Politics & Other Mistakes: Dope and Money

You may find it hard to believe, but the Legislature has a sense of humor. It’s pretty feeble, but any sign of comedic instincts at the State House has to be encouraging.

As proof of this tentative tendency toward funniness, I offer the official name of the task force the state House and Senate created to deal with how legal pot will be regulated. It’s called the Joint Select Committee on Marijuana Legalization Implementation.

I admit it would make for a better punchline if they’d named it the Joint Select Committee on How Joints Will Be Selected. (And it would be even more hilarious if some enterprising weed dealer honors the committee by branding a particular strain “Joint Select.”) But any joking around is better than none.

It is in all seriousness, however, that I offer this august body a little advice. Based on what’s happened in other states with legal ganja, there’s a major mistake Maine should do its best to avoid.

The biggest error Colorado, Washington and Oregon made was assuming that taxes from the sale of reefer would produce financial windfalls for state coffers. In reality, the impact was negligible. In Oregon, for instance, recreational cannabis sales were initially subject to a 25 percent tax, plus, in some cases, a 3 percent local option tax. The revenue these heavy levies generated was far below expectations. The reason: Potheads continued to buy their dope on the black market where it was cheaper.

There have been news reports claiming illegal marijuana sales declined more than 90 percent in states after legalization. But that’s a bit misleading. What actually happened is that medical pot, which isn’t subject to taxation, was diverted to the recreational market, where it was sold for less than the going rate for the legal stuff.

Rather than repeat this futile pattern, Maine should follow a more sensible path, one that will keep most sales above board and yet produce better long-term financial returns.

The idea is simple. Even better, it’s been tested in the real world and found to work. And best of all, it contains elements that will appeal to not only dope smokers, but also to conservatives who wouldn’t know which bodily orifice to stick which end of a joint.

It’s called “really low taxes – for now.”

According to an article in The Atlantic magazine last year, the idea originated with a guy named Rear Admiral Luther E. Gregory back in the 1930s. Gregory was in charge of restoring legal liquor sales in Washington state at the end of Prohibition. He realized there was no incentive for criminals to stop selling bootleg booze, particularly since high taxes on legal liquor made it less attractive to consumers. So Gregory set the tax rate at the lowest level in the nation and offered the black marketers amnesty and legitimate liquor licenses. He also instituted harsh penalties on anyone selling illegally. Within three years, bootlegging had all but vanished.

With the competition eliminated, Gregory then raised taxes to nearly the highest in the country. Buyers and sellers weren’t happy about that, but they had few options other than to accept it, because the black market no longer existed. Liquor sales held fairly steady, while state revenues were greatly enhanced.

Would the same thing work for marijuana?

Vermont has seriously considered this approach, even though a consultant’s report raised a couple of concerns. One is that low taxes might encourage more drug use. That’s doubtful, because nearly everyone who enjoys recreational marijuana was already doing so before legalization. They’re unlikely to increase their intake just because it’s legit. The other issue is that a highly profitable cannabis industry would be powerful enough to fund a major lobbying campaign against tax hikes. If so, the second part of Gregory’s plan – the part that raises most of the money – might be difficult to implement. But what if it is? The worst we’d end up with is cheap pot, which would attract tourists from places like New Hampshire. Maine might finally get back some of the millions we lose to the Granite State’s low-price liquor outlets.

This approach merits careful consideration by that committee that could have been named the High Commission on Getting High.

Give me the straight dope by emailing aldiamon@herniahill.net.