[avita1]

Tobacco taxes have been found to discourage smoking among certain populations [1].

Perhaps that's not a fair comparison because the way legalization has been going, at least in the U.S. looks like a cross between tobacco and gambling. Taxing tobacco feels like the more correct metaphor, but I'm not sure why.

[1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3228562/

[PeterisP]

I observe that high tobbaco taxes have been a serious factor in discouraging or reducing smoking where I live, however, I'd like to point out a drawback. I'm not asserting that it would outweigh the benefits, but still.

What I'm seeing is that the high taxes, combined with a boundary to a neighbouring country with much lower taxes, is creating an extra financial incentive for crime that wasn't there. It suddenly created a situation where there's big money to be made in smuggling, and a strong pressure for corruption for various officials (customs, local police, administrative officials, municipalities, judges) funded by that money, and for violent crime (e.g. murdering honest officials that refuse to be bribed) funded by cigarette smuggling. In some sense it's comparable to the drug organized crime, because the market for 'gray' tobacco is comparable to drugs; while the customers pay much less, there are many more customers. And any black market has all kinds of negative side-effects on society simply by existing, as it adds incentives for bribery and corruption, and it funds people and organizations who naturally extend to other crimes - just like prohibition funded the rise of mob in USA.

So I'm worrying that the expected benefits of legalization are (in part) reliant on users moving from black market to legal means; however, in a legalized but heavily taxed environment many (most?) users would still prefer to keep their illegal dealers (because their product is affordable) and the expected decrease in crime and violence would not materialize because of that.

[nine_k]

Black market has immense operation expenses. It won't be able to undercut a legal market, even very heavily taxed, but still free.

It's more profitable to just start a legal operation instead.

OTOH countries where a particular drug is illegal will feel a significant pressure if in a large neighboring country the same substance is legal. This.hopefully would provide both an example and an incentive to at least decriminalize the substance, too.

[snagglegaggle]

I see similar things, and suggest another quite bad externality: when people realize the law doesn't make sense or look out for their bests interests they quickly come to view it with contempt.