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ECONOMICS

  • by Allen St. Pierre, NORML Executive Director November 20, 2014

    The Congressional Research Service (CRS) released a comprehensive thirty five-page report last week examining the federal government establishing a wholesale excise tax on the production and sale of cannabis-related products.
    majority_support

    In what is one of the most comprehensive policy and fiscal reviews to date of how cannabis can be taxed and regulated numerous areas of consideration were reviewed including enforcement, discouraging youth use, choosing the base to tax (i.e., weight, potency and price), restrictions, labeling, measurement, special tax rates, home production and medical cannabis. Members of Congress initiate these reports to CRS.

    CRS’ economic analysis indicates that cannabis prices are likely to fall from today’s prohibition-influenced prices of $200-$300 an ounce to as low $5-$18 ounce. Economic modeling based on a $40 billion annual cannabis market in the United States tests a $50 per ounce federal excise tax price point (generating nearly $7 billion in federal excise taxes).

    When making the logical comparison of alcohol and cannabis’ ‘external costs’ (i.e., taxation to equate with external costs of the drug use to society), researchers peg alcohol’s external costs to the nation at $30 billion annually; cannabis, at $0.5 – $1.6 billion.

    NORML Executive Director Allen St. Pierre commenting on the new CRS paper: “This CRS report on the prospects of the federal government taxing and regulating cannabis is another clear indication of the political saliency and fiscal appeal of ending cannabis prohibition at the state, and increasingly at the federal level (replacing the nearly eighty-year old failed federal policy with tax-n-regulate policies that are similar to alcohol and tobacco products).

    With fours states and the District of Columbia since 2012 opting for legalizing cannabis, dozens of members of Congress from both major political parties—from states with legalization and those that pine for it—are getting serious about making sure the federal government does not lose out on hundreds of millions annually in tax revenue from the ever-growing cannabis industry in the United States.”

     

     

     

  • by Allen St. Pierre, NORML Executive Director November 19, 2014

    Last week in conjunction with the well attended Las Vegas Cannabis Business Expo was the launch of a new business-centric webpage created to highlight the women and men of America’s nascent cannabis industry, as well as to foster needed B2B relationships and ‘best of industry’ practices among the many thousands of new cannabis-related businesses that have been founded in the last five years.sheet-of-money-hemp

    CannabisBusinessExecutive’s launch demonstrates a basic and continuing need by cannabis entrepreneurs for community and kinship in the fast growing and challenging new domestic cannabis industry, notably in the states of Alaska, Colorado, Oregon and Washington (where voters since 2012 have approved binding ballot initiatives replacing failed cannabis prohibition policies in favor of tax-n-regulate policies that look similar to existing alcohol policies).

    Of note regarding CannabisBusinessExecutive’s unique content are three of it’s main features:

    Industry’s Top 100 players

    Pot’s Political 50

    Most Influential Women

    Additionally, for citizens interested in cannabis-related business news and investing opportunities, other excellent sources include:

    Marijuana Business Daily 

    Marijuana Venture 

    For the doubting Thomas that cannabis legalization is not gaining more and more cultural and commercial cachet in America (and the world), look no further than to the major corporate cannabis branding announcement EXCLUSIVE made yesterday morning on The Today Show during the show’s prime time (7:35AM).

     

     

     

  • by Sabrina Fendrick September 10, 2014

    sheet-of-money-hempRetail marijuana purchasers in July outspent medical cannabis buyers for the first time since the launch of Colorado’s adult-use market 9 months ago.

    The state’s Department of Revenue recently reported that customers bought $29.7 million worth of legal marijuana last month ($5 million more than June), surpassing medical marijuana purchases which totaled $28.9 million in sales. Interestingly, this is despite the fact that medical dispensaries outnumber retail stores by a margin of 4 to 1.

    According to Colorado Public Radio (CPR), there has been a 112% increase since sales first started, with more than 100 stores across the state having sold close to $145 million in pot. CPR further notes that, “Taken together, the medical and recreational marijuana industry have sold about $350 million worth of pot since January, contributing $37.5 million in taxes and fees to government coffers,” a portion of which is guaranteed to go to school construction.

    With the exception of May, each month has set a new record in marijuana sales, so far showing that a legal marijuana regime not only works, but is proving to be valuable and growing source of revenue for the state – and its residents agree. A new NBC/Marist Poll found that Colorado’s retail cannabis market remains popular among Colorado residents, 55% of whom continue to support the passage and implementation of Amendment 64, the initiative that was passed in 2012 to tax and regulate sales to adults, aged 21 and over.

     

  • by Allen St. Pierre, NORML Executive Director August 27, 2014

    majority_supportOur friends at High Times (and former NORML director Dr. Jon Gettman) are running an online poll asking for consumers’ choice regarding the preferred marijuana distribution that emerges post-prohibition.

    Legal Marijuana: Which Market Do You Prefer?
    As we approach the new inevitability of legalized cannabis, three models have been proposed for a national marijuana market.
    By Jon Gettman

    In the past, the goal of marijuana legalization was simple: to bring about the end of federal prohibition and allow adults to use the plant without threat of prosecution and imprisonment. But now that legalization is getting serious attention, it’s time to examine how a legal marijuana market should operate in the United States.

    Below are descriptions of the three kinds of legal markets that have emerged from various discussions on the subject. We would like to know which one you prefer.

    First, though, let’s touch on a few characteristics that all of these proposals share. In each one, the market has a minimum age for legal use, likely the same as the current age limits for alcohol and tobacco. In each of these legal markets, there will be penalties for driving while intoxicated, just as with alcohol use. You can also assume that there will be guaranteed legal access to marijuana for medical use by anyone, regardless of age, with a physician’s authorization. The last characteristic shared by all three mar- kets is that there will be no criminal penalties for the adult possession and use of marijuana.

    Proposal #1:
    Government-Run Monopoly
    Under this approach, there would be no commercial marijuana market allowed. Marijuana would be grown and processed for sale under government contracts, supervised and/or managed by a large, government-chartered nonprofit organization. Marijuana would be sold in state-run retail outlets (similar to the state-run stores that have a monopoly on liquor sales in places like Mississippi, Montana and Vermont, among others), where the sales personnel will be trained to provide accurate information about cannabis and its effects. Products like edibles and marijuana-infused liquids with fruity flavors would be banned out of a concern that they can encourage minors to try the drug. There would be no advertising or marketing allowed, and no corporate or business prof- its. Instead, the revenue earned from sales would pay for production costs and the operation of the state control organization; the rest of the profits would go to government-run treatment, prevention, education and enforcement programs. Regulations would be enforced by criminal sanctions and traditional law enforcement (local, state and federal police). No personal marijuana cultivation would be allowed. The price of marijuana would remain at or near current levels in order to discourage underage use.

    Proposal #2:
    Limited Commercial Market
    Under this approach, the cultivation, processing and retail sale of marijuana would be conducted by private companies operating under a limited number of licenses issued by the federal government. Advertising and marketing would be allowed, but they would be regulated similar to the provisions governing alcohol and tobacco promotion. Taxation would be used to keep prices at or near current levels in order to discourage underage use. Corporate profits would be allowed, and tax revenues would be used to fund treatment, prevention, education and enforcement programs. Regulations would be enforced by criminal sanctions and traditional law enforcement (local, state and federal police). No personal marijuana cultivation would be allowed.

    Proposal #3:
    Regulated Free Market
    Under this approach, entrepreneurs would have open access to any part of the marijuana market. Cultivation, processing and retail operations could be legally undertaken by anyone willing to bear the risks of investment and competition. Advertising and marketing would be allowed, but they would be regulated similar to the provisions governing alcohol and tobacco promotion. Prices would be determined by supply and demand, with taxation set at modest levels similar to current taxes on alcohol, tobacco and gambling. (These vary widely from state to state, but assume that under this model, the price of marijuana would be substantially lower than it is in the current market.)

    Also, home cultivation would be allowed. Licenses may be required for any sort of cultivation, but these would be for registration purposes only and subject to nominal fees based on the number of plants involved. Individuals and corporations would be allowed to make whatever profits they can through competition. Tax revenues would fund treatment, prevention, education and enforcement programs. Competition and market forces would structure the market rather than licenses or government edicts, and regulatory agencies rather than law enforcement would supervise market activity.

    A Different Approach
    There are two key issues when it comes to deciding among these proposals. First, should the price of marijuana be kept high through government intervention in order to discourage underage use as well as abuse? Second, does commercialization translate into corporate money being spent to convince teenagers to use marijuana? Many of the proposals for how a legal market should operate are based on assumptions about these two issues, which leads to recommendations that the government must, one way or another, direct and control the marijuana market.

    Obviously, the first two proposals outlined above reflect those very concerns. The third takes a different approach, in which marijuana is treated like similar psychoactive commodities, and the public relies on education, prevention and age limits to discourage underage use as well as abuse.

    We want to know what type of legal marijuana market you prefer. Please take part in our poll on the HIGH TIMES website.

  • by Paul Armentano, NORML Deputy Director July 30, 2014

    Study: Arrests For Marijuana Offenses Increasing In Many StatesLaw enforcement in many states are making a greater number of marijuana arrests than ever before despite polling data showing that the majority of Americans believe that the adult use of the plant ought to be legal.

    According to a just published report, “Marijuana in the States 2012: Analysis and Detailed Data on Marijuana Use and Arrests,” which appears on the newly launched RegulatingCannabis.com website, police made an estimated 750,000 arrests for marijuana violations in 2012 – a 110 percent increase in annual arrests since 1991. Yet, despite this doubling in annual marijuana arrests over the past two decades, there has not been any significant reduction in marijuana consumption in the United States the report found.

    In 2012, marijuana arrests accounted for almost half (48.3 percent) of all drug arrests nationwide. Marijuana arrests accounted for two-thirds of more of all drug arrests in five states: Nebraska (74.1 percent), New Hampshire (72 percent), Montana (70.3 percent), Wyoming (68.7 percent) and Wisconsin (67.1 percent).

    From 2008 to 2012, seventeen state-level jurisdictions experienced an average annual increase in marijuana arrests, the report found. South Carolina (11.6 percent) and the District of Columbia (7.7 percent) experienced the highest overall percentage increase in arrests during this time period. By contrast, annual marijuana arrests fell nationwide by an average of 3.3 percent from 2008 to 2012.

    Overall, the study reported that the five state-level jurisdictions possessing the highest arrest rates for marijuana offenses are the District to Columbia (729 arrests per 100,000 citizens), New York (577), Louisiana (451), Illinois (447) and Nebraska (421). District of Columbia lawmakers decriminalized the adult possession of marijuana earlier this month.

    The two states possessing the lowest marijuana arrest rates are California and Massachusetts, the report found. Both states decriminalized marijuana possession offenses in recent years.

    Stated the report’s author, Shenondoah University professor Jon Gettman, “After a generation of marijuana arrests, nearly 19 million and counting since 1981, the results are that marijuana remains widely used, not perceived as risky by a majority of the population, and widely available. The tremendous variance in use and arrests at the state level demonstrate why marijuana prohibition has failed and is not a viable national policy.”

    Full text of the report is available on the NORML website here or from: RegulatingCannabis.com.

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