One of the pillars of pro-legalization for marijuana is that regulating and taxing will pull the money away from the smugglers and crooks.
The argument says legal distribution will make it unprofitable for the smugglers. But a new watchdog report from the ATF shows this hasn’t been the case for another, legal addictive substance – cigarettes.
The report, outlined by CBS News, says that not only were illegal cigarettes lost during the operation, money was mishandled as well – $162 million went toward ATF expenses. In one instance, an informant was allowed to keep $4.9 million.
A profitable 'business'
Also mentioned was the scope of illegal cigarette smuggling – a “business” that is “at least as profitable, if not more profitable, than drug smuggling.”
According to a CBS news report:
The U.S. Justice Department estimates state and local governments are losing $5 billion per year from untaxed cigarettes being sold on the black market. Police know they're only catching a fraction of the smugglers.
The article mentions that the ATF lost track of some 420 million illegal cigarettes – a volume equivalent to a two-story house (43 cubic feet).
The parallels are strong for those who believe legalizing marijuana will stop dealing in the drug. It’s even worse for weed, since, unlike tobacco, marijuana is easy to grow and process at home. Advocates of legalization wanting to “tax and regulate,” especially those who see marijuana taxation as a windfall profit machine for state governments, are overlooking a simple fact of economics – consumers will purchase at the lowest price available to them. Whether that lower price is for homegrown marijuana or smuggled cigarettes doesn’t matter.
And what makes cigarette smuggling so attractive in the first place? Besides the profit margin, it’s the low penalties and the lack of enforcement. In other words, the effective decriminalization of tobacco.