A mature marijuana industry could generate up to $28 billion in tax revenues for federal, state, and local governments(Tax Foundation). While there are many economic benefits to marijuana legalization there are many economic drawbacks such as states will need to spend a lot of taxpayer money to monitor retailers, conduct investigations, and prosecute tax evaders (“The Economic Impacts of Marijuana Legalization.” The Journal of Global Drug Policy and Practices). Although there are many economic drawbacks to legalizing marijuana the benefits do outweigh the drawbacks of legalizing marijuana.There are currently 29 legal medical and/or recreational marijuana states (Should Marijuana Be a Medical Option?).
That’s 58% of states that have voted for legalization. So if over half of Americans are for legalization, why did it become illegal in the first place? The demonization of the cannabis plant was an extension of the demonization of the Mexican immigrants in the 1930s (“How Did Marijuana Become Illegal in the First Place?”). During this time claims about marijuana causing men of color to become violent and attempting to have sex with white women were prevalent. This became the inspiration for the Marijuana Tax Act of 1937 which banned its use and sales (Kind Concentrates). The idea was to have an excuse to search, detain and deport Mexican immigrants (“How Did Marijuana Become Illegal in the First Place?”).
Anti-drug campaigners warned against the encroaching “Marijuana Menace,” and terrible crimes were attributed to marijuana and the Mexicans who used it (PBS). President Reagan later signed the Anti-Drug Abuse Act in 1986, instituting mandatory sentences for drug-related crimes (PBS). The new law raised federal penalties for marijuana possession and dealing, basing the penalties on the amount of the drug involved (PBS). President Reagan’s new law made possession of 100 marijuana plants receive the same penalty as possession of 100 grams of heroin (PBS). A later amendment to the Anti-Drug Abuse Act established a “three strikes and you’re out” policy, requiring life sentences for repeat drug offenders, and the death penalty for “drug kingpins.”(PBS). The abolition of marijuana was never about it being unsafe or it being a problem but rather a way of making people afraid of immigrants and getting immigrants off the streets.
In 1966 the Compassionate Use Act legalized marijuana in California for the aid of chronically ill residents (“California Code, Health and Safety Code – HSC § 11362.5.). Later that year California became that first to officially legalize medical cannabis. As of 2013, Marijuana prohibition costs state and federal government as much as $20 billion a year (Sledge, Matt).
Between 2001 and 2010 over 7 million people were arrested just for having marijuana (“Marijuana Arrests by the Numbers.”). After years of prosecuting those who use the drug, it seems there has been a shift in public opinion and it is finally time to end the prohibition on marijuana.A mature marijuana industry could generate up to $28 billion in tax revenues for federal, state, and local governments, including $7 billion in federal revenue: $5.5 billion from business taxes and $1.5 billion from income and payroll taxes (“Marijuana Tax Legislation and Federal Revenue.”).
A whole new taxable business would form. If legalization were to happen at a federal level more jobs would be created. In fact in the states that have legalized more than 123,000 jobs have been created. California led the country in marijuana-related job creation with 43,374 full-time jobs, Colorado came in second with 23,407, and Washington third with 22,952. One report from New Frontier Data says that by 2020 the legal cannabis market will create more than a quarter of a million jobs (Forbes). Repressive policies not only have uncertain benefits but they are also expensive without even including the cost of putting people in prison. In 2015 there were 643,121 Americans in prison for a marijuana law violation and of those, 89 percent were for possession only (Drug Policy Alliance). Legalization will reduce the number of citizens in our prisons by at minimum 574,641 people and make room for the violent criminals that the United States needs off the streets.
The United States will save millions when they aren’t putting people away for a simple marijuana charge. Legalization will also keep money locally and generate revenue from the taxing of cannabis. In addition, drug cartels will have one less drug on the streets.
In time legalization will overall reduce crime and illegal border crossing.While both alcohol and tobacco are taxed and regulated, the tax benefits to the public are vastly overshadowed by the adverse health consequences of their use (“Why We Should Not Legalize Marijuana.” CNBC). With that being said, it is hard to say the marijuana would be any different. If legalization were to happen, there is speculation that it may lead to a rise in usage thus leading to an increase in marijuana-related healthcare costs. According to The Journal of Global Drug Policy and Practices, increase in use will cause dependence and abuse of the drug. If the number of new users is between 13.
05 million and 47.85 million, then treatment admissions would likely increase from 1.3 million to 4.8 million respectively. These estimates assume a dependence rate of only 10% according to The Economic Impacts of Marijuana Legalization: The Journal of Global Drug Policy and Practices. Those in favor of legalization often claim that there would be the benefit of tax revenue but, in order for a state to benefit from tax revenue, it must first collect the tax proceeds.
States that have attempted to tax medical marijuana, a notoriously cash-only business, find this to be a problem because banks have refused to do business with those who sell drugs in violation of federal law. States will need to spend a lot of taxpayer money to monitor retailers, conduct investigations, and prosecute tax evaders (“The Economic Impacts of Marijuana Legalization.” The Journal of Global Drug Policy and Practices).
The best way to determine how to proceed with the decriminalization of marijuana in the United States is to look at the different legislation in other countries that have already legalized. There’s nowhere in the world more relaxed on marijuana laws than the country Uruguay but not in the way you might think. Rather than viewing marijuana as a drug, Uruguay views it as an industry.
Uruguayans say their model is designed to strike a balance between prohibition and the kind of exuberant marijuana economy emerging in some U.S. states (Kennedy, Merritt). The industry in Uruguay is completely run and regulated by the government. Uruguay has no retail marijuana stores, no marijuana advertising, and even edibles are illegal. Instead of retail marijuana stores, two private firms authorized to supply the pharmacies with industrial quantities of dope, four tons annually and they can not even put their company labels on the packaging. Public health official Julio Calzada says that the country is trying to avoid marijuana becoming like the tobacco industry in the United States (Kennedy, Merritt). Under Uruguay’s legislation, anyone over age 18 who registers in a government database will be able to buy up to 40 grams per month at one of three dozen participating commercial pharmacies ran and regulated entirely by the government (Kalvapalle, Rahul).
Instead of showing an identification card, consumers place their thumb on a scanner that links to a government database and tells the pharmacy how much marijuana they are eligible to purchase. Is this type of government regulation the answer to the United States concerns? Since this new legislation has come into effect Uruguay has seen the new system drain away customers from the black-market marijuana economy and attribute this to the fact the government grows their marijuana flowers significantly stronger and sells at a lower price point, $1.30 a gram vs. $5-$15 in the United States for legal marijuana in Colorado (Kalvapalle, Rahul). Uruguay has a different view of the marijuana plant and its industry that just might be the best solution to the legalization debate in the United States.
Canada has also moved to federally legalize marijuana although it is not set to be fully legalized until July 2018. Canada will not be as strict with their legislation as Uruguay has been. Unlike Uruguay, Canada will be open of “marijuana-tourism” and will allow an individual to grow up to four plants at one time. The Canadian government has also committed $9.6 million to a comprehensive public awareness campaign to inform Canadians, especially youth, of the health and safety risks of cannabis consumption, and to surveillance activities(Legalizing and Strictly Regulating Cannabis: the Facts).
According to the Canadian government the new act will deter and reduce criminal activity by imposing serious criminal penalties for those breaking the law, especially those who import, export or provide cannabis to youth, provide for the legal production of cannabis to reduce illegal activities, and enhance public awareness of the health risks associated with cannabis(Legalization and Strictly Regulating Cannabis: the Facts). Should the Cannabis Act become law in July 2018, adults who are 18 years or older would be able to legally possess up to 30 grams of legal dried cannabis or equivalent in non-dried form, purchase dried or fresh cannabis and cannabis oil from a provincially-licensed retailer and make cannabis products, such as food and drinks, at home provided that organic solvents are not used (Legalizing and Strictly Regulating Cannabis: the Facts).Once Canada has officially legalized, the United States should review and study Canada’s and Uruguay’s tactics and their effects on each society both economically and socially in order to determine how legalization might affect the United States if it were to happen. Although there are many disadvantages to legalizing marijuana, the economic benefits outweigh these disadvantages. States that have legalized marijuana already show a decrease in use of other hard drugs such as cocaine and heroin. By legalizing marijuana we could potentially help the drug epidemic in the United States. Legalization reduces crime by diverting marijuana production and sale from the black market to legal venues.
“States together spent somewhere around $3.6 billion enforcing marijuana possession laws in 2010, according to a new study by the American Civil Liberties Union, entitled “The War On Marijuana In Black and White.” That’s the author’s’ “best estimate,” though approximations using different methodologies put the cost as high as $6 billion and as low as $1.2 billion.
” Legalization would give the United States at minimum $3.6 billion dollars to spend on something more important such as education (“States Spending Billions to Enforce Pot Laws: Report.” CNBC).
Creating an excise tax on marijuana is one way the United States can capitalize on the economic benefits. Legalized marijuana is on track to generate approximately $655 million in state taxes on retail sales in 2017. Within that tax figure, $559 million will come just from cannabis taxes, much more than from alcohol taxes. An excise tax would discourage use, particularly for youth; prevent too rapid a fall in price; fund related programs; and even raise revenue. Colorado even reports that the marijuana tax has been a great way to get more revenue and not have to raise taxes elsewhere (“Marijuana Industry Projected To Create More Jobs Than Manufacturing By 2020.
” Forbes). With the extra revenue from the marijuana industry, Colorado was able to put $16 million towards Affordable Housing Grants and Loans in 2016 from cannabis tax collections. Massachusetts, another state that has legalized, imposes a 3.75% excise tax on sales, creating an estimated $100 million in annual revenue.”We can put that money to good use to strengthen our schools, fund veteran services, or bolster our law enforcement and treatment efforts,” reads a statement from the Massachusetts campaign (“4 States Legalized Recreational Weed This Week.” Business Insider). Legalizing marijuana will benefit our nation as a whole by generating tax revenue, getting non-violent criminals out of our prisons and creating more jobs.
Although there are negative aspects to legalization, the benefits do outweigh the negatives. The extra tax revenue that states and the federal government will receive can be put into housing, such as in Colorado, strengthening our public school system, and repair our roads systems, just to name a few things that would improve with legalization. The $28 billion in tax revenues for federal, state, and local governments vastly overshadows the cost to regulate the drug. The United States government is always talking about how to create more jobs and by 2020 the legal cannabis market will create more than a quarter of a million jobs (Forbes). A quarter million jobs created by 2020 and that’s just for the states that have legalized; imagine how many more jobs would be created if legalization happened at a national level. If the United States were to follow in Uruguay’s footsteps, as discussed earlier, the United States would have almost all control over the substance and would thus make even more money off of national legalization due to being the only dealer available. As seen in Uruguay, black market marijuana would be almost completely eradicated making usage much safer and easier to regulate for the United States.
I believe the United States should study Uruguay’s very strict model and Canada’s more relaxed model once in place in order to determine the best way to move forward with the legalization of marijuana.