Wednesday 22 May 2024

Q: Why did cannabis legalisation not eliminate the underground market?

"The state of New York legalised recreational marijuana in 2021. Recent estimates, however, count 2,000 unlicensed vendors and only 100 licensed ones.
    "Why did legalisation not eliminate the underground market?
    "One problem is that New York [state]’s policy change did not eliminate the federal ban on marijuana ... A second impediment is that New York has been slow at licensing legal marijuana retailers ... The third factor is the state’s 13% tax on retail sales, which again advantages black market sales. ...
    "[P]olicy should allow the entire market to move above ground — by reducing costly and time-consuming regulation. ... while expanding licensing and lowering the tax rate, the state can move most of the market above ground. This will plausibly raise tax revenue, by applying a lower rate to a much larger base."

~ Jeffrey Miron + Lemoni Larsen Matsumoto from their post 'To Eliminate Underground Markets, Tax and Regulate Less'

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