Legalize drugs, gain $77 billion
Here are more excerpts from the Harvard study cited in today's column. The study was undertaken by Jeffrey Minor, an economics professor who is described in various press reports as a libertarian.
Government expenditures
"This report concludes that drug legalization would reduce government expenditure by $44.1
billion annually. Roughly $30.3 billion of this savings would accrue to state and local governments, while roughly $13.8 billion would accrue to the federal government. Approximately $12.9 billion of the savings would results from legalization of marijuana, $19.3 billion from legalization of cocaine and heroin, and $11.6 from legalization of all other drugs."
"The estimates are ballpark figures that indicate what order of magnitude policymakers should expect from legalization."
"To estimate the state and local savings in criminal justice resources, this report . . . estimates the percentage of state and local arrests for drug violations and multiplies this percentage by the state and local budget for police. It estimates the percentage of state and local felony convictions for drug violations and multiplies this percentage by the state and local budget for prosecutors and judges. It estimates the percentage of state and local incarcerations for drug violations and multiplies this percentage by the state and local budget for prisons. It then sums these components to estimate the overall reduction in state and local government expenditure. Under plausible assumptions, this procedure yields a reasonable estimate of the cost savings from drug legalization. "
Taxes
"In addition to reducing government expenditure, drug legalization would produce tax revenue from the legal production and sale of drugs. To estimate the revenue, this report employs the following procedure. First, it estimates current consumer (retail) expenditure on drugs under prohibition. Second, it estimates the expenditure likely to occur under legalization. Third, it estimates the tax revenue that would result from this expenditure based on assumptions about the kinds of taxes that would apply to legalized drugs."
"Legalization would also generate tax revenue of roughly $32.7 billion annually if drugs were taxed at rates comparable to those on alcohol and tobacco. Approximately $6.7 billion of this revenue would result from legalization of marijuana, $22.5 billion from legalization of cocaine and heroin, and $3.5 billion from legalization of all other drugs."
Demand
"This report assumes there would be no shift in the demand for drugs. This assumption likely errs in the direction of understating the tax revenue from legalized drugs, since the penalties for possession potentially deter some persons from consuming. Any increase in demand as a result of legalization, however, would plausibly come from casual users rather than heavy users, since heavy users are the ones with strong desire to consume drugs and are therefore already consuming despite prohibition. Any increase in use might also come from decreased consumption of alcohol, tobacco or other goods, so increased tax revenue from legal drugs would be partially offset by decreased tax revenue from other goods. Forbidden fruit effects from prohibition might also tend to offset the demand decreasing effects of penalties for possession. Thus, the assumption of no change in demand is plausible, and it likely biases the estimated tax revenue downward. "
Lower drug prices
"Under the assumption that demand does not shift due to legalization, any change in the quantity and price would result from changes in supply conditions. Two main effects would operate. On the one hand, drug suppliers in a legal market would not incur the costs imposed by prohibition, such as the threat of arrest, incarceration, fines, asset seizure, and the like. This means that, other things equal, costs and therefore prices would be lower under legalization. On the other hand, drug suppliers in a legal market would bear the costs of tax and regulatory policies that apply to legal goods but that black market suppliers normally avoid. This implies an offset to the cost reductions resulting from legalization. Further, changes in competition and advertising under legalization can potentially yield higher prices than under prohibition."







Comments
Not so fast there sparky. Do you have any idea where all that money is currently going. Your talking about good paying jobs as cops, prison gaurds, probation officers, attorney's, etc. etc. etc. This is big business and a lot of Americans feed their families off the war on drugs. We cannot afford to lose these jobs right now.
Posted by: john | December 2, 2008 11:23 AM
I agree that marijuana should be legalized. What people do with their own bodies should be their business...as long as they do it responsibly & do not hurt anyone else in the process. I don't agree with legalizing cocaine & heroin since those are way too dangerous but I do think they should be decriminalized because once again people should have the right to put whatever they want into their bodies. Just my 2cents worth.
Posted by: Shelly | December 2, 2008 3:33 PM
That's right John, we MUST continue arresting 2,000 people every day for marijuana-related offenses because another group of people need to feed their families.
Let's not use the word "discrimination", let's just call it "job creation".
Posted by: End the Prohibition | December 2, 2008 6:08 PM
John, having a job is a privilege, not a right.
Posted by: Adam | December 2, 2008 8:43 PM
john- what about all the jobs that would be created by the new industry?
Posted by: mark | December 2, 2008 8:44 PM
The prohibition of marijuana has been a cost to us that we cannot afford any longer. The reduced burden on the justice system would allow our judicial system to focus on real criminals and keep them out of society. I would advocate for the increased revenue from taxation but I would also advocate for maintaining the jails, corrections officers, and police to combat real crime.
Posted by: truthwill setufree | December 2, 2008 9:17 PM
Yeah i think weed should be legalized because a lot of people smoke weed even though its illegal and if it was legal, we would have so much more profits from it and there wouldn't be petty crimes because weed doesn't do much to human body.
Posted by: luis | December 2, 2008 10:07 PM
A significant factor would also be the impact on foreign conflicts -- in South America, Afghanistan, etc. If heroin, cocaine, marijuana, etc. get the good ol' Made in America stamp, what will that do to the poppy fields of Afghanistan, the coca fields of Colombia and more?
Posted by: Peter | December 2, 2008 10:32 PM
There’s something terribly WRONG when the DEA and the Mexican drug Cartels agree that the marijuana prohibition is a good thing!
Someone on our side has made a big mistake. We must END the Federal Marijuana Prohibition and STOP funding the cartels!
Posted by: End the Prohibition | December 2, 2008 10:42 PM
My best guess is that John is being serious.That's one heckuva reason to keep people rotting in jail, because other people need the jobs involved. If they can't find real criminals to make their living defending us from, they'll have to find other work, with retraining help if necessary. And as far as not firing people during this recession, unfortunately nothing is getting legalized so fast, this recession will be history before so much as one state legalizes weed, let alone the dangerous stuff.
Posted by: newageblues | December 3, 2008 12:00 AM
Has anyone factored in the increase in health care, emergency room, and addiction counseling costs, as well as the human and economic costs of people overdosing? Mind you, I'm in favor of ending the War on (Some) Drugs, but we still have to be realistic here.
Posted by: Alexander | December 3, 2008 7:00 AM
Alexander, YES!
No one who has thought it through expects to not have those issues to deal with. But all of the measures required to deal with them will still add up to less than 20% of what is currently spent (by the criminal process) and have a reasonable expectation that the 20% referred to will be reduced even more.
Posted by: MrRational | December 3, 2008 10:48 AM
That's a good point, Alexander. However, marijuana is the safest recreational drug on the planet; it doesn't cause cancer, heart disease or brain damage, and you cannot overdose on it or die from using it. In addition, its addictive qualities are somewhat less than caffeine.
So we're not going to see an increase in health care, emergency room and addiction counseling costs when we switch to treating it the same as we do alcohol.
Furthermore, everywhere marijuana's been decriminalized (including Amsterdam) the use of the drug has gone down. So there will be less people using it than right now. As we currently don't experience health care and emergency room costs for marijuana when we have 15 million people using it, we will also not experience these costs when we have less people using it.
What we will experience is far less minors using marijuana, as well as an end to drug dealers and an end to the Mexican drug cartels which have killed more than 4,000 people this year alone, often beheading and dismembering them to get their message across.
The humanitarian thing to do is to end the federal marijuana prohibition and control marijuana with the same laws we use for alcohol.
Posted by: End the Prohibition | December 3, 2008 11:14 AM
$7.7 Billion Tax Dollars spent Annually on just Cannabis Eradication Programs in the U.S.
Are you safer because a Cannabis Consumer is incarcerated?
What ROI (return on investment) of Your tax-dollars have you gotten?
More than 800,000 people were arrested in 2007 for cannabis violations and approx 90% of those were for simple possession.
Now, I am told it costs American Tax-Payers about $2800.00 to house a prisoner each month.
Lawmakers have allowed for Expanding Laws, Increasing sentencing in order to get More Citizens Incarcerated and once there, keep them longer
I'm sorry, But there are actual Dangerous criminals out there that are Not being sought, investigated and prosecuted because Valuable and very limited resources are being spent seeking Cannabis and Cannabis consumers.
No one has been able to Scientifically demonstrate harm from use, Except for the Laws, Rules and Policies governing the use of Cannabis. That is the Most Dangerous element surrounding Cannabis use, is getting Arrested!
DE-Schedule it at the Federal Level, Tax it, sell Licenses to cultivate it and Everyone benefits from New Tax Revenue, This will impact/lower crime, severely impact the Black Market, lesson the dangers of exposure to dangerous drugs.
Who Profits from Cannabis Prohibition? Look at the list of supporters for Not ending this disastrous Prohibition. Follow the Money.
When will Medical Cannabis become a matter of Health Care and Not a Political Issue? Only the sick, hurting and dying suffer the consequence of Prohibition.
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Posted by: FreidaMae | December 3, 2008 11:32 AM
What’s going on with the uptick of murders in Balto? I know that some are crimes of passion, but I assume that a number are a direct result of the drug trade. Is there an “end of year” push to get revenues or numbers up in the drug trade? Are margin calls due? Does the bottom line of an (criminal)organization mean that heads literally roll???
Posted by: Drewdy | December 3, 2008 1:59 PM
The Federal Marijuana Prohibition: Is it holding you back?
This year alone the Mexican Drug Cartels have murdered more than 5,000 people, primarily to protect their cash flow from illicit marijuana sales in the US. Sales made possible only due to the presence of the Federal Marijuana Prohibition that prevents reputable businesses from legally selling marijuana to adults.
If you were one of the 5,031 people killed by the Cartels this year, probably you were also decapitated or dismembered to ensure they got their message across, or maybe you were the 5-yr old boy whose heart they injected with acid, then you could legitimately say that the Federal Marijuana Prohibition is holding you back.
But maybe it was the other great benefiter of the prohibition that had a negative impact on your life. Maybe you were one of the 2,000 people our Law Enforcement personnel arrested every *day* for marijuana-related offenses. The vast majority for doing nothing more than what alcohol drinkers and cigarette smokers do every day. If you were one of the people arrested for possessing the safest recreational drug on the planet while your alcohol drinking and tobacco smoking friends were able to consume their addictive and deadly drugs of choice with impunity, then you too could say that the Federal Marijuana Prohibition is holding you back.
There is something terribly WRONG when the DEA and the Mexican Drug Cartels agree that the marijuana prohibition is a good thing. Somebody on our side has made a BIG mistake.
Posted by: End the Prohibition | December 4, 2008 11:09 AM
The FDA doesn't test whether a drug is better than existing ones on the market, it just tests whether it meets the manufacturer's claims and it's within specified levels of safety.
So why does EVERY prohibitionist say "there's better drugs out there"??? That isn't what the FDA tests!
If the FDA doesn't test other drugs to see if they're better than everything else then why should marijuana be forced to meet this standard?
Marijuana is a GREAT drug for some things, and as safe as hell! That'd be enough to allow other drugs to pass the FDA's testing, so why isn't enough to allow marijuana to pass???
Send marijuana back to the FDA and get them to test it right this time!
Posted by: Jillian | December 22, 2008 7:25 AM
It is as simple as this: If America wants to turn this economy around before we are completely emersed in a depression, then we need to legalize ALL drugs. The industry would create so much revenue that could be funneled back into the economy in struggling sectors (infrastructure, universal healthcare, education, etc.) Now, as for the hard drugs the government would have complete control and undermine all gang/cartel efforts still trying to compete. The hard drugs would be supplied in only safe amounts and at such a price that nobody could compete. Gangs would virtually disappear, or would have to resort to trafficking guns and humans as their primary source of revenue, which are much less profitable. With the right legislation and correct politicians (and bipartisan) working on this, legalizing drugs could be done in a safe and economically friendly way that would simply benefit nearly every sector of society.
Posted by: Evan | February 12, 2009 7:32 PM
Michael Phelps may have a higher calling in life than selling cereal. Citizens on the Internet should start a Michael-Advocates-Legalization campaign. When I heard about the child pornographers not being pursued because we waste money pursuing pot-smoking hippies, it made my blood run cold. Everyone please encourage Phelps to advocate legalization.
Posted by: Just-Another-Citizen | February 13, 2009 2:45 PM