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Two things of interest that the article doesn’t go into: - Taxes on weed in CA are going to be very high, ~20%. This may drive black market sales. - Online or
by wils1245 9y ago
Two things of interest that the article doesn’t go into:
- Taxes on weed in CA are going to be very high, ~20%. This may drive black market sales.
- Online ordering through Eaze is popular, which might drive the familiar winner take all online commerce market dynamic. A lot of people don’t care for the dispensary experience.
At the end of the day, this is an agricultural product, and a commodity. It was optimistically compared with beer, but beer is made from a recipe, of which there are endless variations to try. Some heavy users care about certain strains and the like, but I have a feeling that for most people weed is weed. The new edible products are a development, but those too will be comoditized.
- stevenwoo 9y agoThose taxes on weed don't look bad compared to what I think is the current equivalent product with even higher taxes - cigarettes - how is the situation different in your view?
- wils1245 9y agoThere’s a much more robust black market already in place for marijuana than for cigarettes. Washington has all the same products and is right next door, and taxes at 3% [1]. Also at least in CA municipalities are adding their own taxes, so the distance you need to travel to enable black market arbitrage might not be much. 1 - https://dor.wa.gov/sites/default/files/legacy/Docs/Reports/2017/Marijuana_SalesTax.xlsx https://dor.wa.gov/sites/default/files/legacy/Docs/Reports/2...
- ryanlol 9y ago>There’s a much more robust black market already in place for marijuana than for cigarettes Dunno, it's easier to order black market cigarettes online with a credit card than to order black market marijuana.
- nitwit005 9y agoThere seems to be no shortage of prosecutions for people smuggling cigarettes, or avoiding the taxes.
- PhasmaFelis 9y agoI've literally never heard of a cigarette-smuggling prosecution. I don't doubt that it happens, but it's small-time. Given the option, it seems that most people would rather pay a bit more than creep around like criminals to get their fix.
- frankharv 9y agoHere in Virgnia they have police set up on the north side of the Chesapeake Bay Bridge Tunnel. Alot of contraband moves to NYC via US Highway 13 North and the police are pretty good at spotting smugglers. Coming out of the tunnel you are in a pinch spot and they use this area for recon. The tax on cigarettes in NYC is so high they smuggle from Virginia. Lot of guns move the same route and the NYC people keep complaining that we have weak enforcement.
- randomblob 9y agoCigeratte compannies employ private investigators to drive up prosecutions. Here's an article about the subject (german): http://www.spiegel.de/panorama/justiz/zigarettenschmuggel-ermittler-von-reemtsma-ueber-seine-arbeit-a-845116.html http://www.spiegel.de/panorama/justiz/zigarettenschmuggel-er...
- headstorm 9y agoYour link shows the weighted local sales tax rate at 3%. The state sales tax is 6.5%, reflected under 'Estimated state sales tax collections'. The state excise tax (pre-sales tax) is 37% according to https://lcb.wa.gov/mj2015/faqs-on-taxes https://lcb.wa.gov/mj2015/faqs-on-taxes .
- loeg 9y agoThe WA tax on marijuana is far higher than 3% -- there's a 37% excise tax[1] and then additional local sales taxes may be applied as well. [1]: https://dor.wa.gov/about/statistics-reports/recreational-and-medical-marijuana-taxes https://dor.wa.gov/about/statistics-reports/recreational-and...
- mikestew 9y agoTaxes on weed in CA are going to be very high, ~20%. This may drive black market sales. WA’s taxes are ungodly high for weed (EDIT: w/o looking it up, more than 20%, that’s for sure). Didn’t seem to slow down things much. A new store just opened closer to the house, and I don’t know of a single store that has closed. Personally, I’m more than willing to pay the “convenience fee” to just drive down the road any time I like and score some weed. That, and let’s do what we can to encourage the legal stuff, eh? We collectively get one shot at this, let’s not screw it up. But if WA is any indication, give it a few years of high prices, then the prices will settle down. Pot was outrageously expensive in WA when it first legal, but it’s pretty reasonable now, I think. As for online ordering, yeah, that’s going to be a thing. Because the experience of “here’s a menu, hurry and make a selection from 200 different items while you’re in line.” doesnt work for me, either. One local shop offers online ordering, and the only reason I don’t use them exclusively is that they’re out of the way. But you’re right, pot isn’t beer, it’s corn. The only reason I don’t grow some next to the tomato plants is because WA says I can’t. So the only barrier from me taking production in-house is legal, which seems to be a pretty thin moat with which to protect your castle.
- AndrewUnmuted 9y ago> As for online ordering, yeah, that’s going to be a thing. If the Darknet is any indication (and according to High Times[0], it is), you're right about this. Cannabis is the most popular product sold on the various illicit online drug marketplaces. [0] https://hightimes.com/business/marijuana-is-the-most-popular-dark-web-drug/ https://hightimes.com/business/marijuana-is-the-most-popular...
- egypturnash 9y agoI don't have any data on WA's black market vs white market, but I do have some anecdata: the thriving community of illicit entrepreneurs hanging out by the U District Jack in the Box has completely vanished since legalization. (And it is quite literally a black/white thing, too - the people selling weed in shops are pretty much uniformly white, whereas the illegal market was a lot more mixed-race.)
- mynameisvlad 9y ago
- 40acres 9y agoHave you tried Eaze? Could you describe the experience? There's a couple of online sites in Oregon (where I am based) but they don't reach my area and the local dispensary is 10 minutes away.
- xocyabencl 9y agoI've used Eaze. You pick an item from a menu in the website or app (although the Android app doesn't work for me), then someone drives up 20 minutes later and hands the item over. In my case I've gone outside to the driver's passenger window, they didn't come to my door. Think Uber, except the driver takes longer to arrive and gives you weed. It's like any other delivery service, but I suspect the economics work better than food delivery because users make larger orders, you don't need to pick up from restaurants, and freshness is not as important (comparing to a central kitchen for food delivery).
- pmoriarty 9y ago"for most people weed is weed" Never underestimate the power of marketing. Everywhere I look in our world, marketing is king. It doesn't matter how crappy your product is, if it's marketed well, people will buy it.
- sysalphUS 9y agoCase in point: fidget spinners
- sandworm101 9y ago>> if it's marketed well, people will buy it. Budweiser. The people who like to talk about bear don't drink Bud. Nevertheless, by volume and market share, Bud is probably America's favorite beer. If you want to be the pot equivalent of a craft beer company then complain about the prices and taxation. But if you want to play in the big leagues, price and consistency are all that matters.
- rconti 9y agoThe taxes won't be an issue. They'll easily be swamped by lowered costs, eventually. One major issue is retail store licenses; few cities are deciding to license stores, and they're not happening on day 1 (for the most part). Another issue is licenses for growers. Currently growing licenses only allow 1 acre under cultivation, and it sounds like production will be nowhere near high enough to meet demand, at least initially. It sounds like CA's start into the legal market will be a lot rockier than most.
- aphextron 9y ago>Online ordering through Eaze is popular, which might drive the familiar winner take all online commerce market dynamic. A lot of people don’t care for the dispensary experience. Anecdotally, I've seen a ton of small delivery services popping up in the Bay Area recently and doing well. Turns out selling weed is profitable.
- AndrewUnmuted 9y ago> Some heavy users care about certain strains and the like, but I have a feeling that for most people weed is weed. As recently as 5-6 years ago, I would have agreed with this sentiment. These days, however I think this mentality is no longer a responsible one to propagate. Today's cannabis is, in general, much more potent than it used to be. And now there are ways to consume very large amounts of this extremely potent product in a very short amount of time (concentrates, oils, edibles, etc). No matter how it's consumed, today's average cannabis user is getting a lot more in their hit than prior generations. This means that the difference between a sativa and indica is no longer necessarily a nuanced one. Today people need to be reasonably sure that what they're getting will meet their needs, because for some one hit may send them spiraling in the totally wrong direction. A user with anxiety issues may need to entirely steer clear of sativas because they are known to cause anxiety attacks. But someone who needs to be around other people may need to avoid indicas because they are known to cause delayed responses and decreased social acumen. This risk is compounded when people use one of these new, super-powerful 'hybrid' strains because their effects on the individual user are harder to predict than pure indica or sativa strains. Legalization will put new emphasis on educating users on safe practices, harm reduction, and other such things. In the US, public schools teach harm reduction strategies with alcohol in its various forms, and one day it will probably need to do the same for cannabis.
- root_axis 9y ago> Today people need to be reasonably sure that what they're getting will meet their needs, because for some one hit may send them spiraling in the totally wrong direction. A user with anxiety issues may need to entirely steer clear of sativas because they are known to cause anxiety attacks. But someone who needs to be around other people may need to avoid indicas because they are known to cause delayed responses and decreased social acumen. What's the source for this, I'm genuinely interested? As far as I'm aware, this is more a marijuana folklore thing than an effect that science has verified.
- rconti 9y agoI don't think it's folklore but am not sure about scientific "proof". I also just heard on the radio yesterday an explanation that high THC content can cause those anxiety effects and the CBDs can balance it out, so in the future they might be marketed in terms of THC:CBD ratios. Interesting.
- njarboe 9y agoCigarettes cost about $0.10 a pack to manufacture so maybe $0.50 price for highly marketed brands. Price these days, with the added tax and sudo-tax lawsuit settlement, $5-$10 a pack. About 10x so 1000% tax or so. 20% seems mild especially considering normal sales tax in CA is around 10%. I don't see a fundamental reason the cost of weed won't be around the price of tobacco in a fully legalized and big-ag growing environment. 5-10 years?
- GordonS 9y agoI think the reason for high tobacco taxes is because of the harm smoking tobacco causes. At least in the UK, where the taxpayer foots the nation's medical bills, the escalating taxes seem designed to slowly but surely make smoking a thing of the past. It seems to be working.
- natecavanaugh 9y ago> Taxes on weed in CA are going to be very high, ~20%. This may drive black market sales. The last I heard was that those with a prescription wouldn't have to pay the tax, and since it's so easy to get a prescription, at least ATM, I would imagine that would be the first avenue before the black market (heck, I would even say that getting it from friends who grow their own would be a gray market angle that would probably happen before getting it from the black market suppliers). But I don't know if there have been any changes in the law during this past year regarding taxation for medical patients.
- Stratoscope 9y agoTaxes in Oakland are increasing from 14.25% to 34.25%, and in San Jose they are increasing from 19.25% to the same 34.25%. [1] Medical users with a county Medical Marijuana Information Card (MMIC) are only exempt from a portion of this, the 8.5% sales and use tax. [2] To get an MMIC you first need a doctor's recommendation (typically $40/year). The maximum cost of an MMIC from the county is $100/year, or $50/year for Medi-Cal patients. So to save the 8.5% sales tax, you need to visit a cannabis doctor, wait in line, and pay $40, then visit the county public health department, wait in line again, and pay as much as another $100. If you are a heavy user, this could save you some money, but I have a feeling that most people in California who are currently medical users will simply drop the medical recommendation and buy under the new adult-use rules. [1] https://www.shopharborside.com/adult-use-regs.html https://www.shopharborside.com/adult-use-regs.html (expand the "new taxes" item) [2] https://www.thegreencross.org/newsletter https://www.thegreencross.org/newsletter
- DrScump 9y agoThis may drive black market sales. Given that only about 9-11% of CA's cannabis production currently goes into the legal intrastate market, I'd say "black market" sales already drive production... including a lot of production on public lands (and at great environmental cost).
- PhasmaFelis 9y ago> It was optimistically compared with beer, but beer is made from a recipe, of which there are endless variations to try. Some heavy users care about certain strains and the like, but I have a feeling that for most people weed is weed. Weed is weed when it's illegal--you take what the dealer's got or you get nothing. Same thing with booze, during Prohibition. When it's actually possible to comparison-shop, you see a lot more preferences developing.
- freeflight 9y ago> I have a feeling that for most people weed is weed. That oversimplification works both ways: For many people, beer is just beer. And just like with beer, there are endless variations of cannabis strains, different ways or preparation and different ways of consuming. Just the way cannabis is cured can make a vast difference in taste and effect. With alcohol, many places often have centuries-old traditions for consumption and brewing, cannabis just started going down that route, so imho it's just logical that there's a lot of catching up to happen because most of the knowledge we collected is stuck in the realm of "illegality" and spread thin between users, with no real way of consolidating it in a useful way. It's gonna take a lot of time to lose the stigma which has been, purposely, build up around cannabis for decades.
- randomblob 9y agoI would argue the difference between strains is even bigger than the difference between various types of beer. As stated in some comments, a cannabis user expects a certain effect and some strains can lead to exactly the opposite effect as the desired one.
- twblalock 9y agoI'm sure some black market activity will remain because of the tax rate, but I'm also sure most middle- and upper-class people would prefer to pay more for their weed at a legal venue than risk arrest by buying from a black market dealer. There also exists a black market for cigarettes because of taxes, but the vast majority of smokers buy cigarettes legally because it is easier and safer and runs no risk of arrest.
- topshelfdata 9y agoExcise taxes in Washington state on weed are 37%, much higher than the ~20% you suggest for CA. https://lcb.wa.gov/mj2015/faqs-on-taxes https://lcb.wa.gov/mj2015/faqs-on-taxes https://dor.wa.gov/find-taxes-rates/taxes-due-marijuana https://dor.wa.gov/find-taxes-rates/taxes-due-marijuana
- gozur88 9y ago>Some heavy users care about certain strains and the like, but I have a feeling that for most people weed is weed. I'd be surprised if that's the case, and even if it's the case in the beginning, I'd be surprised if it's still the case after a few years.