The black market will be a legitimate issue in many of its various forms in the coming November election. Referring to the black market, of course, means illegal traffic in officially controlled commodities.
On Monday, the California State Sheriffs Association came out against the proposed gun control measure backed by Lt. Gov. Gavin Newsom, in part, arguing that the measure would not prevent criminals from obtaining guns and ammunition illegally on the black market. One feature of the measure is to require background checks for ammunition buyers—something the sheriffs understand criminals will avoid. If criminals want ammunition and guns they will turn to the black market.
Meanwhile, the initiative to raise tobacco and cigarette taxes 230% for 87-cents a pack to $2.87 is moving forward. Opponents of the measure will argue that one result of a successful cigarette tax increase will be a dramatic surge in cigarette purchases on the black market.
In fact, a study done for the California Foundation for Commerce & Education two years ago by Andrew Chang & Company specifically mentioned the black market in the report’s title: The State and Local Impact of Tobacco Prices on Smuggling and Black Market Tobacco Sales.
Among the report’s findings:
- Approximately one out of every five cigarettes in California is smuggled, as of 2011. This amounts to about 220 million cigarettes smuggled every year, the equivalent of Arizona’s total cigarette consumption.
- A $2 dollar-a-pack tax increase would double the smuggling rate to 39 percent of all cigarettes consumed.
- By failing to account for smuggling, proponents for the tax hike will overestimate the tax on tobacco products.
- The tax increase and drop in legitimate sales attributed to smuggling would result in thousands of fewer retail jobs in the state.
While opponents of the gun and cigarette tax will talk about increased illegal activity, proponents for another ballot initiative will put a contrary spin on the black market issue. Supporters of the marijuana legalization initiative will argue that passing the initiative will close down much of the black market trafficking in marijuana today while the state will gain revenue from the tax placed on cannabis sales.
Ironically, Lt. Gov. Newsom is a supporter of marijuana legalization, as well. Should be interesting to see how he juggles the contrary use of the black market issue in the gun control and marijuana measures.
He won’t be alone. The sheriffs’ association has also come out against the marijuana legalization effort. So, they, too, will be dealing with pointing out the black market problem with the gun/ammo measure while realizing that a black market continues to thrive if the marijuana measure fails.
If the fictional character of Signor Ferrari in the classic movie, Casablanca, (“As the leader of all illegal activities in Casablanca, I am an influential and respected man.”) who encouraged use of the black market, had a contemporary equivalent in California, he or she would look to the results of the November election with both eager anticipation and a bit of distress.