On Tuesday, November 8, Californians will vote on a proposal to legalize possession of marijuana for adults, and, finally, legalize production and sale of marijuana. Proposition 64, The Adult Use of Marijuana Act, will legalize possession of up to one ounce of marijuana for adults 21 and over; it also establishes a regulatory framework for the legal production, distribution and sale of marijuana and marijuana products.
Proposition 64 establishes taxes on the cultivation and retail sale of marijuana. AUMA sets a $9.25 per ounce tax on cultivation, and a 15% tax on retail sales of marijuana and marijuana products. This 15% tax will be collected in addition to the California 7.5% sales tax, except that medical marijuana patients will be exempt from paying California sales tax. Libertarians and others object to these new taxes on principle, and for practical reasons.
Taxes on marijuana will lead to higher costs for consumers. This higher cost will be mitigated over time as a legal market will tend to drive prices down. Production and distribution will be more efficient, and people engaged in licensed marijuana businesses will not face prosecution and resulting costs of legal defense, fines etc. A legal marijuana market, with federal legalization, will provide quality products at competitive prices, so total costs even with taxes will be lower than in the current black and gray markets for marijuana.
Libertarians also object to new taxes because it gives more money to governments. Since California government is already having problems paying for existing programs, mandates and entitlements, the existence of new revenue streams will not itself promote government growth. One can hope that money from marijuana taxes can fund relief from other taxes. At least it might prevent hikes in other taxes that Democrats and Progressives might push in coming years.
Production, distribution and sale of beer, wine and liquor are regulated and heavily taxed. Principle and experience both tell us that a legal market in alcohol, even with taxes and regulation, is better for individuals and society than Prohibition.
Before production and sale of beer, wine and liquor were banned, alcohol taxes provided 30% to 40% of the revenue of the federal government. In order to make Prohibition possible, Prohibitionists joined with Progressives to pass the 16th Amendment, authorizing the federal government to tax incomes. The lesson from this is that government dependence on alcohol taxes protected the legal status of alcohol for many years. Marijuana taxes will provide a money source for government that politicians will not want to interfere with.
85% of California adults do not use marijuana. Many have resisted previous attempts at legalization, including Proposition 19 in 1972 and Proposition 19 in 2010. The prospect that marijuana might save them from tax hikes, or even make possible tax relief, gives these people a reason to vote for legalization. Even with taxes, the costs of marijuana will go down in a competitive legal market. And, of course, libertarians can campaign for lower marijuana taxes, with marijuana users a receptive audience for tax relief that they never needed before.
For freedom and for a legal marijuana market, join Governor Gary Johnson and me in supporting Proposition 64, the Adult Use of Marijuana Act.