Photo: Neeta LindIt’s not often that you see a quote like this.
Referring to a new tax that will fall squarely on the shoulders of his business and just a few others, Steve DeAngelo said in a CNN article,
And we decided to step up to the plate and make a contribution to the city in a time of need.
Remarkably, DeAngelo is not just willing to pay this new tax, he actually led the effort to get the tax approved. His business will now have to pay $350,000 in additional taxes next year because of the new tax.
Why is DeAngelo so eager to pay these taxes? I’m almost certain it is not because he is an altruist.
The real answer, I suspect, is that he is generating $19 million a year in revenues selling in a market (medical marijuana) that is barely legal. And DeAngelo probably suspects that taxation will increase the likelihood that his business remains legal, for two reasons.
The first reason is that taxing a good implicitly says that the government acknowledges the legitimacy of the activity; we tax legitimate goods, and we fine and imprison those who sell illegitimate goods. Second, while experts suggest that marijuana itself is not very addictive, new sources of tax revenue surely are addictive! So once the revenues start coming, government won’t want to turn off the spigot.
I’m curious to hear from blog readers who have information on how much these medical marijuana clubs charge. I wouldn’t think it would be very expensive; marijuana on the street is as cheap as can be.
Can someone explain to me how one club generates $19 million in revenues a year? There must be a lot of sick people out there.
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I read in a recent NYTimes article that an eighth of medical marijuana costs $102 in California, which is twice as much as the street price, or so I’ve heard.
The prices in the clinics are comparable to street prices for high end cannabis in large urban areas (maybe even a little cheaper). The quality is high, and the supply is endless. There is a modern day gold rush going on in California. The government may be bankrupt, and industry may be escaping to states like Texas, but many are moving to Northern California to cash in on this cash crop.
Marijuana prohibition was enacted originally as a tool to drive out Mexican laborers after WII. Now all it does is flood our prisons, and drain out treasure. How senseless is this prohibition? Hopefully we are in the same place as we were in the 1930′s (and I pray it is not economically), and we abolish this senseless and costly prohibition. We waste our money and resources the longer this enforce these racist and draconian prohibition.
Although I dont have the section in front of me, the Tax code gives the right for the IRS to tax any illegal business, and even allows an illegal business to deduct the costs of business as would a normal operation, except narcotics. SO basically a drug dealer needs to pay tax on his revenue and cannot deduct the cost of product. Point being tax doesn’t necessarily legitimize the business. However, the business owner here is probably correct regardless.
I don’t know prices, but even if it is more expensive, there is more that you are getting than just the marijuana. Generally, the quality is far better, there is no threat of prosecution, and you have a guaranteed supply.
I’d imagine that it’d be relatively easy for anyone to get medical marijuana, almost like getting a fake ID to buy alcohol – of course not THAT easy, but relatively easy for obtaining a drug that is usually illegal.
Plus, being able to acquire weed “legally” through medical marijuana without any fear of getting caught may make people very willing to pay the premium, which is as Eric said about double the street price.
My addiction began in earnest when I reached eighth grade. It demanded to be fed on a daily basis for the next thirty years. The addiction of which I speak was not to marijuana, but to the game of basketball, for which I had an unquenchable thirst .The good news was that it paid for my college education and provided a constructive, socially acceptable outlet for no small amount of rage over being raised in a financially strapped family headed by a tragically alcoholic father.
The bad news was a host of irreversible spine and joint problems which have put me in daily chronic pain for over twenty years. I decided long ago that opiate based pain medication was a route I would simply not ever go down; in my effort to combat a level of pain that at times caused me to black out behind the wheel of my car.
The best solution for me over time has been to have a taste of ” mother nature” when the pain becomes unendurable, as it sometimes does. While I am not a daily marijuana user, I can state with conviction born of experience that cannabis, totally apart from its mood elevating effects, is an efficacious substance for people who suffer from chronic pain and it should be legalized in every state in the country.
The tax benefits reaped would make its legalization more than worthwhile given the financial morass the country is in these days.
From what i’ve read it’s not 19 million from the one club, it’s from the 4 recognized clubs that operate in Oakland. Oakland is a big city.
Aside from that, I think it’s worth mentioning that pot is already taxed under the state tax system, this is only a city tax increase that is being proposed (from $1.2 to $18 per $1000).
It should be interesting to see how this all pans out, regardless. I think it would make a lot of the Oakland city officials upset if the fed were to come shutting down their rev stream by shutting down the dispensaries. (Which the DA for the ND of Cal. feels strongly that they are per se illegal, because they are all operating for profit.)
Pot smokers have said loudly and for many years that they would be happy to pay taxes on their cannabis to have it legalized. I for one would welcome the economic shift from costing us money to making us money.
@Tom Jones – pulling any possible connection to accuse people of racism is never appropriate. It was outlawed so the paper/cotton industries didn’t have to compete with a superior product.