rise two inches and black market prices fall, an eighth of weed is still the same price – if not cheaper – as a weed dealer in 2014.” wrote Herbert Fuego for the Denver Westword. “That’s good enough for most people who don’t smoke every day, and heavy users can now find the most reliable concentrates in pharmacies.”

Other cannabis industry officials admit the black market pot trade is likely to continue for a while. “I don’t think we’ll ever completely eliminate the illegal market, I think that’s probably unrealistic,” said Steve Hoffman of the Massachusetts Cannabis Commission told Politics.

RELATED: Why the Black Market Continues to Thrive – and What Is Being Done About It

The real reason black market pot trading is persistent is not because of high taxes. It is a nationwide ban. Once the federal government legalizes it like alcohol and tobacco – something Senate Majority Leader Chuck Schumer is trying – more states will jump on the trend, if for no other reason than tax revenue. Schumer’s plan includes a 25% tax rate that some states fear will cause financial hardship. “If a national market is not introduced carefully and gradually, large companies, especially existing tobacco companies, can immediately move into new markets, displacing and displacing smaller players.” wrote Colorado’s Attorney General Phil Weiser

However, it will be these large corporations that have the best chance of competing in a tax-free black market.

Ultimately, adult cannabis use laws in any state are the only way to effectively fight the black market. As long as there is a ban, it will allow criminal organizations to capitalize on it. Even though it’s perfectly legal, just like alcohol at the end of the federal ban, illegal operations will hang around for a while. At some point, however, people will pay to get their pot legally, and the black market will almost no longer exist. Almost.