Beginning with Oregon in 1973, 18 states and the District of Columbia have decriminalized the possession of small amounts of marijuana. Three of them (Alaska, Colorado, and Oregon) and the District of Columbia went on to legalize the recreational use of marijuana. They were joined by the state of Washington. Nevertheless, the federal government still considers growing, distributing, buying, selling, possessing, or smoking marijuana to be a violation of federal law.
Could the federal government begin to rigorously enforce federal marijuana laws in states where the drug has been legalized for medical use, decriminalized, or legalized for recreational use? Conceivably, yes, but not likely. The federal government can see which way the wind is blowing when it comes to the American people’s attitude toward marijuana use. And besides, it can oppress us in innumerable other ways.
Drug policy should be a state-based matter anyway. There is nothing in the Constitution that gives the national government the authority to have a Controlled Substances Act, an Office of National Drug Control Policy, or a Drug Enforcement Agency. There is nothing in the Constitution that gives the national government the authority to regulate, criminalize, or prohibit the cultivation, sale, or use of marijuana (or any other drug). There is nothing in the Constitution that gives the national government the authority to interfere in any way with the eating, drinking, or smoking habits of Americans. There is nothing in the Constitution that gives the national government the authority to restrict or monitor the medical treatments or recreational habits of Americans.
I think that eventually the federal government may relent, at least somewhat, when it comes to marijuana. Why? The answer is money — tax money — not because the federal government will finally start to follow its own Constitution. The federal government is always looking for additional forms of revenue it can squeeze out of taxpayers.
The four states that have legalized marijuana for recreational use have likewise instituted a tax on marijuana. There is a 25 percent excise tax on the marijuana sales price in Oregon. The effective rate in Colorado is 29 percent. However, the rate in both states is scheduled to go down somewhat this year. The rate in Washington is an astounding 37 percent. The tax on marijuana in Alaska has not yet been implemented, but is expected to be approximately 20 percent. There is no tax on marijuana in the District of Columbia — not yet.
There is a legislative proposal in Vermont to legalize marijuana and tax it at a rate of 25 percent. Voters in Nevada will consider Question 2 in the November 2016 election. It proposes to legalize marijuana and impose a 15 percent tax on the wholesale price of marijuana, plus the state sales tax. Ballot initiatives to legalize and tax marijuana at rates ranging from 3.75 to 75 percent are circulating for signatures for the upcoming election in Arkansas, Arizona, California, Maine, Massachusetts, Michigan, Missouri, Montana, and North Dakota.
According to the Tax Foundation, “Marijuana tax collections in Colorado and Washington have exceeded initial estimates.” Colorado is expected to collect $140 million this year. Washington is looking for about $270 million. The Tax Foundation estimates that “if all states legalized and taxed marijuana, states could collectively expect to raise between $5 billion and $18 billion per year.”
The federal government must be salivating over the prospect of getting on the marijuana tax gravy train. The federal government currently has excise taxes on gasoline (18.4 cents per gallon), diesel fuel (24.4 cents per gallon), pistols and revolvers (10 percent per gun), cigarettes ($1.01 per pack), airline tickets (7.5 percent per ticket), beer ($18 a barrel), wine ($1.07 per gallon), and distilled spirits ($13.50 per gallon). But the Tax Foundation estimates that “a federal tax of $23 per pound of product, similar to the federal tax on tobacco, could generate $500 million per year.” And a “10 percent sales surtax could generate $5.3 billion per year, with higher tax rates collecting proportionately more.”
The question of whether marijuana should be legalized and taxed is an ambiguous one. To answer in the negative may mean that marijuana should not be legalized and therefore not taxed or that although marijuana should be legalized, it should not be taxed. The question is properly two separate questions, so let’s look at each one separately.
Should all of the other states besides Alaska, Colorado, Oregon, and Washington legalize marijuana for recreational use? Of course they should. Every American in every state has the natural right to use marijuana for any reason. But contrary to liberals and conservatives who may favor current legalization schemes that are highly restricted and regulated, libertarians advocate complete marijuana freedom. There should be no laws at any level of government regarding the buying, selling, growing, processing, transporting, manufacturing, advertising, using, or possessing of marijuana (or any other drug) for any reason. The war on drugs should be ended immediately and completely, all nonviolent drug offenders should be pardoned and released from prison, and all government agencies devoted to fighting the drug war should be eliminated. There should be a free market in drugs without any government interference, regulation, licensing, or taxing.
As they do on the issue of complete marijuana freedom, libertarians differ from liberals and conservatives when it comes to the issue of taxation. The libertarian view of taxes is a simple one: taxation is government theft. It’s not that taxes should be fair, adequate, business-friendly, uniform, flat, broad, simple, efficient, apportioned equally, or low. The libertarian view is simply that taxes — income, sales, property, or excise — should not exist in the first place. And taxation is still government theft even when it takes the form of “sin taxes” on alcohol or tobacco — or marijuana. To say that taxation is not government theft is to say that the government is entitled to a portion of every American’s income.
It should also be pointed out that marijuana taxation is no panacea for budget deficits. Tax money raised from marijuana sales will not mean that taxes will be lowered on other items or that the overall tax burden will be lower. State legislators, along with members of the U.S. Congress, have an insatiable desire to spend money, other people’s money — the taxpayers’ money.
Clearly, marijuana should be legalized but should not be taxed.
But is it not better that marijuana be legal and taxed like alcohol and tobacco instead of being illegal and untaxed as it generally is now? Certainly. Some liberty is better than no liberty and more liberty is better than less liberty. But from the standpoint of individual liberty, property rights, market freedom, and limited government, marijuana should not just be legalized in the manner it has been in Alaska, Colorado, Oregon, and Washington; it should be fully legalized with no regulations or restrictions whatsoever — and no taxes.
This article was published by the Future of Freedom Foundation.
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