October 24, 2013 Updated: October 24, 2013 at 3:10 pm
ENDORSEMENT: Vote "yes" on Proposition AA.
A majority of Coloradans voted to legalize marijuana for recreational sales and use, but few wanted mayhem. They wanted what advocates of Amendment 64 promised: a regulated, above-ground market that would help fund government and make business hard for criminal dealers.
So The Gazette encourages all Coloradans - those who wanted legalized pot and those who did not - to vote for Proposition AA. A "yes" vote in no way endorses recreational use and, in fact, puts absolute limits on how much of the drug can be bought, sold and used. That's because taxes discourage activity and reduce the overall amount of capital that can go for any good, service or commodity. If a given market can afford no more than $10 million a year on marijuana, a 15 percent tax reduces purchases to $8.5 million. The negative effect taxation has on economic activity is the reason capitalists who oppose taxes on medicine, construction and other forms of progress often favor taxes on destructive activities - such as liquor and cigarette sales.
A tax can be viewed as a valve. In general, raising taxes slows economic activity; lowering them speeds it.
Honest defenders of fair elections cannot advocate a tax on marijuana so high that it would destroy all recreational transactions. Doing so would negate the will of voters who wanted a trade regulated by the state but successful enough to solve a few problems. Specifically, voters hoped recreational drug transactions - previously untaxed - would help fund school construction and costs of regulating the pot industry to reasonably safe standards.
Proposition AA would do both. It would impose a 15 percent excise tax on recreational marijuana, with the first $40 million in annual revenue going for school construction. A 10 percent sales tax would pay for public drug education and the regulatory structure needed to oversee the trade.
These are taxes on a trade that has never been taxed. That factor eliminates concerns about stifling an existing revenue source.
Along with the 25 percent taxes imposed by Proposition AA, recreational marijuana sales would be subject to the state's 2.9 percent sales tax and other local taxes. Even if combined taxes approach 30 percent, we suspect consumers will choose to buy legally. By doing business with regulated sellers, marijuana users will strain back-alley dealers who answer to no one and do nothing constructive for their communities.
Society's experience with another drug - nicotine - tells us the proposed marijuana tax isn't too high for consumers to comply. The state Department of Revenue's website explains that someone buying an average pack of cigarettes might pay $5.40 in Colorado. Of that amount, only $3.40 is the retail cost of the product in an average transaction. The other $2 is the cost of a $1.01 federal excise tax and a state excise tax of 4.2-cents for each cigarette. The state sales tax is 2.9 percent. So the $3.40 pack of cigarettes gets taxed at nearly 60 percent - before accounting for local sales taxes.
Cigarette sales continue to flourish and the high taxes - which dwarf anything proposed for marijuana - have not caused consumers to find underground alternatives. Most people obey the law and will pay a high price before transacting with criminals.
Coloradans can respectfully disagree regarding the choice of voters to legalize a traditionally illicit drug for the sake of recreation. Regardless, all should get something in return. That's what voters demanded when they legalized pot.
Vote yes on Proposition AA.