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One Example Why Too Much Taxation Can Be Bad
Just about everything is taxed. And while a certain level of taxation is needed to allow governments to perform their constitutionally required duties, there are times taxation goes a bit too far.
Which is when the saying "tax something and you'll get less of it" becomes readily apparent.
The cannabis industry is a perfect example.
More and more states are legalizing the use of marijuana, be it for medical use or personal use. And the primary reason behind the legalization is so states can tax its cultivation and sale, bolstering their bottom lines.
But, what may not have been thought all the way through by the state legislatures that passed these legalization/taxation bills was the fact that taxing an industry too much can drive demand down and/or to other sales avenues. In this case, the illegal operators/drug cartels, who don't have taxes and fees to worry about and thus can undercut, sometimes considerably, the price legal suppliers are charging.
This is happening now in a number of states, with California and its significantly high tax levels on just about everything, including the cannabis growers and sellers, leading the way.
"Our Industry is Collapsing": California Pot Companies Beg Newsom to Stop Taxing Them Into Insolvency by Tyler Durden/Zero Hedge
The cannabis industry in California is reeling from exorbitant taxes and crime, causing the leading companies in the industry to pen a letter to Gov. Gavin Newsom (D) warning that the state's legal pot industry is on the verge of collapse.
"Our industry is collapsing," reads the letter, signed by more than two dozen executives, industry officials and advocates of legalization, following years of growing complaints that the industry was unable to compete with the illegal pot economy, where consumers pay far less for weed that sells 2-3x the quantity of legal businesses, according to AP (via NBC San Diego).
Taxation is a balancing act, and our elected officials must always keep this top of mind. Unfortunately, there are some who just don't understand this concept whatsoever.