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

[tacticalogic]

Yeah, flood the tunnels and follow down the private planes that invade us as well.

Why are you still parked on your butt in front of a PC? You're supposed to be hunkered down behind a rifle killing drug smugglers.

[davesdude]

"Does the government have the authority to regulate drugs (state, local, and/or federal), and if so, should they? "

well hell no because a government should protect its people right? well prohibiting those substance makes them worst, if you want to get on that matter now we are off topic,(but still send me a private mail if you want clarifications) which i remind you is about the economical impact...but we all got carried away in that good old debate about WOD!!! The articles was proposed by several specialist, to use it in a political debate against mr bush... did you honestly read the thing???

[davesdude]

"Indeed, if legalization were to occur, I'd be the first on the bandwagon to take those supreme rights to do what I saw fit and force all of my employees and government fund recipients to take a drug test. Failure would mean no job, and no benefits. If I were an insurance company I would demand drug testing of all covered people and refuse to cover drug users. Same applies to loan applicants"

Thanks! Common sense would still exists after all! And you are not alone...So why would drug use spike up?

[davesdude]

"but he's wrong here."

and why's that? i came here to know why...Truly!

[davesdude]

Haha nice sarcasm! Thanks!

[davesdude]

"My point is that legalization, as we think of it with other products, simply wouldn't be possible in the current tort atmosphere. MJ might make a go of it with hefty insurance costs tagged on, but other more harmful drug manufacturers would simply be unable to make it work. The pharmaceuticals have a hard enough time with drugs that have medically redeeming purposes."

Well take exemple with Amsterdam...just make it legal in specific environement, not at the corner store, but in places equivalent to coffeeshop...All the stoners gather at one point, more easily under control, if you fear they might break out crazy!! Where would be the problem in that? Also why would it be bad if the pharmaceutical suffered...that would mean that marijuana is in fact a medication!

[davesdude]

"the right to LIVE is NOT ABSOLUTE " but that right was taken by an individual we don't have control over, he took that right away...no goverment should take that right away...

[davesdude]

"A higher percentage of crack heads suffer serious medical consequences than sky divers."

so i think it is right! so i guess you want to get to the point that drug use would boost up because they are now legal. is that right?

[davesdude]

"You have no prayer of legalization without a price tag of 700.00 a bag or more at the table from a retail outlet that can afford the equivalent of an alcohol license.
Another poster said he paid 850.00 for medicinal. Legally.
This is a capitalist country, not Amsterdam.
75% going to the government. Like booze and smokes.
Their going to make it expensive and call it a voluntary tax. Don't want to pay it, quit.

You have to be kidding."

Well that would be stupid for them to make it that price if they want to out throw the black market, don't you think? Currently it is that price because supply is not great enough...They are currently doing the mistake to raise the price on tobacco and more people turn to black market...So i really wouldn't think those price would still apply...

[davesdude]

"I have NO idea what you just said."

referring to an older post without noticing there was already 200 post! i stop writing for about a couple of hours!

[davesdude]

sorry for all those late post! but i didn't want to miss a thing!

[A CA Guy]

Why are you still parked on your butt in front of a PC? You're supposed to be hunkered down behind a rifle killing drug smugglers.

Yep, killing off a bunch as they cross the border and won't stop would be a good thing, I agree with you.

[Lady Jag]

Marijuana Production, Availability Rising, Federal Report Says

March 9, 2006 – Washington, DC, USA

Washington, DC: Marijuana production and the amount of cannabis available domestically are on the increase, according to the National Drug Intelligence Center’s (NDIC) 2006 “National Drug Threat Assessment” report. The report finds that marijuana production in Mexico, Canada and the US is rising, with domestic cannabis production increasing sharply in 2005 to its “highest recorded level.”

[A CA Guy]

Hey, if they don't heed the border patrol and stop on our side with their vehicles and try to storm back guns blazing, rocket the SOBs.

[tacticalogic]

Yep, killing off a bunch as they cross the border and won't stop would be a good thing, I agree with you.

Then get off your ass and go do it.

[A CA Guy]

That is a border patrol and military issue that as a private citizen we do not have the freedom to pursue unless you are a property owner being attacked these days.

Part of what is wrong at the border.

[tacticalogic]

That is a border patrol and military issue that as a private citizen we do not have the freedom to pursue unless you are a property owner being attacked these days.

Part of what is wrong at the border.

So you want them shot, but you want someone else to do the shooting?

[TKDietz]

"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."

That depends. If you could get pretty good quality buds for that price not full of leaves, seeds, or stems, you'd be paying a little over $7 a gram which would probably translate into maybe a dollar or two per smoking session if you were a fairly average pot smoker. That's cheap. It's cheaper than going out and having a couple of beers at a bar after work, that's for sure. If you were only an occasional smoker, it wouldn't be worth it at all for you to go to the trouble of growing it yourself. It wouldn't even be worth the trouble if you were someone who smoked a little every evening.

Now, if you were a really heavy smoker, your habit could get pretty expensive if you were paying $200 an ounce, but I don't really see why it would have to cost that much if it was legal. Grown on a large scale commercial farms like other agricultural products are produced these days, it really shouldn't cost more than a few dollars a pound to produce adequate quality product. The government would have to tax the crap out of it, taxes amounting to several times wholesale costs, in order for prices to stay where they are today. Fancy connoisseur grade stuff might cost more to produce, but I can't imagine how it could cost anywhere close to what it costs today to produce it. As it is the really pricey stuff is grown on a very small scale in growrooms usually in homes under expensive grow lights and they have to worry about getting arrested and sent to prison and having all of their property seized. The fanciest stuff out there could be grown in huge fields of green houses with only supplemental artificial lights when needed. The economy of scale would bring production costs way down. Even with taxes and insurance and regulatory costs, the cost to bring the product to market could be far less than it is today. It can't be that much harder to grow and harvest and dry and cure marijuana than it is to do the same with tobacco. It might be a little more labor intensive and more involved but even if it cost twenty times as much to produce the per pound cost would be substantially less than a hundred dollars a pound.

I bet it pot will be legal and regulated similar to the way alcohol is today and I doubt that many people will grow their own when that does happen. There should be good quality product available at fairly reasonable prices. People will enjoy the variety they find at the retail outlet. There will be favorite brands or varieties people get used to. Tastes will change and big growers will develop signature products that can't really be duplicated at home. People won't really want crappy homegrown anymore than they want homebrewed beer some yahoo brewed in his closet. Most will be more than happy with what they can get at the retail shops. And if home growing is allowed, my bet is that there would be some tight restrictions and people would probably be required to purchase permits, at least at first. There will probably be a lot of fear that everyone will just grow their own, which I don't think will happen, but the government is going to want to ensure that they collect their taxes. It will end up just being more trouble than it is worth to most people.

[TKDietz]

"What are the prices in Europe for the already grown stuff in the special shops, not on the street?"

There really isn't anything like that. The coffeeshops in Holland are supplied by black market growers, predominantly organized crime. Growing is still illegal there, although the police will look the other way when it comes to small closet grows. Small closet grows are not supplying the coffeeshops. These are high volume businesses that require steady supplies people growing four or five plants at a time cannot deliver. Also, like any other business selling goods, they require consistent product. On top of that, in order to compete with the other shops they have to provide a wide variety of product to satisfy their customers. A lot of what they sell is imported, smuggled into their country much the same as it is smuggled into ours. Growers, smugglers, and other suppliers are busted in Holland, and a lot of marijuana and hashish is seized by law enforcement. It's a strange arrangement they have there. These coffeeshops are allowed to operate. Some even have neon marijuana leaves on the fronts of their buildings. Some are national chains. All of their supply is bought from the black market though. There are no massive scale growing operations like you might see in the tulip business in Holland. The suppliers there operate much the same as they do here and consequently prices aren't that much different there. Prices are probably a little lower on average but from what I have read, not a great deal lower.

[Supernatural]

Thanks for your answers. They make a lot of sense.