The Budgetary Implications of Marijuana Prohibition

Harvard University ^ | June 2005 | Jeffrey A. Miron

[davesdude]

Executive Summary

Government prohibition of marijuana is the subject of ongoing debate.

One issue in this debate is the effect of marijuana prohibition on government budgets. Prohibition entails direct enforcement costs and prevents taxation of marijuana production and sale.

This report examines the budgetary implications of legalizing marijuana – taxing and regulating it like other goods – in all fifty states and at the federal level.

The report estimates that legalizing marijuana would save $7.7 billion per year in government expenditure on enforcement of prohibition. $5.3 billion of this savings would accrue to state and local governments, while $2.4 billion would accrue to the federal government.

The report also estimates that marijuana legalization would yield tax revenue of $2.4 billion annually if marijuana were taxed like all other goods and $6.2 billion annually if marijuana were taxed at rates comparable to those on alcohol and tobacco.

Whether marijuana legalization is a desirable policy depends on many factors other than the budgetary impacts discussed here. But these impacts should be included in a rational debate about marijuana policy.

http://www.prohibitioncosts.org/mironreport.html

[SampleMan]

The potheads will be trying to get it made illegal again!!!

The legalization crowd hasn't considered the class action lawsuit yet. But mental acuity and pot smoking don't exactly go hand in hand.

[philman_36]

You got anything resembling an argument under all that ad hominem garbage, or are you just going to vomit all day?
You seem to be doing a little regurgitating yourself.
Just making things a regular BARF-O-RAMA.

[philman_36]

The legalization crowd hasn't considered the class action lawsuit yet.
BARF-O-RAMA!
Doctors, Patients File Class Action Suit to Block Federal Punishment for Medical Marijuana

I really don't know if you consider the filers as part of the legalization crowd so that may not apply.

[Dinsdale]

You keep using this word PROHIBITION. I don't think it means what you think it means.

Extending prohibition to mean anything prohibited just proves that if you change the meaning of words you can make white equal black. It also proves you are out of arguements and are playing semantic games.

How about extending it to the laws of physics. Things are prohibited from falling upward. Viola prohibition works.

Prohibition of recreational drugs has never worked 100%. The only fair question is if the total cost of prohibition exceeds the total net cost of the drug with normal regulation. For alcohol the answer was clearly yes.

[Gordongekko909]

No, I'm arguing against boilerplate red herrings.

Oh, so you think that I don't actually intend to support legal marijuana ever, and that my "get rid of socialized medicine" condition is just there to make it so that I will never actually support legalization. Well, I can't prove what my motives are by any evidence whatsoever, so you can either accept that my opposition to marijuana legalization hinges entirely on it not accomplishing its stated goals, or you can't. And there's nothing I can do about that.

I didn't say you couldn't calculate some change. I said the expense already exists to some extent WITH prohibition in place. Are you saying you will bear the current expenditure as long as government goons are busting some heads? That you won't bear the same expenditure without the head busting?

My argument is that it won't be the same expenditure. Health care costs would go up with legalization, and taxes with them. I would be perfectly satisfied with annihilating socialized medicine; I don't particularly like it. That annihilation, however, is a precursor to me supporting legalization, because I don't want to pay more. In short, I could care less if someone smokes his brain into bong resin in the privacy of his own home. I just don't want to pay his medical bills.

If the expenditure remains the same, do you favor standing down in the "war" on MJ?

You mean if the entire thing turns out to be revenue-neutral with no change in healthcare policy? Sure, why not. I just don't think that that's how it will turn out with taxpayer-funded health care still in place. Hence, get rid of socialized medicine before legalizing marijuana.

[Gordongekko909]

I thought I "wasn't worth bothering with."

[philman_36]

...ad hominem garbage...
BTW, that's disdain and contempt you're getting, not ad hominem garbage.

[Gordongekko909]

Sooo... you gonna stop "bothering with" me any time soon?

[Lady Jag]

Forbes Mag, November 2003, said, "CANADA'S LEGAL farm operators have net margins of 5.5%. An economist in Vancouver's Simon Fraser University figures pot growers have a 72% annual rate of return, after discounting for costs, labor, thefts and arrests." I've seen statistics like this for years, all saying that legalization would be profitable.   From this lack of action, one would infer that legalization would profit the wrong people.

[philman_36]

I thought I "wasn't worth bothering with."
My bad, I was imprecise. Your arguments aren't worth bothering with.
That leaves me with contempt and ridicule, which I'm going to use as I choose.
As a solution I profer that you can choose to ignore my replies.

[Supernatural]

I marijuana is legalized, many people would simply grow their own?

You can make beer and wine right now with no consequences although they are both regulated by the government.

If I could grow my own I would not pay any business $200 per oz.

Would people be willing to pay $200 for a fifth of whiskey?

Would people be willing to pay $50 for a six pack of beer?

If weed was $20 per oz. the federal stores might do some business.

[philman_36]

Health care costs would go up with legalization, and taxes with them.
Supposition. (that means it's a guess, or your belief, not fact) Throw it out and try again.

[philman_36]

As a 23-year old law student I'm rather surprised that you would let supposition color your argument.

[GLDNGUN]

How about extending it to the laws of physics. Things are prohibited from falling upward. Viola prohibition works.

And you think I'm out of arguments? LOL Different types of prohibition have differing rates of success. I used an example to show a highly effective one. One that actually exists and that actually works in regard to human activity. Don't like it? Tough.

Prohibition of recreational drugs has never worked 100%.

Really??? You don't say! Has the prohibition against rape, robbery, or murder ever worked 100%???

How's that prohibition against illegal immigration working on the southern border? Not too well, is it? We can't be expected to control human activity, right? I mean if someone wants to smoke a doobie, they are going to get their hands on one, right? And if someone is desperate to get into the good 'ol USA, they are going to, right? So let's end the WOD and the War on Illegal Immigration and save wads of money, right?

[SaintDismas]

The only thing prohibition has ever done is to create black markets operated by criminals and encourage the corruption of public officials. >>>>

I agree with that wholeheartedly. And these incessant assinine commercials on the radio and t.v. about marijuana and parents, "the anti-drug" are so annoying to put it mildly. I can't stand them, mostly because they give the impression that smoking pot is killing people right and left. What the hell about kids and meth? Why the heck don't they have commercials about that? Tell them it will completely rot their teeth out (true), they would care more about that than their health

[Gordongekko909]

I can't stand them, mostly because they give the impression that smoking pot is killing people right and left.

Huh? I never got that impression from those commercials.

[SaintDismas]

No, I didn't mean that exactly, but only to say that you don't see any other, really dangerous drugs talked about, do you? I find that weird

[Dinsdale]

Still playing semantic games using your definition of prohibition.

How about addressing the point (you know costs on both sides etc).

Did'nt think so.

[Gordongekko909]

I've seen quite a few commercials about Ecstasy. Dehydration, heart failure, etc. I imagine you see more anti-marijuana commercials because it's used more than any other drugs.

[TKDietz]

The biggest problem I see with this report is that they use the ONDCP's estimate on what Americans spend on marijuana. The ONDCP estimated that Americans spent 10.5 billion dollars on marijuana in 2000. They came up with this figure solely from data from SAMHSA's NSDUH, the government's national survey on drug use. They did not look at all users from the report either, only those who admitted use within the past 30 days, so they cut out several million pot smokers up front. On the survey people were asked how much pot they smoke and the average for those who admitted smoking in the last 30 days was about 7 grams. They then came up with an average price for that much marijuana and multiplied it by the number of people who admitted smoking within 30 days prior to the June 2000 survey to come up with a total for how much Americans spend on marijuana. The total "consumption estimate" of the total amount of marijuana consumed by Americans that year came to about 1009 metric tons (may have been 1019 tons, I'm doing this from memory).

The problem is that far more than 1009 metric tons of marijuana are seized every year by local, state, and federal authorities. To believe the ONDCP's numbers, you'd have to believe that we seize a lot more marijuana than makes it to the streets. That's laughable. That doesn't doesn't happen. Even the ONDCP knows better than this. They also calculate what Americans spend on cocaine and they will not rely on SAMHSA's drug survey numbers to calculate what Americans spend on cocaine because they know the numbers are way low. As it turns out, the ONDCP's "consumption estimates" for cocaine just about match the "supply estimates" for cocaine done by another government agency. There are also supply estimates for marijuana. I don't know off the top of my head what they were for the year 2000, although I'm thinking I recall the estimate being between 10,000 and 22,000 metric tons, but I am quite certain that the estimate for 2003 was that there were between 12,000 and 25,000 metric tons of marijuana available on the market in this country in the year 2003 after the government seized all it was going to seize. That's quite a bit more than the 1009 metric ton consumption estimate by the ONDCP.

The ONDCP consumption estimate is no doubt way low. There is no way in the world the government is seizing far more marijuana than is getting through to consumers. Law enforcement don't even believe that. Most will estimate they are getting something like 10% of what's out there. The feds alone seize something like 1,200 or 1,300 metric tons of marijuana every year, and state and local authorities seize a lot as well. They seize thousands of pounds every year off the highway in the small town where I work. I know this because the public defender office where I work gets almost all the drug mule cases and we handle thousands of pounds worth of pot cases every year. A DEA agent once told me that the actual number in my county is in the tens of thousands of pounds per year but we don't see a lot of it because a lot of these guys will do "controlled deliveries" where they go on and deliver the loads to the other states and law enforcement bust the people at the other end.

It may very well be that the supply estimate of 12,000 to 25,000 metric tons is high, but there is no doubt in my mind that the 1009 metric ton consumption estimate is way off. It could very well be that Americans are really consuming 10, 20 or more times as much marijuana as the ONDCP consumption estimate reflects. The true number has to be at least several times the ONDCP estimate. If that is the case, and there is no doubt in my mind that it is, these economists numbers with respect to taxes are way off. We could probably actually collect several times as much in taxes as these economists estimate.