Editor’s note: This commentary is by Eric Mackey, of Waterbury, who is the 27-year-old proprietor of Eric Mackey Paint and a seasonal worker in winter.
[T]he legalization of marijuana for recreational use in our state is reaching a critical stage in its seemingly inevitable transition towards a taxed and regulated cannabis market. Gov. Phil Scott’s task force has recently recommended a 20 percent excise tax in addition to a 6 percent sales and 1 percent local option tax.
This 26-27 percent tax and other regulatory goals are in order “to protect consumers, to prevent the diversion of marijuana to under-age consumers and the black market, and to generate sufficient revenue to self-fund the administrative and public health and safety program costs resulting from marijuana use and sales in the state, all while fostering economic opportunities for Vermonters.”
This long-winded statement is filled with big words and sounds appealing but upon closer consideration it seems misleading.
Legalizing marijuana doesn’t necessarily lead to an increase in marijuana use. According to the Washington Post, marijuana use in Colorado actually declined in children ages 12-17 after legalization. Thus, we are already paying for the “administrative, public health and safety program costs” associated with marijuana.
It is also nearly impossible to understand how taxing marijuana at a 26-27 percent rate will “prevent the diversion of marijuana to under-age consumers and the black market.” A tax this large will be a boom to the black market as is evidenced by the impact of high taxes on New York City’s thriving underground cigarette market. What this high tax will do to “protect consumers” or foster “economic opportunities for Vermonters” is also unclear. Those lower- to middle-income Vermonters, who are perhaps renting or living (think dormitories) in places they cannot grow their own marijuana, will feel a disproportionately greater impact the higher the tax.
Additionally, as reported by Seven Days, “Middlebury attorney and drug policy reform advocate Dave Silberman stated that economies of scale would naturally push an unregulated market towards consolidation, where ‘all the marijuana in America is grown in one field in Nebraska.’”
It should be noted that Silberman is not quoted as an economist or a farmer, cannabis is not corn, and that unnecessary regulations allow larger corporations to thrive. Joel Salatin is a farmer who primarily raises grass-fed beef and an author of “Everything I Want To Do is Illegal.” In this book he explains in detail how small business owners like himself are at a huge disadvantage to the giant corn farmers Silberman describes because big business can absorb regulatory costs and higher taxes easier than small businesses like his.
From an ecological perspective cannabis is known as “weed” for a reason. It is a plant that has been cultivated for thousands of years and can be grown from Siberia to Australia. There is, therefore, no ecological basis to back up Silberman’s statement that farmers would choose to use productive Midwestern farmland to cultivate marijuana when the reality is that it is probably more cost effective to grow indoors or in greenhouses.
There is also only a glimmer of reality in his logic: cannabis is illegal on the federal level and in the majority of the states in this country, including Nebraska. A more accurate comparison might be for Silberman to state that businesses might choose Massachusetts, with currently has only half of Vermont’s proposed excise tax (10 percent). Clearly, doing business in Massachusetts wouldn’t help Vermonters besides those who lived near the border and could go there for cheaper marijuana.
A long (88-page) story short, the task force has only until December to make final revisions and Rep. Sam Young, D-Glover, has already stated that he intends to introduce a tax and regulate proposal in early 2019.
We, as residents and taxpayers in Vermont, hear a lot from our representatives in Montpelier about making this state affordable for younger people. This is a very unique chance, in crafting new legislation in a new market, to back up this rhetoric with positive actions. The price of marijuana in an illegal market has been criminally high for the past hundred years. Unfortunately, as reported by the Times Argus, “officials say prices for legal cannabis should be competitive with prices in the illicit market.”
They have decided that a legal regulated market is the right thing to do yet they insist on structuring this market around the prices of an illicit one? This rationale that Vermonters should be punished with a higher tax and higher prices because it is illegal in other states makes no sense. It also makes no sense that Vermont needs double the excise tax of a state like Massachusetts. The excise portion of the tax goes towards public health related expenditures. It can be deduced than, that the officials are recommending that Vermont needs to spend twice as much on public health surrounding legalization of cannabis as Massachusetts. Why?
Here is a chance to lower the price of marijuana nearer to what the cost of growing the plant is actually worth. To eliminate excessively high profits on the black market and to pass those savings on to the consumer. To increase the disposable income of marijuana users so that they may spend more in unrelated parts of the economy (leading, one would believe, to higher tax revenues for the state).
An excise tax this large on marijuana will only prolong the black market by keeping prices at an “illicit” level. It will eliminate any savings for many Vermonters and instead divert these savings towards “public health and safety” despite little data showing a need for increased funds in these areas. But, most importantly, it will disproportionately impact the young people that this state wants to attract and retain.
Colorado has shown that both sides of the legalization debate remain relatively misguided. The increased education revenue in Colorado is statistically insignificant (2 percent) and not the windfall that legalization advocates proposed. We cannot and will not be absolved from unrelated fiscal problems by this tax and regulate proposal. The increase in marijuana use is also insignificant and not the reefer madness that legalization opponents figured.
I hope that our lawmakers take these facts into consideration and take a moderate approach with a regard to the proposed excise tax: give us a break.
