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California here they come: Drug cartels & Teamsters

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POSTED May 8, 2017 1:04 a.m.

The priceofweed.com website puts the current average California pot price for an ounce of high quality marijuana at $248.56.

The website works based on information that users provide them in terms of how much they paid. Back in 2015 the same site for the entire year put California’s average price for an ounce of marijuana at $242. It has gone up and not down since the criminal penalties were relaxed.

This is not a good sign even if you don’t partake. 

The reason is simple. There’s a lot of money to be made by “moonshiners,” organized crime, big business, organized labor, and the government.

The California Board of Equalization in the fiscal year ending June 30, 2016 reported taxable medical marijuana sales statewide of $575,021,347 resulting in the assessment and collection of $50,507,006 in sales and use taxes.

Once the state issues recreational marijuana licenses in 2018, the National Organization for the Reform of Marijuana Laws (NORML) projects it will generate $1.2 billion in taxes. 

Using the current average price on priceofweed.com the 15 percent excise tax on retail sales of pot would generate $37 an ounce while the 7.5 percent state sales tax would yield $18.6.0 An ounce yields roughly 60 joints. That brings the cost per joint to $5.05. 

There are 20 tobacco cigarettes in a pack. With the new state taxes that brings the cost per cigarette to 45 cents. By comparison the retail cost of one cigarette in New York City is 65 cents as taxes are even higher than in California.

New York has a thriving back market because states within in easy drive have taxes that are significantly lower. As a result most of the cigarettes sold in New York City — the Tax Foundation puts it as high as 60.9 percent — come from the black market.

If you don’t think a buyer of recreational marijuana wouldn’t hesitate to buy on the black market if they could save $1 a joint you are a certifiable wild-eyed optimist.

Add the temptation to undersell whatever system the state sets up to regulate the sales of recreational pot and you are setting the stage for crime.

Now you might ask who are they harming assuming they aren’t growing the stuff illegally on federal land using highly toxic chemicals to kill everything else in sight while poisoning the watershed? The government.

Cut bureaucrats out of $1 billion in revenue and they’ll turn lose the dogs.

Of course, the pro-pot folks have argued because marijuana is easy to grow and there would be so many small growers that it would weaken organized crime. The image they conjure up is a hippie driving a VW mini-van skirting the taxman by selling some pot on the side.

Such nonsense ignores the fact the countless speakeasy operations that Prohibition spawned were  standalone operations tough for law enforcement to chase down but not for the likes of Al Capone to muscle in on.

The only difference with Prohibition that went into effect 97 years ago for a 13-year run was that booze was made illegal while marijuana is being made legal. It doesn’t change the dynamics that the habit in question generates enormous money that catches the attention of 1920s crime syndicate or 2010s drug cartels.

California is expected to be nearly a $10 billion annual market for recreational marijuana. Organized crime doesn’t leave that kind of money on the table nor does government or organized labor.

It explains why the Teamsters are actively lobbying in Sacramento to create a three-tiered system for pot production, distribution, and sales much like what was put in place for the liquor industry after Prohibition was lifted. The system creates a middleman between growers and retailers with required state licenses that are prohibited from selling or cultivating marijuana. They are required to collect taxes and under proposed law deliver pot samples to labs for testing. They also negotiate the rates retailers pay growers and take a cut for themselves.

By creating middlemen, the Teamsters see a way to unionize the emerging legal industry given they’d be relatively a handful of brokers as opposed to thousands upon thousands of operations where unlicensed middlemen (pushers) take pot from growers and put it in the hands of retailers (dealers) or even drug organizations that control the entire system from growing to street solders pushing their products.

And while law enforcement deals with illegal growers and such now, the problem will be amplified by growers and sellers trying to skirt the tax laws requiring more “revenue agents” on the street made possible by big tax receipts on pot sales.

Setting aside all other pro and con debates, the argument that legalizing marijuana would make drug cartels and such a thing of the past was delusional.

They are not going to let go of their share of a $10 billion market just because it is made legit enough that the Teamsters are making a move to organize it.

Most backers of legalizing pot are on the mellow side, so to speak. They saw it as a relatively harmless diversion on the same side of the fence a liquor but supposedly not as dangerous with the ability to destroy families and civilized behavior when it becomes addictive and is abused like alcohol can be at times. They weren’t thinking like drug cartel kingpins, black marketers, revenue agents, or Teamsters. The only thought about the high while the real players were looking at the money.

This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA.  He can be contacted at dwyatt@mantecabulletin.com or 209.249.3519.

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