Pubdate: Tue, 27 Nov 2012
Source: Surrey Leader (CN BC)
Copyright: 2012 Surrey Leader
Contact:  http://www.surreyleader.com/
Details: http://www.mapinc.org/media/1236
Author: Jeff Nagel

POT TAX ESTIMATES BASED ON DOUBLING PRICE OF WEED

Chasing too much revenue may keep black market alive

Taxing B.C. bud could generate hundreds of millions of dollars in
provincial government revenue each year, but likely not billions, a
new study suggests.

The study, prepared by UBC and SFU researchers and published in the
International Journal of Drug Policy, estimates B.C. marijuana users
spend roughly $500 million a year on pot.

The Stop The Violence BC campaign to legalize marijuana has used that
figure to infer B.C. could reap $2.5 billion in revenue over five
years by heavily taxing the drug.

That would mean at least doubling the current price of weed to
generate the same amount in tax if it were sold legally in the
province - a scenario some observers have warned could keep the
gang-controlled black market alive and well.

Washington State, with a similar sized pot-smoking population, has
come up with its own estimate of nearly $2 billion in government
revenue over five years from taxing marijuana. Voters there approved
legalization in a referendum earlier this month.

Its planned 25-per-cent tax would be levied not just once but on each
wholesale and retail sale, and other state and local taxes and
licensing fees would also apply.

Kevin Hollett, a spokesman for Stop The Violence, defended the idea of
tax levels that sharply drive up the price, noting taxes make up 81
per cent of the retail price of tobacco.

But SFU criminology professor Neil Boyd said governments hungry to
plunder the pot market should be careful how much money they try to
extract.

"The current price on the black market of marijuana is $200 to 300 an
ounce," he said. "If people who are going to tax and regulate it were
going to sell it for $600, you're still going to have a black market."

Another criminologist, Daryl Plecas, has argued high taxes just keep
the door open for organized crime.

He said the main market for gangs would go up in smoke if pot was made
legal for anyone to grow and possess and government made no attempt to
tax or regulate it, but added that only works if consistent laws are
applied across North America.

Boyd said he believes governments could tap a major flow of revenue
under legalization without driving too much trade underground.

Alcohol is heavily taxed, he noted, but there's no significant black
market.

He agreed illegal trade will remain a factor as long as there's a big
export market.

A North America-wide scheme would be best, he said, but predicts
there'd be "a really significant change" if even half the U.S. states
taxed and regulated pot.

The new study's estimates were based on an average price paid in B.C.
of $7.50 per gram, although it cautioned most pot smokers may pay more
than that.

Washington's estimates assumed a $12-per-gram retail price, four times
the estimated $3-per-gram cost of licensed marijuana producers.

Past studies suggest B.C. grown marijuana is worth $7 billion a year,
with at least 85 per cent going to export.

The number of pot grow-ops in B.C. is thought to have nearly doubled
between 2003 and 2010.
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MAP posted-by: Matt