Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

California is in that awkward stage between regulation and subsidization.

This is exactly what I figured would happen when drugs were legalized. Obviously, dealers will ALWAYS undercut government-authorized sellers--there's no way to avoid more-expensive wholesale prices, taxes, and overhead if you sell legally. Also, there will always be a black market for those under age 21. It's not that I disapprove of de-criminalization; it's that somehow these obvious logical consequences were never featured in the discussions and debates about legalization.

...somehow these obvious logical consequences were never featured in the discussions and debates about legalization. ~ RigelDog at December 27, 2019 6:44 AM

They never are.

One of the problems supply-side economics advocates have is that government and think-tank economic models too often don't account for changes in behavior due to taxation's effect on pricing. If people buy 100 items of something pre-tax, the model expects them to continue to buy 100 items after a significant tax increase, thus resulting in more revenue for the taxing authority. The model also rarely allows for increased economic activity after a significant tax decrease.

Corporate America understands price elasticity. Government does not. People (and corporations) adjust behavior to avoid expenses, including taxes.

• Witness Clinton's luxury yacht tax and the sudden mass layoffs of boat builders as demand dried up.
• Tax Strategy is one of the fastest growing fields in corporate consulting.
• People living on the border of two states optimize their purchasing habits to take advantage of the taxation practices in both states.
• Online shopping grew rapidly when people discovered the online retailers were not collecting state sales taxes.

If it's cheaper and not too costly to get your pot untaxed from the local weed dealer, you will continue to do so. Money is not the only consideration; the local weed dealer delivers. If the legal punishment for buying from the teenager down the street is minimal and the cost savings are considerable, you'll buy from the local dealer. If not, you'll go the legal route.

That's part of the reason Eric Garner died. The DA insisted the police arrest him (and others) for dealing loose cigarettes and costing the county its tax revenue. The DA intended to deal harshly with black market dealers to drive them out of business. Perhaps not that harshly, but harshly. If the cost of being an unlicensed dealer is high enough, the dealers will pay to get a license (or get out of the business) and the price the public pays for the product will rise because alternate sources will dry up.

However, society has to bear the costs of making being an illegal dealer too costly. And, in many cases, society is becoming less willing to bear that costs.

Legalization is not always the answer, but it does change the equation. Witness illegal moonshining. There's no money in it. The market has dried up. Who wants dicey hooch made by a toothless redneck when you can get a bottle of legal hooch at the local ABC that doesn't come with a jail term?

Besides the market drying up, the cost of moonshining is too high, both in money and in prison time. Instead, the old moonshiners have gone into business legally and are selling their wares at the local liquor stores with the required tax stamps. The South is dotted with legal small batch distilleries. Many were started and are today owned and operated by old moonshining families. Some even put their moonshining history on public display as part of the brand's marketing.

@Conan: "People living on the border of two states optimize their purchasing habits to take advantage of the taxation practices in both states."

Which is why the local Wawa has a limit on how many cartons of (relatively) cheap smokes you can buy here in Virginia, knowing that a lot of them will wind up resold in New York and New Jersey, where they're much more expensive.

Ta. Da.

Exactly what I called when I asked all of you what you thought was going to happen for "legalization".

Ten years ago.

Alternatively, "politicians still seek the repeal of the Law of Unintended Consequences".

And some business owners don't understand price elasticity. I am familiar with a fellow who runs a restaurant and a bar, and noticed that pint cans of Pabst Blue Ribbon was selling well. He wanted to boost the price, not understanding that people didn't drink PBR because it was good, but rather it was good enough for the price. Not because they are brand loyal.

Pay the freakin 9 bucks a pill or ask your doctor for a THC prescription. Because of allergies and quality control, I don’t drink moonshine, or much of anything alcoholic really and I don’t take backyard pharmaceuticals.

I would prefer not to have any of my medications manufactured in China either but it so far seems hard to avoid.

Potting soil, sun, water, fertilizer - in California you can grow six plants at home, exactly the strain(s) you need - and you always know what's in it.

https://www.shouselaw.com/marijuana-cultivation.html

Isab: I would prefer not to have any of my medications manufactured in China either but it so far seems hard to avoid.

Most of the name-brand drugs sold in the US are manufactured outside the US - mostly in India, and also Mexico, Puerto Rico, Ecuador, Indonesia... lots of different places.

Canadians pay 25-40% less for name-brand drugs. Americans get better variety and better prices on generics.

Funny how politicians know that taxing things like cigarettes, plastic bags and gasoline will discourage production and consumption of those things, but pretend that taxing things like marijuana, property, income or investments will have no negative effects.

Whatever pitch they use to sell a tax, it's the tax they want, regardless of what they say the effect will be on consumption. I doubt that they believed taxing legalized marijuana would not encourage an underground market. I doubt that they cared as long as the result was more money to the state. Though they used the $1-Billion figure in their pitch for the legislation they wanted, they still ended up with $288-Million more to steal. They'll come up with ways to discourage or get a piece of the remaining underground market.

"Potting soil, sun, water, fertilizer - in California you can grow six plants at home, exactly the strain(s) you need - and you always know what's in it."

People who insist that there is such a thing as health insurance want to GET things, not DO things. Some will do this, the majority will not.

"Though they used the $1-Billion figure in their pitch for the legislation they wanted, they still ended up with $288-Million more to steal."

You put those people in office.

"I take a pot capsule when I suspect I have a migraine coming on -- just a feeling I've sometimes gotten over the years when one's impending."

One Starbucks espresso, in a can, does the trick for me when the visual aura appears. The key with a migraine is to change the way blood pressure is regulated. This works without the chance of going positive on a test for THC where I work. I am fortunate to have a rather mild migraine on the average; those of you it hurts greatly have my sympathy.

Note that the Department of Energy prohibits CBD products because of purity issues interfering with mandatory testing. I dunno what a "pot capsule" is, but the CBD products I see advertised here in SC are nowhere near $9ea.

The key with a migraine is to change the way blood pressure is regulated. ~ Radwaste at December 28, 2019 3:04 AM

I read somewhere that beet juice can do that, dropping the systolic (upper) reading by 5-10 points after a glass of it.