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Marijuana, mercantilism and my cornfield

Mon, Mar 1, 2010

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Sen. Chris Romer (D-Denver) is not the first politician to see the, um, revenue potential in the de facto legalization of marijuana, but he’s grabbed the issue with all the enthusiasm of the newly-converted.

As the Denver Post reported Thursday:

“Sen. Chris Romer, D-Denver, said he intends to amend a bill that creates regulations for medical-marijuana dispensaries to include a provision that places an excise tax on medical marijuana, similar to the special excise tax that already exists for alcohol. Because of the Taxpayer’s Bill of Rights, that provision – if first approved by lawmakers – must be put before the voters before the tax could be imposed.

Romer wants to use the resulting revenue – which he hopes to be about $10 million to $15 million annually – to fund drug education programs for teens, substance- abuse treatment centers and medical care for veterans and the poor. Romer said he is concerned the state’s boom in medical-marijuana use could create a companion boom in recreational marijuana use among young people. ”

Such concern is admirable, I guess, but there are already a lot of recreational marijuana users in the country. What vexes the good senator is not the number of folks who fire up, but the quantity of dope which goes untaxed.

According to my friend Tiffany, who has her medical marijuana prescription card, the “dispensaries” that she patronizes charge between $50 and $80 for an eighth of an ounce of the demon weed.

Taken at the lower end, that translates into a price of $6,400 per pound. That’s a lot of money for the fruits of an easily cultivated annual, which grows readily in a wide range of climates.

Such outlandish prices are determined not by the market, but by the law. Were it legal to grow and consume marijuana, prices would fall precipitously.

Let’s consider a similar annual, which requires careful cultivation, lots of sun, and massive inputs of fertilizer and water. Despite such difficulties, ingenious farmers have managed to successfully raise this South American plant. Thanks to science and economies of scale, American farmers can grow eight-foot stalks of this once-rare form of grass and bring its tasty inflorescences to market at remarkably low prices.

You’ve probably bought an inflorescence or two at your local supermarket. Zea mays var. saccharata, otherwise known as sweet corn, is one variant of the most widely grown crop in the United States. Last year, our intrepid farmers produced 332 million metric tons of corn. And, at around 25 cents an ear during season, sweet corn is certainly affordable.

Imagine if marijuana were cultivated as is corn-on vast tracts of farmland with rigorously controlled inputs of fertilizer, herbicides, pesticides, and water. The price would fall precipitously, as would the state’s tax revenues.

A desultory search of the state budget failed to reveal any multi-million dollar “corn tax” revenue item. Yet the state might well consider a different levy.

During the early 19th century, England adopted so-called “corn laws,” which taxed imported corn, hoping to protect farmers from low-priced foreign imports. Rather than taxing local producers and consumers, why not tax the vast operations that export commercial-grade marijuana from Mexico and Canada? In true mercantilist fashion, Colorado would then relieve the drug cartels of a portion of their vast profits, while protecting our own inefficient farmers. Enforcement wouldn’t be a problem-we’d just send Sen. Romer down to Juarez to collect the dough!

Despite the feel-good verbiage surrounding the issue, Romer and other like-minded legislators want marijuana to be both legal and illegal. Legal enough to tax, but not legal enough to cultivate at scale. They want high consumption, at high prices.

They know perfectly well that folks like Tiffany, who actually use marijuana as a medicine, are outnumbered by the tens of thousands of Coloradans who have scammed themselves a de facto “get out of jail free card,” enabling them to bypass the underground economy. Yet thanks to the confusing morass of laws that govern marijuana use in Colorado, “legal” users must still pay underground prices.

I never much liked weed – made me dull-witted, paranoid, and sleepy (not that I ever inhaled, of course!). Give me corn on the cob any time – and, in fact, I raised a little plot of hybrid corn last summer, which eventually yielded half a dozen small, misshapen ears.

Imputed cost: about $30 an ear, valuing my labor at zero.

Clearly, I ought to switch crops.

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4 Comments For This Post

  1. Like it'll matter ..... Says:

    …… i’ve seen pictures of yer days on the boat, John.
    ….and i’m therefore suspicious of the ‘inhalation’ comment.

  2. Peter Says:

    What is the difference between Alcohol and Marijuana?? None, both substances make you dizzy. Alcohol probably with a lot more side effects and a lot more expensive to treat. So, why not create a tax income?? It still is everybody’s choice what to consume and the Tax Lord will be happy to get more $$’s in his treasure chest. Does it matter from where it comes from?? $$’s are $$’s or am I wrong??

  3. Rick Wehner Says:

    This marijuana thing has the potential, within weeks, of again throwing Cspgs into the national press! National news organizations are always looking for ‘filler’ pieces to throw into their broadcasts and it would appear they have ‘red-flagged’ Cspgs.

    Why?

    Look at all the problems that have been created by the same Cspgs alliance that continually make news:

    The Amendment 2 controversey and the gay bashing in general, the New Life/Haggard with the FOF/Dobson situation, the brouhaha over the muppet cleavage, the bungling of the USOC deal, the hard time the city had trying how to figure out with the homeless camps.

    Even though financially, Phoenix is in far worse shape than the Springs, Diane Sawyer sends her crews to Cspgs!

    The reason is that because of all the petty and simple things that the ‘moralist alliance’ come up with that are not even issues in other cities, it holds fascination for the news media.

    If Cspgs were not so concerned by such serious and life threatening matters as ‘cleavage’ and children possbilty seeing an MMD, perhaps time could be spent on important matters such as the budget.

  4. Bob Blaw Law Says:

    I understand your humor, but high-grade marijuana does NOT come from Mexico. Nor-Cal, Hawaii and British Columbia on the other hand…