States Need to Stop Taxing Marijuana

Jose Nino Comments

The legalization of marijuana in states like California, Colorado, Nevada, and Washington has been a boon for the marijuana industry.

A report from the Statista claims the marijuana sector created approximately 300,000 direct and indirect jobs in states where it has been legalized for recreational use.

Another benefit of legalization has been increased tax revenue. Seven out of the ten states where marijuana is legal already tax and regulate stores generating revenue off of marijuana sales. ZeroHedge reports these taxes are typically 10 to 37 percent higher than the local sales tax.

Marijuana legalization is great news for opponents of the Drug War. This failed government program has resulted in mass incarceration, infringed upon the civil liberties of countless Americans, and cost Americans nearly $1 trillion since its initiation in the 1970s.

Although political realities do limit our expectations for real liberalization measures, principled adherents of drug liberalization should have long-term plans of limiting taxation on substances like marijuana. Sin taxes have often failed to reduce the consumption of said activity.

But overzealous politicians could make taxes so draconian that de facto prohibition conditions emerge. In these prohibitionist circumstances, black market alternatives then arise which are often of questionable quality and more dangerous for consumers.

These kinds of tax increases also encourage politicians to maintain their reckless spending habits. In turn, taxes will be used as a political football to placate certain interest groups and grow the size of government. Some of the services where the tax money goes to are laudable, such as school construction, drug abuse programs, and medical research.

However, we need to start thinking beyond feel-good projects in the short-term. These kinds of services can be provided on the free market without coercive taxation.

David Boaz of the Cato Institute is correct in pointing out that the emphasis on marijuana regulation often goes overboard. He fundamentally understands regulation is designed to price out competition and to “serve to concentrate an industry and thus concentrate wealth.”

Long-term, states should be looking to grow drug freedom, not the government.

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