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

[Trailerpark Badass]

If marijuana was legal, where would doped-up kids get the money for their habits? Probably via my car radio or my neighbors' garage full of tools. Hence, their tentative right to drugs is outweighed by the tenuous but still existant property rights.

Dumbest post I've ever read.

Well, today.

[Beckwith]

Your impression of the results of Amendment XVIII, Prohibition, are fantasy.

During prohibition, it was legal for an individual to make their own alcohol products for "personal use." Anybody that had a doctor for a friend had a prescription for alcohol. Anybody that wanted a drink could get one.

My grandfather ran a speak across the street from the Boston Herald Traveler on Avery Street in Boston that was famous because all the reporters wrote stories about it and he was never busted. I wonder why?

As far as the media making much of bootleggers and criminals, that's hogwash. Bootlegging was a massive industry, employing tens if not hundreds of thousands and as I wrote in my original post, "The only thing prohibition has ever done is to create black markets operated by criminals and encourage the corruption of public officials."

That's EXACTLY what the 18th Amendment accomplished. Anyone that wanted a drink could get a drink.

Another unintended consequence (maybe?) was that distilleries, wineries and breweries were mostly small operations run locally. At the end of Prohibition, the gangsters who had accumulated massive, tax-free wealth created huge alcohol producing companies, cornering the market for alcohol products. There are many that contend that was the original intent of the amendment.

Also, if it weren't for prohibition we wouldn't have Ted Kennedy.

[philman_36]

For a little while I entertained the possibility that you might have something interesting to say in something approaching adult behavior.
For a little while I entertained the possibility that you might have something interesting to say in something approaching conservative behavior.
And you too get one point for proving me wrong about that.

[SampleMan]

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

I have no idea what that sentence means, so I can't really answer it.

[bobjam]

The abuse of alcohol in our country gained momentum after the Civil War. Groups such as the Anti-Saloon League blamed the violence that permeated not only city life but also frontier life on alcohol. Town after town responded to the problem by "going dry". You would be surprised at just how many towns today are either dry or have very strict Blue Laws. Eventually the public had had enough and three-fourths of our elected state legislatures ratified the Prohibition Amendment (to liberals that's an example of a minority forcing its unpopular morals on everyone else while a 5-4 SCOTUS decision is a sterling example of good governance). It is no wonder that alcohol use dropped off in the early 1920's.

If laws creat crime, then let's end murder by legalizing it. We could end illegal immigration by legalizing it too.

[SampleMan]

Where would be the problem in that?

The Amsterdam model doesn't solve the tort issue anymore than gathering all smokers together would have alleviated the Big Tobacco law suits.

Also why would it be bad if the pharmaceutical suffered...that would mean that marijuana is in fact a medication!

You've lost me again here. MJ is a medication? Not deductive reasoning from being sued and non sequitur to the argument in any event. Imprimis, most drugs have some capacity to help or hinder the body. Morphine is medication if you need it, but a highly addictive and illegal brain toaster if you don't. Would you just explain who will legally produce and sell crack cocaine (as it is a great example), without immediately being sued into bankruptcy.

I notice a strong inclination to simplification in the legalization argument, that ignores even addressing obvious problems like tort law.

Additionally, your Amsterdam model begs the question of whether you would require municipalities to provide such areas and under what authority, so that junkies wouldn't have to travel, and what of our rural pot heads?

[bobjam]

Criminals were corrupting cops and politicians long before Prohibition, and they continued to do so long after Prohibition.

A tiger is a tiger, and tigers do what tigers do (to steal from Rush Limbaugh). The same is true with criminals. They commit crimes. It's what criminals do. Did the gangsters and mobsters suddenly become model citizens when Prohibition ended? No; they moved on to other criminal enterprises.

[SampleMan]

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

Did I say it would spike up? No. But I think its reasonable to say it would increase. Just as lowering the legal age for alcohol to 13 would increase drinking by teenagers. But whether it would increase or not isn't really what we have been discussing.

I'm stating that I don't think that legalization will be the panacea that you think it will. Users of destructive drugs will still be marginalized, will still cause problems for society, will most likely increase in number, and the current tort atmosphere won't even allow it to operate, even if its technically legal. Again I use the lawn dart analogy. Some people would love to purchase some old fashioned lawn darts, but there are no companies willing to manufacture them.

[SampleMan]

Sorry, class is over. I don't give bonus points for inanity.

[Bogey]

Have you seen the jail terms for people smuggling tobacco?
Internationally or in America?

---

I don't live overseas, so I don't care.

The E.U. and W.H.O are real gung ho on heavier sentences for smuggling. Canada and the U.K as well.
When people infringe on "governments" profits, it doesn't go over well. They have propped up their social spending on the revenues.

The last ring they busted in New York got 20 years.
Middle Easterners. Hijacked a wholesaler truck.
Smokers get hit with back taxes if caught. Some internet buyers have had to cough up to $10,000.

You guys complain about selling, using an illegal product and going to jail.
Cigarettes are Legal. Whether they get 2 weeks or 20 years,
they went to jail because they cut into the governments slush fund.
They went to jail because the public doesn't want to pay governments price.
When government charges 850.00 for a bag, but you can buy from the local for 250.00, what are people going to do?

The anti smokers set the road map for the anti drug people.
Except it will be far worse for a toker than a smoker.
And far more expensive. No offense, but to think they are going to let you " garden" and cut into their take, is mind boggling.
Government and Health groups are far greedier than any dealer..
Drugs will NEVER be legal unless government owns the business, and fringe groups get the rest.
To be honest considering the pressure, fines etc., placed on bars, tobacoo retailers daily, I question what individual
would want the responsibility or liability of being a "drug store."
It won't be cheap.
We aren't Amsterdam.

[DBrow]

I'm not sure that legalization/taxation would make everyone happy.

You'd go from DEA enforcement to BATFE enforcement under the Treasury department.

While cannabis products would fill several shelves at Wal-Mart, there would be harsh penalties for scofflaw bootlegger homegrowers who tried to dodge the tax (and cut into retailers profits).

Look into fines for operating an illegal alcohol distillery in the USA for examples.

Would legalization be profitable overall? You bet! That after all is what the Opium Wars were all about, dope profits.

The clip you quoted has Canadian pot farms operating at 72% ARR, but that's without liability, insurance, health care for the labor, taxes, pensions, disability insurance, or standards compliance. Any "under the table" operation will show high returns or there would be no incentive to go "under the table", one reason why bootleg bourbon is much cheaper than storebought bourbon (plus the lack of aging).

[TKDietz]

"During prohibition, it was legal for an individual to make their own alcohol products for 'personal use.'"

This is absolutely false.

[davesdude]

"You've lost me again here. MJ is a medication?"

I am only following along your way of thinking! So than Why would pharmaceutical would suffer if MJ was made legal?
Like it is not a medication...

[davesdude]

"Did I say it would spike up? No. But I think its reasonable to say it would increase"
yes you said it in an other post, but lets ignore it...You're right it would be reasonnable to say there would be a slight increase...

"Users of destructive drugs will still be marginalized, will still cause problems for society, will most likely increase in number"

Well for them to stay marginalized is agood thing, as a lot of them will stick to pot...

"won't even allow it to operate, even if its technically legal"

so therefor, only the "elite" will rise...as long as no drug test are done in schools, because some of the most brilliant student see their economical futur destroyed because they got caught smoking in their room...

[davesdude]

"While cannabis products would fill several shelves at Wal-Mart, there would be harsh penalties for scofflaw bootlegger homegrowers who tried to dodge the tax (and cut into retailers profits)."

i hope the wal mart thing was only for us to have a lil laugh!

[DBrow]

If MJ were legal, Wal-Mart would not sell it? Or Sam's Club, Alpha-Beta?

What do you envision for legal retail sale of cannabis products?

There already is MJ candy and even peanut butter in CA.

[davesdude]

"I'm making parallels. You appear to be uncomfortable with that. In both of the cases I made, the point was that it is simply a matter of judgment on what is right and wrong. This is so different than regulating drugs?

Many pedophiles say that the kids don't care until some mean adult convinces them that they've been harmed. There are those who want to make the age of consent eight. So don't tell me that I can't correlate one vice with another, when the counter argument is the same.

So tell me again what your interest is in U.S. drug laws."

sorry i didn't answer to that, interesting post...

but i am not sure against what other post it was meant to be! i'll try to make the best out of it!

So no, you cannot correlate the prohibtion on drugs and the prohibition on sexual manners, even if the counter argument is the same...prohibiton on drugs take away your right to be (even if it's unhealthy habits...) If i was living under strick prohibiton laws (a bit like the USA) i wouldn't have get to the point i am standing now...

I have already been caught with pot in Quebec, but the policeman told me: stay home with that!...he didn't even take it away from me...that gave me a chance to now get promoted to technical field sales ( and my boss knew about my habbits when he hired me...)

so that is why i am interested in US laws, so many people jailed for such an innofensive habit, and you have to already tried it to understand...to me this is the greatest country (USA) on earth and if you ask me why, i can tell you all the reasons why...but it's taking a weird turn, now even prohibiting sex toys in some state, without any complaints about it!

[davesdude]

"The feds have a monopoly on Area 51, they don't on an herb that grows everywhere'

good point

[DBrow]

So why would drug use spike up?

Advertising, marketing, ready availability, ability to buy and use without penalty; eventually without stigma, guaranteed quality, no dealer ripoffs, mainstreaming, liquor store and supermarket POS displays, radio spots, TV commercials, celebrity endorsements.

[davesdude]

"Advertising, marketing, ready availability, ability to buy and use without penalty; eventually without stigma, guaranteed quality, no dealer ripoffs, mainstreaming, liquor store and supermarket POS displays, radio spots, TV commercials, celebrity endorsements."

all those already applies... except, i agree a law should be pass in order to keep the marketing thing away (includes tv and radio), like in amsterdam, no advertising is legal nor marketing or promoting of the product...and that is the problem with tobacco and alcohol industry...and i really don't think a government would be stupid enough to put drugs in super market, and even in corner store...coffee shops would be the best thing!