The law of unitende consequences is a law that ‘law’ always sems to ignore. Here’s how Nevada’s ‘legalizing’ marijuana will keep the black market alive and well.
Are Nevada officials actually trying to preserve the state’s marijuana black market?
In the first four days that Nevada residents could legally purchase marijuana for recreational uses, state retailers made $3 million in sales—and lined the state government’s coffers to the tune of a cool $500,000 in tax revenues, according to the Las Vegas Sun.
Actually, that can’t be right. Allowing for rounding, that only accounts for about 15 percent of sales—which is the state excise tax on the first wholesale sale. Nevada also imposes a 10 percent retail excise tax on recreational sales, and then adds in sales tax, which varies from just under 7 percent to over 8 percent according to where you are. Let’s call the total tax take about 32 percent of legal recreational marijuana sales. That’s a really high tax rate to impose on any industry—especially one that was thriving (albeit illegally) and entirely untaxed less than two weeks ago.
The confusion is understandable, given that Nevadans voted to legalize pot just last November and state officials dragged their feet on complying until the last minute. The market for marijuana is currently operating under emergency regulations issued July 6 after booze distributors went to court to protect a temporary, legally guaranteed monopoly on recreational marijuana sales guaranteed them by last year’s ballot measure. In June they won an injunction prevent the state from authorizing competing licensees and the whole process threatened to founder.
“State officials are clearly rushing into this hoping no one will notice how sloppy implementation is actually going,” Rafael Lemaitre, a former top staffer in the Obama administration’s Office of National Drug Control Policy, told the Sun.
That the state might need to make room for more retailers to hang out their shingles is evident from reports of hours-long lines for people to make legal purchases.
Legalized marijuana came to Nevada, but so have the high taxes and complex regulations that preserve illegal sales elsewhere.