Quote:
Originally Posted by YYC in LAX
Is there any chance that the complete legalization of pot and in-store sales would actually increase the cost? i.e. Canada's high tax rates for alcohol/tobbaco.
Or is the idea (for legalization advocates) to have in-store sales as well as people growing out of their homes and selling privately under the table?
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This is something I wrote out on the last page:
Quote:
Originally Posted by HOOT
Let's assume it would cost $60/oz to produce, even though it should be much lower, cigarettes cost about $15 a carton to produce and that's almost 8oz of tobacco.
Carton of Marijuana(1oz) - 8 Packs(1/8oz):
Cost to Manufacture: $60.00
Federal Excise Duty: $4.26
Provincial 'Tobacco' Tax (BC): $55.50
Wholesale Margin (10%): $11.98
Total Wholesale Cost: $131.74
Cost Per 'Pack' (1/8oz): $16.47
Retail Markup (20%): $3.29
HST (BC): $2.37
Total Price/Pack: $22.13
Few things to note:
- Federal Excise Tax $2.13 for tobacco
- Provincial Tobacco Tax (BC) is $37.00 for tobacco
- Wholesale Margin is 6% for tobacco
- Retail Markup is 13% for tobacco
- HST (12%) isn't charged on tobacco
Currently 1/8oz costs an average of $40-50. So for their to be a profitable black market the government would really need put excessive taxes on marijuana, even more than the 1.5-2x I estimated compared to cigarettes. Now if they actually taxed it like tobacco and cost to manufacture is closer to the real thing, we would be looking at ~$10.35 for 1/8oz to the consumer.
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Assuming the government used the taxes and profit margins for marijuana that I listed above you would be looking at ~$6,000,000,000 in tax revenue, $1,200,000,000 in sales for the manufacture and $330,000,000 in retail sales. Currently right now that money goes into the pockets of organized crime.
So I guess the question is, who do you want to have $7.5b in their pockets, government and tax paying companies or criminals?