The tax revenue thing is also kind of misleading. First, that number is apparently fixed (based on your wording, I'm not familiar personally), but the there is, presumably, no upper-bound on the actual revenues, so as revenues increase, a smaller percentage goes to education.

Second, vice taxes tend to be regressive, the poor pay a higher percentage of their incomes. Some of the "education lotteries" (state lotteries that benefit education) are basically mechanisms for transferring wealth from the poor to the rich(er). Poor people buy the lottery tickets and the tax revenues go to fund college scholarships for middle and upper-middle income kids. That's not socially healthy.

Given the two points above, there's a real danger that marijuana taxation will be used to transfer the overall tax burden from higher income people to lower income people.

If that means fewer bear traps and less rat poison in our national parks, it's a win as far as I'm concerned.

>Second, vice taxes tend to be regressive, the poor pay a higher percentage of their incomes. Some of the "education lotteries" (state lotteries that benefit education) are basically mechanisms for transferring wealth from the poor to the rich(er). Poor people buy the lottery tickets and the tax revenues go to fund college scholarships for middle and upper-middle income kids. That's not socially healthy.

There's nothing wrong with taxing stupid.

For example, if you gain >$price of a Powerball ticket worth's of entertainment from musing about how you'd spend the prize, it's a rational purchase.

On the other hand, buying two tickets isn't rational. You get no extra dreaming, and your expectation of winning hasn't moved essentially at all.

  > There's nothing wrong with taxing stupid.

That or they just 'waste' $2 on a long-long-long shot knowing that they won't win but don't care because, really, it's only $2 and how much does the average American pay for their coffee?

Now people who dedicate significant portions of their resources to scratch and lotto tickets have a different problem than either wasting $2 or innumeracy. It's called poor impulse control.

I strongly believe people who put down the lottery just can't let go of their super-rational minds and just enjoy an irrational thrill every once in a while. Sure, the people who spend $100 a month on Lotto when they only make $400/mo... that's a bad decision. But just $2 once every couple of months when the jackpot is some insane number? Why not? It's just $2 bucks! Yes the odds of you winning are smaller than Plank Length[1], but just let yourself go every once in awhile and enjoy a thrill and imagine "What If...". The Lottery is not a scam; assuming you understand the chances of winning is as close to zero as can be without actually being zero. People actually do win & get the money. Now, if someone can prove to me that all the winners are fake and nobody ever gets any of this money... then that's another story.

1. http://en.wikipedia.org/wiki/Planck_length

EDIT: Downvoted. Not surprised; I just tried to make an argument about letting go of rationality on HN. That's probably the most offensive thing I can say here. :)

I just think that it is a battle to fight another day. It is hard to argue that the poor are worse off buying marijuana legally rather than illegally, especially when the prices start to fall below what you would pay on the streets which it will as soon as the supply is able to meet the demand. Supply is pretty low because the only companies who have licenses are medical marijuana companies that already had a license, more companies will become licensed soon.

Added to the fact that in Colorado I think anyone is currently allowed to grow a small number of plants for themselves without being licensed and they can end up not paying any tax.

It's also a high risk business. You might invest millions on growing a crop only for the Federal administration to change policies in a few years and come in and blowtorch your crop.

http://reason.com/blog/2012/08/22/feds-destroy-1-billion-in-...

http://calcoastnews.com/2011/07/feds-raid-sanger-pot-farm-de...

Either way, you won't get it back and your investment is gone.

Just like how legalised gambling just made it legal for the mobs to run casinos?

Except that's not what happened. Investors came in, bringing real managers, real security, and real regulation. They turned the seedy, Las Vegas strip into Disneyland. And those old mob run casinos, you'll find their demolition videos on youtube.

Agreed, but legal cartels are (marginally) better in that they are forced to operate under the "light of day". This doesn't automatically solve all the problems in se, but it's an important step.

> First, that number is apparently fixed (based on your wording, I'm not familiar personally), but the there is, presumably, no upper-bound on the actual revenues, so as revenues increase, a smaller percentage goes to education.

Yes, I'm just pointing out that the motivation for the tax was not the same as the motivation behind your typical "vice taxes". It was proposed by the people who wrote Amendment 64 (proponents of legalization).

Naturally there's a tradeoff to be made, as you point out, but IMHO, it was a clever attempt to construct the amendment "defensively", to mitigate the risk of people trying to repeal it.

The size of the tax, and what to do with any excess revenues, are where one has to make a value judgement, and it really comes down to whether one thinks income should be redistributed from rich to poor, poor to rich, or neither. That's a separate discussion, though - I think almost anybody would agree that it's better to be debating the exact structure of the tax, than to be stuck debating whether or not we should force the drug trade to happen in a completely unregulated, untaxed, underground market.

Plus, they have much less need to kill people and that.

Won't this end up like lottery funding "education" in most states? [1] A guaranteed $40M in funding to schools means the legislature will simply reduce funding by $40M and move the balance around the general fund to other initiatives.

I'm not arguing additional tax money is bad, but we shouldn't pretend this will product a windfall of available money for the Colorado school systems.

[1] http://www.washingtonpost.com/blogs/answer-sheet/post/mega-m...

Nobody is - the point is that any attempt to repeal the law down the line can be viewed as a cut to the education budget.

The point of the clause is not to generate revenue for the school system; it's to create political friction against reversing the law.

But the profit margins in the illegal drug market is largely because of the risk involved. Facing legal competition, which does not have to include that risk in its price, is effectively creating a market where legitimized producers have an extreme advantage.

Edited to add:

Also, while I have no idea as to the veracity, Wikipedia says that over half the cartels' revenue comes from marijuana, and links http://www.npr.org/templates/story/story.php?storyId=1269781... in support.

Given the high fixed costs (salaries, bribes, infrastructure) of maintaining a criminal network, I expect that cutting revenues almost in half would be a tremendous blow to their profits.

Well, it wasn't me who said it in the first place, but that aside...

"legalizing all drugs is much, much different issue."

I'm not sure I agree - this is arguably the first step on that path (if we wish to continue down that path). I agree that there will be different outcomes.

That said...

"I don't think the profits would be reduced at all, simply replaced by other products."

I'm not sure you understand how business works. For that to happen, someone needs to start purchasing substantially more cocaine and methamphetamine. If the cartels are capable of making that happen, why aren't they making it happen now?

I really don't see that any of these considerations are any different due to it being a black market - if you think they are, explain why.

1) It eliminates legal risk, so drug production becomes instantly a much more lucrative activity, enticing more people to do it.

2) Profits are reduced as the market becomes more competitive.

3) The cartels are unable to pursue their "normal" extralegal means of suppressing competition, because the parties they might seek to suppress now have legal access to state protection.

4) In a competitive, legal market, the successful firms will be the ones which offer the best product - the firms with the best drugs, the highest standards of quality and ethics, the nicest stores, and the best customer service. Why buy from dodgy drug-dealers when you can walk into a beautiful store and get great customer service?

In short term yes, cartels may attempt to protect their monopoly, but in the long term, legalisation dooms them as cultural dinosaurs unable to compete in the new legal, open market.

Edit: This analysis depends upon low taxation. High taxation will still incentivise extralegal selling, but it probably makes the black market a bit safer regardless.

"4) In a competitive, legal market, the successful firms will be the ones which offer the best product - the firms with the best drugs, the highest standards of quality and ethics, the nicest stores, and the best customer service. Why buy from dodgy drug-dealers when you can walk into a beautiful store and get great customer service?"

Really? So Walmart and Amazon have the highest standard of quality and customer service..really??????

"Why buy from dodgy drug-dealers when you can walk into a beautiful store and get great customer service"

Because money talks. The government will tax and regulate drugs. Many users will not want to pay a higher price for a lower quality product (quality might be THC levels, etc).

Why go to dodgy virus-laden websites to download software and music when you can go into a beautiful store with great customer service?

I'm all for the legalization of MJ, but I feel like common sense goes out the window in any of these discussions.

If the community is all about stopping the violence, why not boycott all cartel grown drugs?

Because Bayer and Amazon can drive the bastards out of business much faster, simply by being better organized.

As long as all the growing takes place within the legalisation territory (i.e. nothing is sourced from illicit operations in foreign nations) then I see no reason why violent organisations would dominate legal trade of psychoactive substances.