Editorial: Contemplating the Rocky Mountain high
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Rob Nikolewski. Photo courtesy of Santa Fe New Mexican/Clyde Mueller.
It’s reefer madness!
No, not the stories of on the first day of the new year in places across Colorado to buy marijuana for recreational purposes.
I’m talking about the world-turned-upside-down reaction from opposite political corners in the aftermath of the Rocky Mountain State passing the law.
Last week, the New York Times, the bastion of all good-thinking liberals, bringing up concerns about Colorado’s “Marijuana Experiment.”
Yet at the same time, the National Review, the bastion of all right-thinking conservatives, , headlined, “Sensible On Weed,” congratulating voters for making “the prudent choice.”
So the Gray Lady’s editorial board, which has never had a problem with espousing social issues such abortion or same-sex marriage gets its knickers in a twist over Colorado’s decision but the National Review is cool with it?
Cats living with dogs!
Now the libertarian in me has no problems with Colorado’s decision (or that of Washington state, which is in the process of instituting its own pot decriminalization measure). , “The government has no more right to tell me what goes into my mouth than it has to tell me what comes out of my mouth.”
But while I support decriminalization I am willing to listen to those who oppose it, such as former Carter administration Health, Education and Welfare Secretary who has for every dollar we spend on taxing alcohol and cigarettes, we spend nine dollars in health care costs, criminal justice expenses and social welfare spending.
Here in New Mexico, former state Rep. Dennis Kintigh of Roswell — who used to be an FBI narcotics officer — points out that prescription drugs are manufactured to extremely high standards and heavily regulated and taxed.
“Why then do we have this nightmare with prescription drugs,” Kintigh told me in an interview last year. “If that’s the panacea that solves everything, how can there be this drug overdose death rate that is going through the ceiling with prescription drugs?”
He makes a good point — and a few others, too. You can see my interview with Kintigh, as well as one with a supporter of decriminalization, at: https://newmexico.watchdog.org/16671
No, my chief concern with the Colorado law is based on issues centering on the collision of government and money.
In Colorado, marijuana will be taxed at 25 percent (plus the usual state sales tax of 2.9 percent) and sales are expected to generate $67 million. Should that come to pass, great.
But we know from experience how government works and I wouldn’t be surprised that, in time, as Colorado officials grow accustomed to that tax income, marijuana is looked upon as just another sin tax and – as we have seen with cigarettes and liquor – the tax rate increases.
When that tax balloons to 40 to 50 percent, there will be a powerful incentive to create a black market and sellers will come up with illegal ways to supply what consumers want.
You can rail about the social and moral advantages and disadvantages of legalizing marijuana but my worry is over government’s inexorable desire for more.
Look here at New Mexico.
When the Legislative Lottery Scholarship was created in the mid-1990s, voters were assured that no taxpayer dollars would be used to fund the program. But now, with lottery ticket sales stagnant and tuition costs rising, the lottery scholarship is running out of money and both the Governor’s Office and Legislative Finance Committee have called for spending between $16 million-$22 million from the general fund (taxpayers) until a long-term fix is made.
Here’s another example:
While in grad school in New York City, I read that when the George Washington Bridge , it was under the presumption that once the bonds on the bridge were paid off, That was 87 years ago and the tolls are still up. And the cost going into the city today on the GW? .
So if you think a government-run program that generates millions can stand a decent chance of reining itself in, well, I’ve got a bridge to sell you.
(This column originally appeared in the Santa Fe New Mexican. Contact Rob Nikolewski at and follow him on Twitter @robnikolewski)
Posted under Blog.
Tags: George Washington Bridge, Legislative Finance Committee, Legislative Lottery Scholarship, Milton Friedman, National Review, New York Times
12:07 pm on January 12th, 2014
I do not see the State of Colorado or the State of Washington looking out for their citizens welfare or their rights, what they see is tax dollars, money for them to spend. What I see is the envy in the eyes of the politicians in our Great State of Enchantment for more tax dollars. Gazing into the skies with starry eyes, thinking, oh my God how much more pork barrel spending could we create with this boon to the tax coffers, and of course if the taxes do not meet their expectations there is always the “permanent fund”. Gen. George S. Patton once said ” politicians are the lowest form of human beings, and liberal politicians are the lowest form of politicians”.
3:06 pm on January 12th, 2014
Lawmakers with tax-levy authority in Colorado and Washington did not legalize marijuana. In each state, voters’ initiatives resulted the abolition of state laws prohibiting marijuana use. The provision for taxation was approved by the general electorate, although sponsors of the measure in Washington State did include a former U.S. attorney, a city attorney, and a state representative.
The desire to affect social policy through tax policy is not primarily a government ambition, but rather arises among a broad spectrum of individuals of all political stripes who comprise the general electorate. To attribute the tax ambition to governments anthropomorphizes a social institution that in fact is nothing more than the collective intentions of whatever interests can impose their will by way of government. With the exception of the most extreme libertarian theorists, most of us prefer government as a means to impose our will for the prohibition of most personal violence and to maintain property rights.
Ballot initiatives that undo legislature’s decades of violence against the electorate by way of marijuana prohibition represent an unusual trend perhaps never before seen in our national history. In these initiatives, the combined and compromised will of the electorate tells lawmakers we’ve come to accept the violence of taxation intended to affect social purposes. What voters are refusing to accept is the violent prohibition of a particular substance that serves individual hedonistic goals in a society defined by hedonistic ambitions, often treating failure to achieve preferred hedonic status as a medical condition that can at times even be treated by forcible administration of substances intended to regulate hedonic conditions.
It’s reasonable to suggest that taxation will balloon when legislatures are empowered to find revenue from any new source. In some cases – such as in the National Firearms Tax, taxation can be a means for the near complete of various technologies – in that case fully automatic weapons – among the general population. However, must as the Laffer curve attempts to explain the relationship between taxation and resulting revenue, if legislatures view marijuana tax as a revenue source rather than as a means of affecting social policy, the scope to which black markets arise could be a reliable indicator of the extent to which legislatures can impose taxes. The economics of moonshine liquor and alcohol tax enforcement may shed light on the extent to which taxes can influence black markets. Safety valves that allow home production of beer, wine and now cannabis may reduce motivation for extralegal commercial production of regulated substances.
8:22 pm on January 12th, 2014
It is not just about the tax revenue, that tax revenue will come from BUSINESS. PRIVATE BUSINESSES hiring, local production, selling product and making profit. It would mean TOURISM if implemented before the other states and under more competitive regulatory terms than other states. NM is currently under fairly desperate economic circumstances.
Pot is a sophisticated horticultural product tailor made to benefit by our agricultural university , NMSU. There is a culinary and potential for edible and drinkable product waiting to be developed by local talent.
These benefits would best be realized if NM jumps on the employment gravy train before other states.
The advantage of going legal has a short shelf life. Marijuana will be legal anyway sooner rather than later. It is a juggernaut already rolling. Will our NM legislator, executive, electorate and judicial systems show the necessary wisdom to be on the profitable cutting edge or lag behind the other states like we do in everything else?
7:56 am on January 14th, 2014
Rob – I particularly like the reference to Bill Murray in this week’s editorial, but the arguments you try to put forth here are muddled and wrong-headed. Your over-arching theme appears to be that limitations on free enterprise including taxes and regulation are a greater evil than the outright prohibition of free enterprise. That’s nonsense. To enforce the idea that tax revenue is the arch-villain of capitalism you then reach for analogies that don’t apply here: Public scholarship programs are not industry, toll bridges are not industry, prescription drugs and alcohol (and tobacco!) kill people whereas cannabis does not. In conclusion you run with the argument that the public tax grab will inflate to the point that black market pricing will become competitive once again. This goes against all available data regarding public regulation of alcohol and tobacco. What is the excise tax on alcohol in New Mexico? When was it last changed by the legislature? Perhaps you ought to follow up with an article on the alcohol lobby in this state and how meddling by the legislature has crippled the industry (Ha!) before you write another column this sloppy and full of misguided reasoning. More Bill Murray though is always welcome.
11:27 am on January 14th, 2014
Ernest –
Thanks for your response. You may be right but as for the concerns about a black market, a couple of things: First, it’s difficult to create a black market for tobacco because most people cannot grow large amounts of the stuff in their backyards. I don’t have any experience growing pot but I think it’s easier to grow a few marijuana plants than a big field of tobacco. Second, if taxes on marijuana inflate to a high level, there is already an available (black) market in Mexico that could encourage importation.
I hope you’re right and intellectually, I’m with you. I’m just skeptical by nature.
Rob
11:39 am on January 15th, 2014
Rob – Didn’t expect a response, very cool. Your concerns about government mechanisms trending toward harm are valid, but your distrust of markets remains off the mark. Even in the scenario you’ve described, there are several non-monetary costs to black markets when compared with free markets (read: non-criminalized markets in this case). Rational consumers will opt for legal purchase even if prices climb well above street prices because the costs of drug crime are a powerful dis-incentive when alternatives are available. Particularly alternatives with ease of purchase, known quality, pricing, and sourcing. Yes, studies have shown that domestic consumers are sensitive to the externalities of the global drug war. The analogy you should be looking at here is Napster vs. iTunes.
All of these hypotheticals are moot however because taxes will never push prices that high. As with other powerful lobbies (Indian gaming, tobacco, alcohol, firearms), the marijuana industry will eventually use their wealth and influence to shape legislation regarding their trade. The magic of free enterprise at its finest.