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Originally Posted by CliffFletcher
But taxing pot to generate government revenue was one of the justifications - probably the biggest - for legalization in the first place. If the plan at the outset was to tax it at only 5 per cent, legalization wouldn’t have had anywhere near the public and institutional support.
And taxes are only one of the expenses commercial growers and retailers have above those of the black market. Infrastructure, regulation, licensing, employee benefits, marketing - all the costs legitimate businesses have that Terry doesn’t. Legal commercial pot just can’t compete with the black market when it comes to heavy and price-sensitive users.
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That was just governments being dumb and greedy. Yes, taxes were a part of the sales job, but no one thought they would be as high as they are.
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The debate over taxing marijuana comes amid warnings from the federal budget watchdog that high taxes on the drug will only boost the illegal market.
According to the Parliamentary Budget Officer, governments have little leeway to tax marijuana and remain competitive with unlicensed producers. The PBO estimated in a report last year that legal cannabis would cost about $7.50 a gram before taxes, compared with $8.80 for illicit cannabis.
"The government may have little fiscal space to apply tax without pushing the price of legal cannabis significantly above the illegal market price," the PBO report said.
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https://www.theglobeandmail.com/news...ticle36497799/
Industrial legal pot production has many benefits over illegal stuff as well. Much easier to market to customers, and economies of scale in massive farms make sit hard for smaller illegal operations to compete. Yes, there are other cost, but 30% tax on your product is by far the largest handicap.
Had they wanted the tax dollars so badly, they should have started with a very low tax to crush the black market, then they could tax a larger portion of sales. But greedy governments got greedy, and now you attempt to ignore a huge cost difference as the reason why the black market still exists. This is all pretty basic obvious stuff.