Show Me the Facts

In my recent post, Disagree with the site? Feel free to argue with me, I received a comment from Michael lavimodiere regarding a suggestion to tax marijuana at $300 per year, per household that grew.

Michael writes:

My Suggestion Is To Charge $300 A Year For Who Ever Wants To Grow It. (With Plant Limit)
Now The Average Smoking Household Spends $300 Or More A Month.

So The 11 Months There Not Buying It Will Be Put Back In The Economy.
($300 A Month Per House Hold)
Now The Tax For Growing
Would Not Only Get California Out Of Debt But Could Do The Same For The Nation.

Plus It Would Cut OverAll Health Care Costs..
Make It Easier To Make Clothing, Paper, Fuel, Food & Building Materials & More
Which Equals Mass Jobs & Saving The Planet!!!

Taxing W/ Government Regulation Will Never Work.
(It’s A Plant & To Easy To Grow & Dosen’t Need Processed, Just Dried)

I first responded to him via the comment system, but I feel it is worthy of its own post because it may incite some good discussion.

My response to Michael’s suggestion:

The key thing to remember, in regards to any law, is one of the main requirements of a law is it must be enforceable. With that said, how much money would be required to build and maintain the infrastructure to enforce a $300 grow tax? Would this not still require DEA intervention to arrest/fine people illegally (i.e. not paying the tax) growing marijuana?

Just off the top of my head, why not treat marijuana similar to how we treat produce (such as a tomato plant). You only pay sales tax on a tomato plant/seed and are welcome to grow it and enjoy it as much as you like. If you wish to grow them commercially, then you have to purchase the correct commercial licenses as well as collect tax on the produce (bud) sold.

Done this way, there would still be all the benefits of legalization that you pointed out (in reference to the clothing, paper, fuel, etc.), and the system would have a very low-overhead to maintain (since you do not have to enforce a tax on such an easily-growable plant).

It may not create as much immediate profit as $300 per household, but in the long run I believe it would be more profitable due to the lack of money being spent on enforcement. Keep in mind, the more people growing, the more money is being spent on growing materials, which means more taxes and more economic stimulus regardless of any upfront tax.

Another problem with your suggestion that I just considered is the fact that not all marijuana plants are created equal. If you are paying $300 a year for the right to grow, let’s say, 50 plants, what would be the penalty for growing 51? What about harvesting your own seeds to grow the next batch? What if your entire batch goes bad or is fertilized? I’m sure many people would enjoy paying $300 a year for the best of the best bud… but realistically, there are many variables which seem to make a flat-rate tax unbalanced and inefficient.

It also would not scale very nicely… where you would have some people who only wanted/needed to grow a couple plants paying $300 alongside of another person growing dozens more for the same price. If this happened, why would someone pay the $300 when they can just purchase marijuana from the other person who is essentially only paying $10 or so per plant?

That leads into another problem… a type of “underground sponsorship” of plants where 1 “household” maxes out their allotment of marijuana plants, then ‘leases’ each plant out for a fee (including maintenance and such). Now instead of collecting $300 per household, a single grower is paying $300 to grow 50 plants at $6 per plant. He then “sells” the right to harvest a single plant to a customer at, say, $50. He can do this for 50 people, which makes him a gross income of $2500 per harvest, yet the state only see’s $300 of it (rather than the $15,000 under perfect circumstances using your suggestion).

What I am trying to point out is that everything costs money… even counting money and making sure people pay money. So the real question comes down to, in my opinion, is it worth it to maintain a costly infrastructure of government power… or is it worth it to let the market play itself out without the burden of additional red tape?

To use the tomato as an example once more, could you imagine the government attempting to keep tabs on every person in this country who grew their own tomatoes? Or gave them to a friend? Used them in a product at a bake sale?

My point is simple: Whatever the solution might be to legalize marijuana in this country, it must be scalable, efficient, and fair to all consumers. If it fails to do so, then it will ultimately fail at completely wiping out the underground markets.

A special thanks to Michael for posting the comment that sparked this entry. Again, my post is only based on my own observations. If you disagree, let me know and if I am wrong, please correct me.