California voters thought approving the recreational use of marijuana would end the black-market drug trade. It did not.
Even as the law took force last year after overwhelming voter approval, the underground market is flourishing. The reason can be summed up in a single word — taxes.
Or rather, avoiding the tax levies tied to the growing, distribution and sale paid by legal marijuana businesses.
California's marijuana tax collections are not even close to what lawmakers had anticipated, even with nearly 40 million potential legal marijuana customers.
But expectation and reality are different creatures, and state officials said recently if marijuana tax collections continue on their current pace, the state will collect $270 million this year. A tidy sum, to be sure, but more than $85 million less than had been predicted.
The industry is the newest in the state, and therefore regulating it continues to be a work in progress. New industries are generally like that, especially ones that have heretofore been patently illegal.
The paradigm shift in public attitudes about the benefits/risks of legal marijuana also has kept the market from settling in. And then there are those staggeringly-high tax rates for players in the new industry.
And while public perception of legalized marijuana is moving toward overall acceptance nationally, segments of the corporate world remain skeptical. Many banks, for example, are shying away from taking marijuana industry deposits, because selling marijuana remains a federal crime.
The local and state taxation issues will eventually work themselves out, but what a legal marijuana industry really needs is for the federal government to jump on the band wagon, which if handled properly, is yet another promising source of tax revenues that can be used for all kinds of public services.
As it stands in California, the lack of cohesive, comprehensive regulatory policies is helping the marijuana black market by maintaining a space in which no government taxes are paid.
Instead, the lack of such cohesion is compelling illegal grow operations to flourish, putting more strain on local and regional law enforcement agencies to expend resources that could be put to much better uses than having officers tromping around in the woods, sniffing out and eradicating the illegal grows.
All this must start at the top, as in the governor and Legislature. Once state policy is firm, local jurisdictions — which can now make their own laws — will at least have guidelines to follow.
Several bills have been floated in the Legislature, but none have managed to grab much traction, perhaps because too many lawmakers still have those visions of billions in tax revenues rolling in, helping ease some of the state’s budget issues.
But the problem with inaction is that without a reasonable, non-punitive tax policy, what revenue stream does exist with the legal industry may well be eaten alive by the costs law enforcement agencies will incur trying to run down the illegal operations.
The state has had plenty of time to recognize this problem, and now our elected leaders need to do something about finding a solution. The end result may not be what lawmakers dreamed about in the run-up to marijuana legalization, but it needs to be realistic, and recognize the challenges local law enforcement agencies will face if this current situation is allowed to continue.
The legal marijuana industry has been established. Now it needs rules and guidelines by which to function in a way that does not encourage the existence of an illegal market.
Our police don’t need to be chasing marijuana growers. They have far more productive responsibilities.