What should be the government’s share for the cost of getting high?
Urbana city officials — with dollar signs in their eyes — hopped aboard the marijuana bandwagon this week, setting a 3 percent sales tax rate.
First things first, eh. After all, proponents of legalization may say it’s not about the money, but it’s always about the money, particularly when it comes to cash-starved government entities.
Time will tell about the rest of the story that goes along with the Jan. 1 legalization of marijuana in Illinois.
The city has yet to approve all the sites and regulations that go along with legal weed. But that seems to be only a matter of time.
The same applies to Champaign, which also can be expected to find the siren song of marijuana revenue irresistible.
So it will be a new day come January, but perhaps not as new as some assert.
After all, marijuana became de facto legal when it was decriminalized. Even before that, arrests for possession of the substance were a low priority for law enforcement.
The illegal sale of marijuana, of course, was and will remain a different story.
Private dealers in the past were a problem because many of them sold a variety of illegal substances, including marijuana, and in large quantities.
After Jan. 1, they’ll continue to be a problem, but for a different reason.
The non-legal sellers will be competing with the legal sellers, and they’ll be marketing their wares to those 21 and over by emphasizing price.
That’s why the tax issue is so important for the governmental entities that are eagerly anticipating a revenue flood from marijuana sales. Maybe it will materialize and maybe it won’t.
Other jurisdictions already have encountered the price problems — higher purchase prices for legal marijuana than illegal marijuana.
Canada as well as U.S. states like Colorado and Washington have taxed their goods in ways that make prices uncompetitive with their energetic competitors in the private sector.
Urbana’s 3 percent sales tax seems like a reasonable levy. But, remember, that comes on top of all the rest, and the taxing has some state legislators concerned that prices for legal weed will be too high to compete with the already flourishing illegal marketplace.
In a “Municipal Toolkit” prepared for local officials, a group of pro-legalization state legislators urged local officials to go slow.
“Proceed with extreme caution and avoid immediately taxing to the cap. We are already near the high middle end of tax rates around the country, and it’s vital to allow the marketplace to mature before increasing tax rates. This has been a huge issue around the country as states and locals have often found that street markets lower prices to compete and maintain market share, so it’s critical to allow the new market to gain traction before increasing consumer costs through taxation,” it states.
Read another way, that statement could be interpreted to mean the following — keep the prices low to get customers hooked and then jack up the tax rates.
The Legislature, unfortunately, has ignored that advice, making it all the more important from its skewed perspective for local officials to follow it.
A word to the wise is — allegedly — sufficient. But when it comes to revenue, all bets are off.