Polis’ measure would regulate marijuana the way the federal government handles alcohol: In states that legalize pot, growers would have to obtain a federal permit. Oversight of marijuana would be removed from the Drug Enforcement Administration and given to the newly renamed Bureau of Alcohol, Tobacco, Marijuana and Firearms, and it would remain illegal to bring marijuana from a state where it’s legal to one where it isn’t.
Via Ace. “ATMF” is certainly appropriate, cannabis is likely to be a cash cow in a time when most states are scrabbling for revenue.
In other news, Colorado and Washington are meeting with the feds and figuring out how to create a marketplace for the barely legal herb, meanwhile millions of stoners make plans to move to one of the two states but end up just hanging out on the couch instead.
On an economic note, I suspect that legalization won’t affect prices as much as some expect, because marijuana has become a boutique product that is cultivated in small, inefficient indoor plots, and there is still a lot of regime uncertainty that will prevent people from sinking $10M into the kind of serious indoor farming operation that might yield economies of scale — I expect taxes will eat up the lion’s share of the price reduction from legalization. Large-scale outdoor production is of course possible, but it tends to produce lower-quality product because it’s nearly impossible to prevent some fertilization (the unfertilized flowers produce the resinous trichomes which is where the psychoactive compounds are concentrated), though that’s less of an issue if the product is being processed into edible forms. It will be interesting to see how this develops.
Comments
9 responses to “Say Hello to the ATMF”
Hot house tomatoes are about $4 an lb. Retail.
And if they make taxes high enough there will be a black market.
Well… tomatoes are probably 95% water by weight. I don’t know of any comparable plant where you would grow it indoors and then sell the dried, manicured flowers. Maybe some kind of spice?
Yeah, $50/ounce on first-sale is a pretty hefty load, depending on where you live that might be enough to push production underground. IIRC there is actually a website that tracks local prices, should see how that compares in those states.
The taxes can be fairly high if you’re paying squeeze to avoid an ATMF raid. That’s one trigger-happy agency.
That’s the difference between prohibition and regulation. Under regulation you don’t have to have perfect enforcement, just a balance between the cost of taxes and the government’s willingness to commit violence.
Dave: Note that “$50/oz” is based on a 50 percent first-sale excise tax.
Which would mean that a distributor, under that scheme, would be estimated to be paying $150/oz.
However, I expect actual prices would be somewhat lower, due to competition and the fact that it doesn’t really cost very much to grow dope in quantity.
Unless the distributors mark it up another 75%, with those price assumptions, it’ll still be under current retail prices around here, with the bonus of being completely legal.
(And radically under retail prices for the non-bulk “I just want 1/8oz or a few joints” market, where retail markup in the black market is highest.)
Marijuana is easy to grow and easy to process. Easier than hothouse tomatoes. WAY easier than tobacco. When it’s legalized everyone and their grandmother will try to cash in with a couple of plants in their back yard and the price will plummet to essentially zero for a while before rising to whatever the market will bear. Which will not be much.
Southern Man, better keep your head. You should know about moonshine raids. Using it may become legal, but “making it” – not if the government wants to make money on it.
I just looked at my bag of Top tobacco. In Illinois and with taxes at a maximal level and paying at the high end $4/.6 oz. =~ $6.70 per oz. At the price we normally pay ($3.50) it is under $6 per oz. Which is under $100 an lb.
And most of that is tax.
@Simon – yeah, and that’s what legal marijuana will look like. BUT it won’t put you in jail for years. And that’s worth every penny to those who need it for some reason or other. Appetite? Glaucoma? I’m not even talking recreational use here. I do NOT know of any other simple appetite enhancer. Period. And many, many, many elders (and not a few non-elders) could benefit from just that ONE “side effect”.
Obesity epidemic may exist, but there’s also an anorexic epidemic among elderly and ill. (Ok per Nanny Bloomberg, I’m sure – at least they’re not fat. Starving to death is ok. Right?)
Southern Man — I don’t know, the profit margins for marijuana aren’t like those for cocaine or heroin, and prices in less formal markets tend to be sticky. I’ll bet retail prices drop less than 50% after legalization, at least for the first few years until the legal uncertainty fades it becomes more corporate.