Marijuana Taxes Keep Black Markets Thriving

Twenty‐​one states have legalized some amount of marijuana for recreational use, and sixteen more allow marijuana for medical use.Critics claim black markets remain despite legalization. This is true — because legalization has been accompanied by excessive taxation and regulation.California’s legal marijuana industry, for example, has a tough time competing with the black market. The state’s illegal sales approach $8 billion annually, twice legal sales.It’s not difficult to see why. Retailers must pay a $1,000 application fee and a minimum $2,500 licensing fee annually, and sales are taxed at about 38 percent (combining all applicable taxes). This causes the price of legal marijuana products to exceed that of illegal products by two to three times.Moreover, California and other states allow municipalities to ban marijuana retail shops, further perpetuating black markets.