Economics and the Case for Legal Marijuana

2004-07-10T16:31:00.000-07:00

If the Wisconsin and Minnesota State legislative agendas indicate the main focus throughout the Nation, it is the Budget.

With ongoing cutbacks, the big question looms:

What can we do to save money and improve our Economy?

I suggest that the legalization of marijuana, ending Prohibition, would be an easy and lucrative contribution. Though it is a civil rights issue primarily, the case for economics might register for people with less concern or understanding of the humanitarian issues.

Jimmy Carter tried to do his part to nudge our nation's War on Drugs towards a more humane direction when he declared in a 1977 message to Congress, "Penalties against drug use should not be more damaging to an individual than the use of the drug itself. Nowhere is this clearer than in the laws against the possession of marijuana in private for personal use." Today, as the Drug War calls for growing expenditures, it is clear that the prohibition of drugs, especially on marijuana, is now stressing the economy with more damage than the use of the drug itself. This stress is not necessary. It represents a significant amount of critical dollars.

In 1977, Senator Jacob Javits and Representative Edward Koch introduced a bill to federally decriminalize marijuana. Although both congressional representatives were Democrats, their motivation for this bill had as much to do with the economics of pursuing marijuana users, then estimated at 13 million, as the undesirability of criminalizing such a large portion of the national population (Koch, 1977).

Unfortunately, though the U.S. Senate Judiciary Committee had voted in October 1977 to decriminalize marijuana, they reversed the decision after the strenuous objections of Sen. Orrin Hatch, R-Utah. Marijuana decriminalization had been endorsed not only by Carter, but also the American Medical Association, the American Bar Association and the National Council of Churches. This resurgence of support followed a similar situation in 1972 when the Schafer Commission recommended that marijuana be legalized.

Prohibition profits the both illegal drug industry and the government. Though a significant portion of the USA’s economy is underground, employment and profits gained by an inflated law enforcement and prison industry are incentives to maintain prohibition.

A presidential commission chaired by the former Republican governor of Pennsylvania, Raymond P. Schafer, called for federal decriminalization and eventual legalization, regulation, and control of marijuana (National Commission on Marihuana and Drug Abuse, 1972).

The commission concluded that marijuana should be decriminalized. This was not interpreted as a license to abuse substances. In fact, the Shafer Commission's overriding concern was reducing substance abuse. According to the report, "On the basis of our findings, discussed in previous Chapters, we have concluded that society should seek to discourage use, while concentrating its attention on the prevention and treatment of heavy and very heavy use. The Commission feels that the criminalization of possession of marihuana for personal use is socially self-defeating as a means of achieving this objective" (National Commission on Marihuana and Drug Abuse, 1972).

More than 25 years later we have an administration whose drug czar is jetting about North America spouting ludicrous reefer madness. Such falsehoods and propaganda has not been so intensive since marijuana was first prohibited back in 1937. The prohibition movement may be more brutal today however, with the attorney general sending heavily-armed drug agents into hospices to terrorize terminally-ill patients and confiscate their medicine. The prohibition of marijuana has resulted in the arrests of nearly 750,000 Americans for marijuana, a majority who are productive citizens.

Drug warrior Orrin Hatch is still a Senator and still committed to making things worse.

While some may say Carter's presidency was a bad time for America, those days look pretty rosy in retrospect. If Carter had only prevailed on marijuana decriminalization, this world would likely be a lot better place than it is today.

Misuse of law enforcement resources. Sherrif Bill Masters reports in his book, Drug War Addiction, that an officer will use half of a work shift to complete the arrest of a typical marijuana offense.

Individuals charged with marijuana possession (not trafficking) presently make up 12 percent of the total federal prison population and about 2.7 percent of the state prison population. 87 percent of marijuana-related arrests in 1997 were for simple possession. Since the Schafer Commission determined that marijuana should be legalized there have been 2 million arrests.

How many true crimes, those crimes with victims, went uninvestigated and unsolved while thousands of marijuana possession charges were investigated and process?

How much tax money is used to pay the arresting officer, the attorneys and judge, then to maintain incarceration? It costs $23,000 a year to keep a prisoner in jail; therefore, those imprisoned for marijuana possession cost taxpayers at least $1.2 billion dollars a year. This figure does not include pre-sentencing costs.

Seventy million Americans have admitted to trying marijuana, and I don’t think anyone would argue they all should be in prison, except for those of the corporations that run for-profit prisons in the United States and make money for each imprisoned individual, and those who accept their rhetoric. TWA, AT&T and other corporations who cheaply employ prisoners to perform customer service duties probably appreciate prohibition as well.

“Cheap pot would also pose a serious challenge to the alcohol industry, a powerful political interest, whose products are over ten times as expensive.” –NORML, National Organization for the Reform of Marijuana Laws

However, in my mind, aiding corporations is a poor reason for doing anything, especially while denying upstanding citizens of their lives.
The fact that 33% of the U.S. population 12 years of age or older, 65,748,000 people, admit to using marijuana at some time in their lives (NIDA, 1988), indicates that the policy has failed at its primary goal of stopping use. How badly the policy has failed must remain a matter for conjecture until prohibition is repealed.

There is another pressing reason for the legalization of marijuana; and though large corporations could make great gains with legalization of hemp and a myriad of beneficial food, fuel and fiber products, they typically oppose legalization. What many consider a wonder plant would revolutionize the production of important goods and aid the ailing environment. “Hemp can be used as the raw material for products that are currently produced out of cotton, petroleum and timber. The seeds are also a high-quality balanced source of all the amino acids and essential fatty acids our bodies need as well as dietary fiber. Unlike its market competitors, hemp can be cultivated, manufactured and consumed with a fraction of the chemicals or pollutants that are used in the processing or utilization of cotton, petroleum, and timber products.”

Marijuana also has amazing medical potential that has been repressed by the prohibition of marijuana, and at the expense of quality of life for millions of Americans. Marijuana has been used as a medicine for at least 5,000 years, and only in 1941 did American doctors cease prescribing it. Marijuana can be used for a multitude of ailments, including pain relief-particularly neuropathic pain (pain from nerve damage), nausea, spasticity, glaucoma and movement disorders. Marijuana is also a powerful appetite stimulant, specifically for patients suffering from HIV, the AIDS wasting syndrome, or dementia. Emerging research suggests that marijuana’s medicinal properties may protect the body against some types of malignant tumors and are neuroprotective.” (American Medical Association) A recent federal study demonstrated the medicinal power of marijuana, and 75 percent of Americans support its use as medicine. A civilized society cannot, in good conscience, allow seriously ill individuals to suffer needlessly when there is a medicine available that could relieve their pain.

Very few citizens profit from the war against marijuana. Individuals should no longer consent to a drug war that does not serve our interests, does not protect us, leaves the police force unable to deal with more serious crimes and aids the interests of only the richest members of society.

Although the legalization of marijuana might have some adverse affects on the economy, they are outweighed by the benefits. The pros of legalization far outweigh the cons. There are many economic reasons proving that legal marijuana would help our economy, some are direct and others indirect. The first thing that one must look at when considering the pros of legalization would have to be the direct benefits. The direct benefits are going to be the astronomical amount of money the government would make in taxes, sales etc. (Marshal, p. 92).

If marijuana were legalized the first thing that would happen would be a drop in the price of the drug. The price would drop due to the fact that it would no longer have to be sold on the black market (Rosenthal, p. 38). The cheaper price and greater availability might mean increased usage. Though the eventual level of use would be reduced by legalization, especially among children and youth, it is estimated, that if marijuana were legalized, and prices were dropped a fair 50% and usage increased only a little bit, marijuana sales could gross anywhere from $50-$53 billion dollars (Rosenthal, p. 39). That right there is a huge amount of money that would no doubt aid the United States’ economy. We could save the $20 billion from the Drug War as well as contributing to the legitimate economy. However, there are other direct benefits to consider. The $50-$53 billion would only come from sales alone. The government could make more money by charging vice, manufacturing and state taxes. It is believed that taxes and fees such as these would gross about another $7-$10 billion (Rosenthal, p. 39). Many other benefits could also be directly related to the legalization of marijuana. If it were legalized, it would create a whole new industry. And of course, this new industry would need employees, which means more jobs for the unemployed (Maertz, Jim “interview w/ Ms. Wara, 10/29/98). Also with this new industry would come the ability to legally export this drug. Due to the advancements in American farm technology it is believed that we would become main exporters of marijuana. Rather then spending about $5-$7 billion per year on illegally importing the drug, legalization would probably generate about $60 million to $1 billion dollars, and at the same time save that $5-$7 billion spent on importation. The legalization of marijuana could help balance the U.S. trade deficit (Rosenthal, p. 42). Obviously the direct affects of legalized marijuana would aid our economy. However, the indirect benefits of legalization would also help dramatically. If marijuana were made legal, it would send economic ripples throughout the U.S. that would create a better economy (Marshal, p. 83). For example, related paraphernalia would see an increase in demand (i.e. pipes, bongs, etc). More money would be spent on these or items like these, which means a better economy (Rosenthal, p. 39). Another factor we must consider, would be hemp. Hemp is a non-psychoactive form of marijuana; the only reason it is outlawed is because it is similar to marijuana in some aspects but not all. The only real reason it is against the law is to make enforcing marijuana laws easier (no gray areas of the law). But hemp has many practical applications in the world today. Hemp contains the one of the strongest fibers in the plant kingdom; it could be used for either industrial or commercial applications. It is also used to make a non-deteriorating paper, that is pollution free. After pressing hemp seeds, the result is a good animal feed; in central Asia it this seed has even been used for human consumption (Rosenthal, p. 42). There are countless economic ripples such as these that would help out the economy, but when looking at the economy as a whole, we can’t only look at how much we bring in. It is obvious that both direct and indirect revenues would aid our economy, however, we must also look at the amount of money we would save if marijuana were legalized. Of course the legalization of marijuana would mean the cost of drug enforcement would drop (Marshal, p. 92). More than 20 federal agencies are involved in the enforcement of marijuana laws, and legalization would mean that these agencies would not have to spend as much on drug enforcement. The government spends about $30 billion dollars per year trying to fight marijuana; if it were legalized, this money could be spent on better things like education. The cost of arrest and conviction of violators is also very high (Thompson (ed.), p. 157). It can cost up to $450,000 dollars to keep an offender in jail. In the book Why Marijuana Should be Legal it adds up the total cost as follows: “Arrest/Conviction: About $150,000; Additional prison bed: about $50,000, depending on the jurisdiction; Annual prison expense: about $30,000 per year (Avg. sentence of 5 years), that’s another $150,000” (Rosenthal, p. 43). And thing of how many marijuana cases there are per year! All of this money save could be put towards better things (Rosenthal, p. 43). There is also the loss of productivity to consider.

When a drug offender is arrested, he must take time off of work to go to court and handle all of his legal affairs. Believe it or not, 82% of arrestees for marijuana possession have jobs. So, when using an average salary of $19,228 per year and about 30 days of lost work time, the first loss of productivity adds up to about $1.1 billion (Rosenthal, p. 45). Money that is spent on marijuana law enforcement could be better spent on things like violent crime, or education (Marshal, p. 93). The fact is the government would save billions if marijuana were legalized. Although revenues and savings would add up to a huge amount of money, there are a few reasons that opponents think marijuana would be bad for the economy. As with every controversial issue, there is always an opposition. But in the case of legalized marijuana, the economic benefits are much greater than the losses, despite what opponents try to argue. The biggest reason why opponents are against the legalization is because of medical costs (Maertz, Jim “Interview w/ Ms. Wara, 10/29/98). They believe that, like cigarettes, marijuana would cause many medical problems, which in turn would lead to more money having to be spent on medical treatment (Thompson (ed.), p. 172). There’s no denying the fact that excessive marijuana smoking would cause lung problems, and more medical expenses. But consider this: In 1980, due to health care/loss of productivity the combination of all drugs (not just marijuana) cost the U.S. $29.4 billion; however, due to health care/loss of productivity alcohol cost the U.S. a whopping $79.6 billion (Marshal, p. 64)! When it comes to health care, alcohol is a much bigger problem. And even if we took the cost of medical aid and productivity loss ($29.4 billion) of all drugs, and subtracted it from the total gross revenues of just marijuana (not including indirect profits), we would still have a profit of about $33.6 billion dollars! Opponents also argue that legalization would mean more marijuana addicts (Rosenthal, p. 39). They argue, if there are more marijuana addicts, there are going to have to be more costs involved for treatment programs. Although it is not proven whether or not marijuana is addictive (Marshal, p. 99), the likelihood of the number of treatment programs having to increase is probably pretty good. However, it is inestimable how much would be needed to finance these programs; but one could be pretty sure that it wouldn’t be $33.6 billion, the amount that legalized marijuana would put into the economy (after subtracting medical/productivity costs for all drugs). Finally, opponents also argue that legalization would cause more reckless driving, pregnancies, fights etc. However, according to a study by drug policy scholar Mark Kleiman of UCLA he concluded that alcohol is the drug that people “are most likely to get pregnant, commit crimes, get in fights or drive recklessly.” (Thompson (ed.), p. 190). Although some of the arguments brought up the opposition are true, when added together with the earnings generated by sales alone, the evidence is indisputable. The legalization of marijuana would no doubt help the economy. Directly or indirectly, profits would soar. Businesses would be helped, new industries would be created and the government would be able to spend billions that it had either received from taxes or saved from trying to enforce an unreasonable law. Economically speaking, legalizing marijuana would help our economy dramatically

The impact marijuana legalization would have on tax revenues would be felt in two ways. First, the tax money currently funding efforts at marijuana suppression and eradication would be redirected. This much is obvious, since marijuana would no longer be contraband.

How this funding redirection would effect overall antidrug spending is difficult to gauge. There might not necessarily be a "peace dividend." The funds would need to go to enforcement of other drug laws; those against cocaine, heroin, PCP, and hard drugs, and whatever other drugs are still illegal.

In addition, some funds would need to be devoted to the regulatory system set up to control production and distribution, at the state and federal levels. This funding need would eventually be offset by taxes on both the marijuana sales as well as taxes on the income derived from such sales, licensing fees, and so on.

It is also difficult to measure just how removing marijuana from the list of crimes that our police enforce would effect police functions and efficiency. Noting the tremendous number of marijuana possession arrests performed each year, it is evident that some police time could be redirected toward dealing with serious problems and violent crimes. This also means clearing the courts, jails, and prisons of marijuana offenders-not only users, who would no longer be criminals, but also dealers and cultivators, who would be outmoded and put out of business.

Currently, control over the marijuana market is left in the hands of the criminal black market. As such, proceeds from marijuana sales are kept in the underground economy. The profits go untaxed, and the money generated is kept off the books. Fortune magazine estimated the potential tax earnings from legal marijuana sales at $11 billion per year, and that only accounts for taxes on the marijuana, not including taxes on the income generated by the legal sellers, distributors, and producers (Kupfer, 1988).

Some opponents of legalization argue that it is inappropriate for society to profit from drug use. Such a policy, it is argued, puts the state into the position of promoting drug use.

Legalization supporters counter that people in general use drugs of one kind or another, mostly legal ones. Thus, the responsibility of society is to ensure that relatively safe drugs are available, although discouraged, while the relatively dangerous drugs should be less available and more actively discouraged. The United States already taxes alcohol and tobacco, the two worst public health problems our society faces. Society would profit tremendously from legal marijuana sales if we decide to take advantage of the market already in existence.

References:
The Drug Legalization Debate, edited by James A. Inciardi
©1991 SAGE Publications, ISBN 0-8039-3678-8

From a Letter to the Governor of KS (Sebelius)

According to figures from the Center on Juvenile and Criminal Justice, we taxpayers spend $21,000 per inmate per year for incarceration, versus approximately $2500 per individual per year for substance abuse treatment. If the state of Kansas were to concentrate more on treatment rather than incarceration for all the nonviolent drug offenders currently imprisoned here, it could save Kansas taxpayers up to $400 million annually.

Recent reports show that 70 - 80% of Americans support decriminalization of the relatively harmless drug marijuana. Federal policy being whatever it may be, many Kansans, including myself, do support a change in the state legislation regarding handling of nonviolent drug offenses.

Many do not consider use, or even abuse, of any drug to be a "crime" in the conventional use of the word. Many are tired of releasing violent offenders, to the detriment of society, to make way for drug offenders of victimless "crimes."

As my Governor of Kansas, I know that you have many important decisions to make. To assist you in considering this particular recommendation, I have attached a report entitled Cutting Correctly: New Prison Policies for Times of Fiscal Crisis, by Judith Greene and Vincent Schiraldi of the Center on Juvenile and Criminal Justice.

This report outlines the very issues I have discussed in this letter. For your convenience, the report also offers a link to the CJCJ website for further study.

Thank you for your time and consideration of this issue. I am interested to know what your opinion of this issue is. If you need more information, I am available to speak to your personally regarding this issue, and can be reached at (316) 686-3161.

Sincerely,

Susan J. Wolfe
Kansas NORML
6150 East Harry
Wichita, KS 67218
SJWolfe2548@yahoo.com

Economics and Legalization

Economics and the Case for Legal Marijuana