Update on marijuana regulation – #16

In case you were wondering, I’m watching the legalization of recreational marijuana to see what effect heavy-handed regulation has on a newly legal industry. My hypothesis? Overbearing regulation will restrict, if not strangle, an emerging industry.

Articles discussed in this post: taxes raised from recreational marijuana in Colorado may have to be returned to taxpayers and two radically different plans for legalization in Ohio.

4/1 – New York Times – In Colorado, Marijuana Taxes May Have to Be Passed Back – The taxpayer’s bill of rights in Colorado requires that when the state collects more money that it forecast on passing the state budget, the excess has to go back to taxpayers. Sounds like an okay plan, right?

Wrinkle in that plan is that all programs generating money get hit. Apparently the details in the voter approved plan will require that most or all of the money collected on sales of recreational marijuana may have to be returned to the taxpayers somehow.

To whom and how much remains to be determined. State legislators want to keep the money, of course. So they are trying to figure out how to not return it to the taxpayers.

To make this even more entertaining, the article very briefly mentions the pot tax is raising less than the forecast $70M.

Welcome to the entertaining world of unintended consequences.

 Two drastically different options for legalization in Ohio

Apparently Ohio might become the fifth state to allow recreational use of marijuana. There are two dramatically different approaches under consideration according to explanations from Lions of Liberty blog, which is coming from a libertarian perspective.

One approach is crony capitalism at its croniest and the other looks like a wide open door.

One of the two proposals would allow anyone over 18 to grow, use, and distribute for personal use. Commercial production is unlimited and personal use is limited to less than 100 plants and less than 100 kilos. (100 kilos?!?!)

Tax allowed on commercial sales is limited to the prevailing sales tax in the state.

That looks like flat-out, no-constraint, unrestricted legalization. Unless, or course, you think limiting an individual to no more than 3,500 ounces at a time is some sort of inappropriate restriction on the citizens of Ohio (100 kilos x 2.2 lb/kilo =220 lb x 16 oz/lb = 3,520 oz)

The other proposal is funded by a small group of wealthy individuals. They have apparently kicked in $20M to get the initiative on the ballot and another $20M to get it passed (if I read the articles correctly). This option would create a specific regulatory structure and allow only a 15% tax on sales.

Entertaining part of the fine print is that under this proposal, cultivation of marijuana would explicitly be limited to 10 names locations, each of which are owned by one of the backers of the initiative. Yes, you read that right – the only people who would be able to sell recreational marijuana would be the current backers of the proposal.

Sometimes you just gotta’ laugh. You mean only me and my buddies will get to grow any of the newly legalized weed if we can pull this off? Count me in for a million. Cool!

Take your pick on what characterization you wish to apply to that preposterous approach. Cartel. Crony capitalism. Oligopoly. Your choice.

Here are some articles with background and explanation:

The crony approach sounds like the opening chapter of a cheesy dystopian political novel.

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