According to Colorado’s new law, dealers without proper licensing can still face prosecution for selling marijuana. Still however, the illegal market may be profitable, according to a marijuana dealer who spoke with the Collegian on the condition of anonymity.
“I am worried about what will happen to my business once pot is available in stores, but I still have some advantages in the game. I can deliver, I don’t tax, and I am available pretty much 24/7,” the dealer said.
According to the dealer, losing a share of the market to a legal seller is more of a concern than being caught. With the addition of a legal market, those who purchased marijuana illegally in the past may buy their product legally.
According to CSU senior economics major Mike Diller, it will come down to price for him to buy legally or illegally.
“I pay for my education, so I try to save money in every way possible,” Diller said. “If local growers and dealers can keep the price lower than the retail shops then I will go to them, simple as that.”
With the passage of proposition AA, the price of marijuana will be inflated by an additional 10 percent state sales tax, which is on top of the existing 2.9 percent sales tax and a 15 percent state excise tax on the average wholesale price of marijuana when sold by a legal retailer, according to the 2013 State Ballot Information Booklet.
The average wholesale price for marijuana has not been determined yet. A state survey was sent out to all medical marijuana businesses asking how much pot they grew in the past year and how much they sold it for to other businesses to determine the market average.
According to Mike Elliot, the executive director of the Medical Marijuana Industry Group, this could lead to an inflated average market rate because this type of transaction, labeled “arm’s-length transactions,” are the most expensive transfers.
The 15 percent excise tax would apply to in-house transfers in which no money is involved. This would add an estimated $14 to each ounce, based on the 2013 State Ballot Information Booklet’s estimated cost of a wholesale ounce being $93.75.
An ounce of marijuana is estimated to sell for $201.56 at retail cost, making the total sales tax $26 per ounce, according to the booklet. Add those taxes together and the average ounce is inflated by $40.
This higher price may lead to the continuation of a black market, yet it is still yet to be determined how Amendment 64 will impact the legal and illegal price of marijuana.
Collegian Reporter Daniel Sewell can be reached at email@example.com.