Pubdate: Thu, 17 Jan 2013
Source: Now, The (Surrey, CN BC)
Copyright: 2013 Canwest Publishing Inc.
Author: Matthew Claxton
Note: Matthew Claxton is a reporter and columnist for the Langley Advance, a
sister paper to the Now.


What is really at stake if B.C. follows Washington State and Colorado
and successfully legalizes marijuana?

Money, of course, that other green substance. Let's start with the
estimated value of the illicit pot growing industry here in B.C. It's
often claimed to be between $6 and $8 billion, a fairly rough estimate
given that none of the principals are filling out any corporate tax
forms or quarterly earning reports.

Even if it's lower than the estimates, it's a huge industry. By
contrast, in 2011 the entire forest industry had a value of just under
$10 billion.

If the local pot growing economy goes legit, we'll see some unusual
effects, only some of them strictly economic.

Everyone who argues for legalization points out that we can then tax
the bejezus out of marijuana. How much would that raise?

In B.C., the tax rate for small businesses is 2.5 per cent, 10 per
cent for big businesses. Let's assume, very conservatively, that we
get nothing but small Mom and Pop artisinal ganja growers and
small-scale retailers. Let's also take the lower $6 billion valuation
of the industry.

That would mean about $150 million in provincial tax revenues off the

But wait! The cost of growing pot will drop substantially if it's
legal, and grown in the open. Maybe it won't be that costly to sell?

Except that it will be taxed at the point of sale, too. So that's
another few million bucks a year. Sin taxes, plus sales taxes, add up
quickly. And that's not even considering the federal tax implications.
Then there are the personal income taxes that would be paid by those
legally employed in the industry.

So what about effects beyond the purely taxational?

We have no grow-ops in houses, because growing outdoors or in
greenhouses is cheaper, so there are a few more houses on the market
than otherwise. Not enough to bring down prices, though.

We have a whole lot of unemployed criminals.

Some fraction of them will go legit and turn themselves into small
farmers and storekeepers.

Others will not make this transition. I'm thinking of the Langley man
who stabbed another man to death purely out of the suspicion that the
other man might have stolen his pot plants. It's hard to imagine a
rage-filled killer fitting in well at a chamber of commerce meeting.

So some gangsters are going to try to move into the remaining illicit
drugs, like heroin and cocaine. There might be a gang war as the
crooks fight over the pieces of a smaller pie.

While we'll see more government tax revenues, this will be somewhat

A significant number of small businesses will close their doors.
They'll all be places that could plausibly accept a lot of cash
payments: restaurants, bars, hair and nail salons, corner stores, and
so on.

Because in every community where there are pot growers, there is a
need to launder money.

In the long term, our society wouldn't look a lot different. Some
people smoke pot now, some people will never smoke it if it's legal.
(Like me.) People commit crimes now, they're not going to stop if pot
is legal.

Things could be a bit more stable, both tax-and crime-wise in the long
term, but it won't turn B.C. into a magical land of unicorns and pixies.

But we don't make policy decisions based on false ideas that we will
create utopias or dystopias. We should make them based on what seems
like best practices. To me, it looks like things would be better with
legal marijuana than with the current system.

Matthew Claxton is a reporter and columnist for the Langley Advance, a
sister paper to the Now. 
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