HB 2557 (aka the Grow Your Own Pot All Over Arizona Act or the Small Group of Elites Overrules the Majority of the Arizona Voters Act)

On January 26, 2011,  a group of legislators who want to overturn the will of the majority of the Arizona people who voted for Arizona Proposition 203 (legalization of medical marijuana) and who know what is best for the masses introduced a proposed law that would kill Arizona’s medical marijuana industry before it begins and allow all 160,000 future medical marijuana patients to grow their own marijuana.  House Bill 2557 will, if enacted unchanged, impose a sales tax of 300% on all medical marijuana.  That means a $10 THC laden candy bar would cost the patient $40 and an ounce of marijuana that retails for $250 would cost the patient $1,000.

I googled “HB 2557” and marijuana today and found only one story in the first 5 pages of Google results in Arizona’s main stream media about HB 2557.  The Tucson Citizen published a story on January 26, 2011, entitled “Drug Cartel Empowerment Act: Arizona Legislature proposes 300% sales tax on medical marijuana,” which stated:

“All I can say is WTF are you thinking?“

On January 27, 2011, the Arizona Daily Star published “Medical marijuana sales taxable, Horne says” in which HB 2557 is discussed.  Apparently the paper interviewed one of the bill’s sponsors, Rep. Steve Farley, D-Tucson (phone (602) 926-3022; email address: [email protected]), about HB 2557.   Farley said the tax could bring in as much as $1.8 billion a year and solve Arizona’s deficit problem.  He also claimed that patients would not have a problem paying a total of $160 to buy an ounce of medical marijuana for $40.  This guy appears to be out of touch with reality.  Taxing anything 300% does not generate more sales tax revenue it generates ZERO sales tax revenue.  Is there any item in the U.S. that must be purchased for 4 times its actual value?

My clients who operate dispensaries in Colorado tell me that an ounce of medical marijuana in Colorado sells between $250 – $400 depending on the strain and quality.  For the benefit of the we know what is best for the people of Arizona legislators who think a 300% sales tax will generate revenue, I will do the math and show my work.

Example:  Patient goes to local dispensary to purchase 1 ounce of medical marijuana and decides to buy the cheapest ounce for $250.  Clerk rings up the sale and says “that will be $1,000 please.”  Let’s analyze this sale from the perspective of the Arizona legislators who live in a different world and the perspective of the average guy on the street who may not be as smart as our legislators.

How the legislators  think:  160,000 patients will happily fork over $1,000 to buy one $250 ounce of medical marijuana as just a small part of the patient’s grand plan to purchase 5 ounces per month and 60 ounces a year. Total cost to patient to purchase 60 ounces a year = (60 ounces x $250) $15,000 plus 300% tax of $45,000 = $60,000.  Total sales tax revenue collected annually on medical marijuana purchases by 160,000 patients = 160,000 x $45,000 = $7,200,000,000.   Budget deficit solved with the additional bonus that Arizona will have so much new revenue it can cancel all other types of sales taxes.

How the patients and citizens think:  Are you kidding?  Nobody is going to pay $40 for a $10 candy bar or $1,000 for a $250 ounce of medical marijuana.   All  160,000 patients will grow their own marijuana.  Total sales tax revenue collected by Arizona = 160,000 patients x $0 plus $0 sales tax = $0.  There will not be medical marijuana dispensaries in Arizona.

Some years ago the brains in Congress who also are unaware of the laws of economics passed a luxury tax on yachts.  The idiots actually thought that the rich would be happy to pay the tax and the federal government would collect more revenue.  What actually happened was the rich (who are not stupid) stopped buying luxury yachts, the luxury yacht manufacturing industry died and the federal government collected less money from yacht sales.

Main Stream Media Not Reporting for Duty

Why isn’t the main stream media reporting this story?  Does the main stream media oppose Proposition 203 and want to suppress news of HB 2557 to minimize public opposition to the bill?  Early on the morning of January 27, 2011, I called and emailed an Arizona Republic reporter who has written a lot of stories about Prop 203 and medical marijuana in Arizona.   The reporter responded that he/she would check out my January 27, 2011, article called “Arizona Legislators Introduce HB 2557 to Overturn Voters Approval of Proposition 203.”  No Republic story on the 27th, 28th or 29th, but it did have two  “who cares” stories on the front page of the Saturday, January 29, 2011, online version of the paper called “Valley cities fight unwanted garage-sale signs” and “Economy has 3 Valley chefs down, not out.”

What gives?  Why aren’t the big Arizona papers and TV channels covering this story?