Courts & Crime

Study: Marijuana tax could breed new illegal market

Legalizing pot may drop the price of a marijuana cigarette to as little as $1.50 in California, but taxing weed may create a whole new black market, according to a new RAND Corp. study.

The six-month study, released Wednesday by the renowned Santa Monica-based think tank, provides fuel for both sides of the debate over whether California should legalize marijuana for recreational use.

The study said legalizing marijuana in California would drop the price of pot by more than 80 percent and increase consumption.

It also said California could generate annual tax revenues either far higher or much lower than a much-publicized $1.4 billion tax estimate by the state Board of Equalization last year.

For example, California tax revenues could swing upward if legalization leads to a surge of Amsterdam-style pot tourism or even lures out-of-state drug traffickers wanting to buy cheap California weed to resell elsewhere.

"It may depend on whether dealers outside of California can access marijuana in California and bring it back to their states," said Jonathan Caulkins, a Carnegie Mellon University researcher and co-director of RAND's Drug Policy Research Center.Potential tax revenues may be lower if an illicit, secondary market develops from people trafficking cheaper, non-taxed marijuana.

"One could hypothesize that people would be willing to pay that tax (on pot) because it would be a lot cheaper to what they're paying in an illegal market," said Rosalie Liccardo Pacula, a senior economist for the RAND Corp. "But there is room for a black market to emerge."

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