Editorial: Dr. Michael Davis
President and Founder LVCIL
September 2, 2021
09:43 AM PST

The current cannabis market is estimated at between $80 and $100 billion a year in the United States with 75 to 80% of that being the illegal black market. Currently Cannabis is federally illegal in all 50 states but it is being taxed and regulated as an illegal dangerous drug labeled as medicine in 2/3 of the states. 18 states have legalized adult use Cannabis as Recreational, however when flower costs $2500-$3000 a pound with the superfluous testing and regulation it is being treated not legally but rather as an illegal dangerous drug. Incidentally, the average state, local and federal taxes on an ounce of whiskey is $.40 an ounce. When coupled with taxes under Section 280E of the IRS code, Cannabis taxes total approximately 100% of the wholesale price.  The illegal black market operators pay no taxes so they are able to sell at a 40% discount to “legal” weed and still make a profit of 50% with often there being very little difference in price. The legal growers, processors and retail operations struggle to make a 10% profit if at that. I have talked with many state licensed operators asking what they are doing about their federal taxes and the majority of them state that they don’t have to pay federal taxes because marijuana is federally prohibited and illegal. My response to that is that was the same rationale that Al Capone used during alcohol prohibition. 

My suggestion to eliminate the black market entirely is to decriminalize, actually legalize, regulate and tax recreational cannabis similar to how alcohol is regulated and taxed. Abandon the regulation of the cannabis plant as a dangerous drug labeled as an unknown medicine and allow the USDA to regulate it as a simple farm commodity such as grapes, potatoes, corn or hops which are the precursors in the production of wine, vodka, whiskey and beer. Then regulate and tax the processed products such as pre-rolled joints, drinks, edibles and extracts such as oil and distillate under the purview of the ATF by weight and volume not by analytical composition. This would create a tax of approximately a dollar an ounce or approximately $15 a pound for flower. My belief that with the various clean air act, increased federal and state assisted housing in 20 years there will be no smoking of the plant but rather all consumption will be by edibles, drinks and possibly vaping. The USDA should regulate the plant as a farm commodity and the ATF should regulate the processed products. 

Surprisingly I would predict this would eliminate the black market and create a Cannabis industry of $400 to $500 billion per year with the wholesale price of Cannabis being sold in 500 pound lots for processing at probably less than $50 per pound. The end of alcohol prohibition virtually eliminated the illegal black market alcohol industry as really how many licensed distillers, brewers and wine makers are there now and how many moonshiners? The federal government regulates and taxes 98% of the alcohol industry to maybe only 20% of the Cannabis Industry under the current repressive prohibitionist stance. The Black Market will never be eliminated in Cannabis until the financial incentives to maintain it are eliminated.

There are only 4 groups that want Cannabis Prohibition and maintain illegality of a plant that can grow wild.

1. People that benefit directly from it being illegal such as Private Prison owners and Police Officers.

2. Corrupt Politicians that accept kickbacks and bribes from those private prison owners, tobacco, oil, textile, and pharmaceutical companies.

3. THE PEOPLE THAT ACTUALLY GROW AND SELL THE ILLEGAL SUBSTANCES.

4. Uneducated Morons that still believe in “Reefer Madness”

My question is if all consumption of cannabis is medicinal how many patients could be treated at a cost of less than $50 a pound versus $3000 a pound now?

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