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New Report Projects $10-14 Billion Annual Savings and Revenues
Replacing marijuana prohibition with a system of taxation and regulation similar to that used for alcoholic beverages would produce combined savings and tax revenues of between $10 billion and $14 billion per year, finds a June 2005 report by Dr. Jeffrey Miron, visiting professor of economics at Harvard University.
The report has been endorsed by more than 530 distinguished economists, who have signed an open letter to President Bush and other public officials calling for “an open and honest debate about marijuana prohibition,” adding, “We believe such a debate will favor a regime in which marijuana is legal but taxed and regulated like other goods.”
Dr. Miron’s paper, “The Budgetary Implications of Marijuana Prohibition,” concludes:
**Replacing marijuana prohibition with a system of legal regulation would save approximately $7.7 billion in government expenditures on prohibition enforcement — $2.4 billion at the federal level and $5.3 billion at the state and local levels.
**Revenue from taxation of marijuana sales would range from $2.4 billion per year if marijuana were taxed like ordinary consumer goods to $6.2 billion if it were taxed like alcohol or tobacco.
These impacts are considerable, according to the Marijuana Policy Project in Washington, D.C. For example, $14 billion in annual combined annual savings and revenues would cover the securing of all “loose nukes” in the former Soviet Union (estimated by former Assistant Secretary of Defense Lawrence Korb at $30 billion) in less than three years. Just one year’s savings would cover the full cost of anti-terrorism port security measures required by the Maritime Transportation Security Act of 2002. The Coast Guard has estimated these costs, covering 3,150 port facilities and 9,200 vessels, at $7.3 billion total.
“As Milton Friedman and over 500 economists have now said, it’s time for a serious debate about whether marijuana prohibition makes any sense,” said Rob Kampia, executive director of the Marijuana Policy Project in Washington, D.C. “We know that prohibition hasn’t kept marijuana away from kids, since year after year 85% of high school seniors tell government survey-takers that marijuana is ‘easy to get.’ Conservatives, especially, are beginning to ask whether we’re getting our money’s worth or simply throwing away billions of tax dollars that might be used to protect America from real threats like those unsecured Soviet-era nukes.”
With marijuana prohibition costing the U.S. government billions of valuable tax dollars annually.
The societal costs of propagandizing against marijuana and marijuana law reform, funding anti-marijuana ‘science’, interdicting marijuana, eradicating domestically grown marijuana and industrial hemp, law enforcement, prosecuting and incarcerating marijuana smokers costs U.S. taxpayers in excess of $12 billion annually.
Of the many numerous arguments that can be advanced by law reformers and advocacy groups like NORML, is the self-evident truth that marijuana prohibition, an utterly failed public policy, costs taxpayers too much and delivers few discernible social benefits.
As President Jimmy Carter told Congress in 1977:
“Penalties against a drug should not be more damaging to an individual than the use of the drug itself. Nowhere is this more clear than in the laws against possession of marijuana in private for personal use. The National Commission on Marijuana and Abuse concluded years ago that marijuana use should be decriminalized, and I believe it is time to implement those basic recommendations.
Therefore, I support legislation amending federal law to eliminate all Federal criminal penalties for the possession of up to one ounce of marijuana.”
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Marijuana legalization offers an important advantage over decriminalization in that it allows for legal distribution and taxation of cannabis. In the absence of taxation, the free market price of legal marijuana would be extremely low, on the order of five to ten cents per joint. In terms of intoxicating potential, a joint is equivalent to at least $1 or $2 worth of alcohol, the price at which cannabis is currently sold in the Netherlands. The easiest way to hold the price at this level under legalization would be by an excise tax on commercial sales. An examination of the external costs imposed by cannabis users on the rest of society suggests that a “harmfulness tax” of $.50 – $1 per joint is appropriate. It can be estimated that excise taxes in this range would raise between $2.2 and $6.4 billion per year. Altogether, legalization would save the taxpayers around $8 – $16 billion, not counting the economic benefits of hemp agriculture and other spinoff industries.
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The National Drug Control Budget for national and international law enforcement has risen dramatically from 1991 to 2000, surging 68% in ten years, from under $11 billion to nearly $18.5 billion. The separate demand reduction allocation similarly swelled 61% from $3.7 billion to nearly $6 billion. Nevertheless, marijuana use among twelfth graders rose even more dramatically, more than doubling between 1992 and 1997. Clearly, there is no correlation between anti-drug spending, both federal and private, and drug use.
In clear comparison, it is obvious that the drug reform movement is badly overmatched in a struggle of truly David and Goliath proportions. But the girth and strength of the prohibitionists is nonetheless hardly enough to keep teen drug use rates down, let alone stable. It is clear that increases in funding have had no discernable effect on use rates. And the current Ad campaign of $1 billion over five years will have the same lack of effect.