Would Legal Marijuana Mean an Excise Tax Bonanza?

Today I was supposed to appear on KPCC, an NPR afiliate in Los Angeles, to discuss Jon Gettman's report on marijuana production in the U.S. (mentioned by Dave Weigel earlier today). In preparation, I started collecting numbers on the fiscal and economic impact of marijuana legalization, which the producer said would be the segment's focus. He just called me back to say they don't need me after all (the segment was "overbooked"), so I thought I'd share what I planned to say on the radio with you, Gentle Hit & Run Reader, lest my research be for naught. The excise tax revenue from legal marijuana, which especially interested the KPCC producer, probably would not amount to much, because almost all of the $36 billion that Gettman estimates the U.S. marijuana crop is worth to growers (which translates into something like $63 billion at the retail level) can be attributed to the "risk premium" associated with prohibition. It's the war on drugs that makes marijuana "America's biggest cash crop."

Dale Gieringer of California NORML has estimated that marijuana may cost as much as 100 to 300 times as much in the black market as it would if it were legal (not counting taxes). Even if the multiple is more like 50 or 25, the value of the cannabis crop would plummet if prohibition were repealed. You also need to consider patterns of consumption. About 45 million Americans smoke cigarettes, typically consuming close to a pack a day (an average of 17 cigarettes per day for daily smokers, who represent four-fifths of smokers), for a total of 378 billion cigarettes in 2005. Total state and federal excise tax revenue from cigarettes (not including payments under the Master Settlement Agreement that resolved state lawsuits against the major tobacco companies) is about $15 billion a year. According to the National Survey on Drug Use and Health, about 15 million Americans smoke pot each month—one-third the number of cigarette smokers—and the typical level of consumption is occasional. The average pot smoker does not consume even a joint a day, let alone 17. Assuming similar production costs for both kinds of dried psychoactive plants, the total retail value of marijuana would be a small fraction of the total retail value for cigarettes. So unless marijuana tax rates were set much higher than cigarette taxes, which would tend to perpetuate a black market, the excise tax revenue would be quite modest at current consumption levels. Gieringer suggests a tax of 50 cents to $1 per joint, which is extremely heavy even compared to the cigarette taxes that prevail in New York City ($3 a pack, or 15 cents a cigarette, on top of the federal excise tax of 39 cents a pack). Even a levy as big as Gieringer proposes would bring in revenues that "might range from $2.2 to $6.4 billion per year," according to his estimate. 

Given much lower prices and removal of the legal barriers to obtaining marijuana, consumption almost certainly would rise, as new consumers entered the market and current consumers smoked more often. But it's doubtful that consumption would rise enough for marijuana to generate anything like the excise tax revenue from cigarettes, mainly because, given the differences in the two drugs' effects, pot smokers (as a group) are never going to smoke as heavily as cigarette smokers. With a tax rate comparable to the U.S. average for cigarettes, we might be talking about hundreds of millions of dollars a year, or maybe a billion or two, as opposed to $15 billion.

Yet the big drop in marijuana prices, the very development that would make excise tax revenue surprisingly modest, would put billions of dollars in consumers' pockets, allowing them to get the same value for much less money. And to the extent that marijuana consumption rose, that too should be counted as an economic benefit, since people would be getting more enjoyment from the product than they did at artificially inflated prices. 

From the government's (and taxpayer's) point of view, the real fiscal benefit from abandoning the war on marijuana would come from no longer arresting, prosecuting, and jailing pot smokers, sellers, and growers. Drug law enforcement costs something like $40 billion a year, and marijuana accounted for 43 percent of drug arrests in 2005. That doesn't mean legalizing marijuana would save two-fifths of the money spent on the drug war, since marijuana offenders are much less likely to be imprisoned than other kinds of drug offenders. But the savings certainly would be substantial. And that's not counting all the indirect costs, such as marijuana offenders' legal expenses, loss of freedom, forgone income, and so on.

In short, the focus on the excise tax bonanza that legal marijuana supposedly would bring—a theme that is often emphasized by opponents of the war on drugs—is misplaced. Which is just as well, since I'm not a big fan of excise taxes.

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  • ||

    "Given much lower prices and removal of the legal barriers to obtaining marijuana, consumption almost certainly would rise, as new consumers entered the market and current consumers smoked more often."

    Does prohibition stop pot use or not? It seems like you are saying that it does.

  • ||

    Does prohibition stop pot use or not?

    It doesn't stop it, but it does reduce it, by raising prices, reducing availability, and dissuading the risk-averse. I don't think anybody would argue otherwise.

    The question isn't *Can prohibition reduce pot use?* The questions are (1) Is it moral to legislate against what people willingly do to their own bodies, and more practically, (2) if we stipulate that it is both moral and desirable to reduce pot use, is it worth the costs associated with prohibition?

  • Christopher Monnier||

    It should be pointed out that marijuana usage in the Netherlands is lower than in the US.

  • ||

    I'll buy the short-term increase in consumption, but I don't buy it long term. Reinarman, Cohen and Kaal showed that drug policy doesn't have much impact at all on consumption patterns either way.

    Not that I think an overall increase in marijuana consumption is a bad thing; that all depends on the context and the tradeoffs being made. If a large segment of never-smokers become occassional smokers and that leads to a significant increase in consumption, I don't see much reason to be alarmed.

  • ||

    Assuming similar production costs for both kinds of dried psychoactive plants, the total retail value of marijuana would be a small fraction of the total retail value for cigarettes.

    Although I agree marijuana prices would certainly be a lot cheaper than they are now, premium grade marijuana would probably remain significantly more expensive than tobacco. In Amsterdam, where it is quasi legal, it is pretty expensive to buy marijuana (from what I recall, they only sell kind bud) in the coffeeshops.

  • ||

    Prohibition does not reduce use, in fact in increases use. There is no real example to the assertion that it increases the likelihood of a person to use the drug. However there is real world example supporting the claim that legalization actually decreases use (http://www.drugwarfacts.org/thenethe.htm).

    Instead prohibition has led to increased use among Americans (http://www.drugwarfacts.org/marijuan.htm). Marijuana has become America's biggest cash crop under prohibition (http://today.reuters.com/news/articlenews.aspx?type=healthNews&storyID=2006-12-18T213430Z_01_N18159676_RTRUKOC_0_US-USA-MARIJUANA.xml&WTmodLoc=NewsHome-C3-healthNews-3).

    If the goal of decreased usage is to be attained it is a better policy to spend more money in rehabilitation clinics. Legalization also offers many benefits, decreased likelihood of contamination, substantially decreasing the rising cost of imprisoning inmates and allowing the growth of hemp crops... etc...

  • ||

    Here in Oakland where marijuana is legal* the prices have not dropped -- the quality has simply gone way up. $40 now gets you stuff grown in a safe, local environment with higher THC content than what a $40 lid use to buy you which was generally shitty mexican brick weed. I know that some of the legal prohibition still in place has some effect on price here in Oakland, and that it has a bit of a monopoly most the rest of the country does not enjoy.

    *By legal I mean you pay $100 for a card and can walk into one of a dozen shops to buy it. One of which happens to be directly across the street from Oakland Police Dept. HQ.

  • ||

    As I stated in the earlier thread, while I don't think that legalized and taxed cannabis will produce gobs of tax income for the government (due to volume consumed), I do think that the vast majority of people will purchase through retail supply chains rather than grow thier own. That is as long as the profit margins and tax rate doesn't increase the cost to a point where a black market is profitable.

    As an example, I can legally make wine. It isn't hard just time and space consuming. I have made it in the past but personally I'd rather buy my wine at the local store and pay the extra costs associated with taxation and the supply chain than utilize my resources to make it. I think that cannabis will be the same. There will be the few hearty souls willing to devote the time and energy into growing their own, but as long as the price isn't too outrageous people will purchase govermentally taxed cannabis long before they will seek out homegrown for free. I just don't see that many people taking up gardening to save a couple of bucks anymore than everybody in the US grows tomatoes rather than buy them.

  • thinking out loud||

    If it were legal, I'd smoke instead of drink. I wonder if the lost revenue from substitutes is a factor in all of this. For that matter, there may be fewer DUI's.

  • ||

    On the other hand, think about the sales tax on munchies. That could balance the budget.

  • ||

    The same people who brought you the War on Drugs are now looking to be financially rewarded for having done so?
    Bishop Desmond Tutu should organize a world-wide "Truth and Reconciliation Commission" into existence, and all drug warriors should have to appear before it.

  • Gene Berkman||

    If the USA and the various European countries were to legalize sale of marijuana, California homegrown could help decrease the US trade deficit.

    The many economic benefits of legal marijuana are far more important than tax revenues.

  • ||

    Kwix,
    I totally disagree. If pot was legal I think most smokers would grow their own. A couple of killer BC BUD plants in the basement would supply the needs of most users. If it's the "one hit shit" an ounce can last a month or more. As has been stated before it's a weed. It ain't that hard to grow. If you can keep your petunias alive you can grow pot. A little light, water and some fertilizer and your good to go.

  • ||

    Yeah, marijuana is a lot easier to grow for personal use than tobacco, defeating the ability to tax in the first place. At least that's my understanding.

  • B||

    Someone else brought up the price of weed in Amsterdam...last time I was there (about 4 years ago) I think the going rate was 12 Euro for 1-2 grams...which if my quick and dirty metric conversion and currency conversions are close, comes to about $400/oz.

    I haven't purchased in the States in a very long time, but that strikes me as rather expensive. However (if the situation in Amsterdam is really comparable) it would suggest the open (or gray) market could probably support prices at or near the black market price...at least in "single serving" quantities.

    If having 99% of the price of legal marijuana go to excise taxes is something that gets more people on board with legalizing, that's a concession I'd be more than willing to make for the sake of all the other benefits (economic and otherwise) that Jacob mentions.

  • ||

    Ah, libertarians. Such insightful understanding of the drug war, such blindness about the economy.

    In a glorious libertopia, thousands of freedom-loving free-market suppliers would freely compete on a level playing field, bringing the retail cost of marijuana down to some reasonable markup above production cost.

    In the real world, legalized marijuana would continue to be controlled substance. There would be huge barriers to entry, putting much of the supply in the hands of a few players large enough to get into the game. These players would be able to exercise sufficient control over the market, and over the political system, to prevent anything approaching a pure market in marijuana from developing. Pot Dealers for Keeping Stoned Kids from Driving would spring up for the express purpose of squashing bills and initiatives.

    Combine this with a body of consumers that is used to a certain price level, and is thrilled out of their minds to be able to buy somewhat better product at the established price without being threatened with arrest, and there is only one conclusion to draw:

    the price of marijuana isn't going anywhere.

  • ||

    Ah, joe, back to your old self eh? The biggest problem with your theory is the fact that marijuana can be quite easily grown at home. So your theory is no more realistic then a few big players dominating the 'tomato' game, and the huge barriers that the small tomato grower needs to surrmount. In the summer for example I dont have to buy tomatoes at all because my mom grows them in her garden, not so much for financial benefits, its more of a hobby, but keeps the whole family plenty supplied.

  • ||

    joe

    Since the "barriers to entry" are the cost of seed, modest hydroponic equipment and a full-spectrum light with a timer, there aren't going to be big players who can control the market. [Unless you're willing to keep the WoD people around for Control of Drugs (CoD? how newfie.)]

  • Scott Morgan||

    Buying a gram at a coffeeshop is like buying a beer at a bar. The price is inflated and no one cares.

    Absent prohibition, pot will be available at whatever price you'd like to pay.

    The cannabis plant is easily hybridized to exhibit certain characteristics, so a functional product can be produced at very low cost. But possibilities for exotic rarities abound as well.

    Can we try this please? I promise not to put my fist in my mouth.

  • ||

    But it's doubtful that consumption would rise enough for marijuana to generate anything like the excise tax revenue from cigarettes, ..., pot smokers (as a group) are never going to smoke as heavily as cigarette smokers

    You obviously never met my roomates in college.

  • Guy Montag||

    At least I didn't notice the "tax the hell out of it" advocacy I have heard other places. At least you guys are rational about only taxing it at a normal rate.

    BTW, by normal rate *I* do not mean the tobacco rate either. I mean the gum rate.

    Also, folks who only smoke 17 cigarettes a day just aren't trying.

  • $||

    Let us not forget the economic benefits of true drug legalisation-of all drugs.Think of the savings if you didn't have to pay for every doctors office visit and the lost productivity-from missing work to obtain "therapeutic" drugs.
    Legalise all drugs-across the board.Too often "libertarians" sound like Socialist Stoners who would sell the principle of personal autonomy down the river for high tax corporate kind bud.

  • Steve in Clearwater||

    C on a C notes: You obviously never met my roomates in college.


    SH: The desire to deliberately overdose on drugs recedes for most people with each passing year in life.

    I have on more than a few occasions in the past ten years toked with college age kids (I'm 46 and a 30 year consumer of cannabis) in several states.

    Many seem quite comfortable with using 2 to 3x the quantity I would today and my routine supply is "midgrade" (150 per oz).

    Most people I meet over 30 are more interested in catching a nice buzz than they are in creating short term disability (ie, sit on the couch for several hours without moving more than your video game fingers, your mouth for eating and drinking...or, well...you know)

    Mind you, we still encourage all of the above as it does reduce your chance of dying in an alcohol related car crash, but most folks learn what George Carlin told us way back when....

    "After a certain point, you're just burning up Good Weed!"

  • thoreau||

    I think joe makes a good point: The price of legalized marijuana would depend to an extent on the regulations.

    Now, many would say that marijuana cultivation is easy, so the big suppliers will face competition. Well, keep in mind that right now there's a hefty reward for flouting the law, in the form of black market pricing. So there's an incentive to compete.

    What will probably happen is that the price drops enough to make black market cultivation (i.e. without a state-sanctioned license) not worth the risk of arrest, but remains well above what an open market will yield. This can be accomplished by restricting the number of licenses given out "for reasons of public health and safety." The cartel of officially sanctioned sellers can then tweak the price until most of the black market sellers give up. Officially, the price might be set by the state, but in practice they'll be set by the businesses who own the politicians. (Standard regulatory capture theory, something my econ professors loved to talk about.)

    The focus of enforcement will probably be catching them for evading the excise tax.

    Still, as corrupt as this would be, anything that ends at least some of the insanity is fine with me. Especially if the same regime applies to harder drugs as well, and puts the more violent sellers out of business.

  • ||

    The best part about legal weed is that we could then turn the combined resources of the biotech industry to coming up with some *truly* awesome GM plants. Just imagine purple buds the size of christmas trees, with little white crystals all over...

  • ||

    Legalization will be a huge benefit and could create many jobs. Hemp's potential as a crop is virtually limitless. It can be a fuel, it can be food (cannabis has the 2nd highest protein in edible plants), you can make clothes very cheaply (no pesticides needed) and it grows naturally in every state in the United States. It has lots of medicinal purposes as well.

    No wonder, it's America's biggest cash crop and it's not even legal.

  • ||

    joe,

    You almost sound gleeful that in a regulated marijuana regime your predictions would come true.

    I think that in the beginning you would be correct, but I also think that in a legalized environment the federal money would instantly dry up for local law enforcement to crack down on people growing their own marijuana (which would have a price approaching zero), which on its own would work to drag the price down.

    I look to the post-prohibition era, and the micro-breweries and home-breweries that exist today for my example.

  • ||

    If the premium price of marijuana in a regulated society is a function of risk, what becomes of the time, energy, resources, etc. when those risks are alleviated? Seems like reducing risk would increase productivity, of some kind, elsewhere. In what form? I dont know, but maybe the odds are good that that increase in production would be taxable. So while the direct tax revenue from marijuana may be negligible, its secondary effects may not be.

  • Guy Montag||

    jf,

    Although you make a great arguement, you picked a pretty bad example.

    I look to the post-prohibition era, and the micro-breweries and home-breweries that exist today for my example.

    It took decades for those things to come about. The early post-prohibition environment was the handful of breweries that survived by making other products (Busch, Miller and Yengling sp? ). Same with other domestic alcohol products.

  • Sam Franklin||

    I think joe makes a good point: The price of legalized marijuana would depend to an extent on the regulations.

    I think joe makes an even better point: The price of legalized marijuana would depend to an extent on the regulations that resulted from big business lobbying the federal government to pass highly protectionist laws, and thereby destroy any system of exchange that Adam Smith would have considered as a free market.

  • ||

    I don't think anyone is calculating the taxes collected correctly. Let's assume that if marijuana was legalized, its less THC friendly cousin was also legalized.
    The market would be way more than just the marijuana that is smoked. You'd have marijuana oil next to the olive oil. There'd be seed companies who sell to home growers. Light manufactures could see sales increase. There'd be potting soils and additives sold especially for marijuana. Someone would sell hemp blue jeans, hemp shirts, etc. My understanding is that hemp makes pretty good paper so you might entire forests of low thc hemp. There are all kinds of spinoffs that I can't think of them all.
    All these things would generate tax income and create jobs.

  • ||

    And let's not forget the accessories market. If pipes and water pipes go from quasi-legal to actually legal, the market would boom.

    Imagine yuppies with $2500 designer hand-blown glass bongs proudly displayed on thier shelves.

  • ||

    I completely agree with joe here.

    Given much lower prices and removal of the legal barriers to obtaining marijuana,

    Why is this a given?

    I have no assumption that if the US were to legalize pot it would do so as anything other than a Soviet-style centrally planned industry; this is the trend for everything the US government has done over the last 70 years and legalization of pot would be the LAST place the government would shift gears.

    Forty "pot-growing licenses" would be auctioned off much like radio spectrum, thereby keeping prices artifically high. Imported pot would be subject to sky-high tariffs. The War On Marijuana would simply be replaced with a War On ILLEGAL Marijuana. Keep the same asset forfeiture penalties in place and local cops will flock to that enforcement like flies on shit.

    I look to the post-prohibition era, and the micro-breweries and home-breweries that exist today for my example.

    Then you might be interested in this:

    http://www.chicagoreader.com/features/stories/bells/

  • ||

    Hey Jacob, I mentioned the risk prememium in the thread yesterday. Considering how easy marijuna is to grow, I would think that the premium is closer to 300 times the natural price than it is 100. Of course, if you legalized marijuana, it would be taxed like tobacco. The fact is the pothead market is willing to pay 300 times the natural price, so why not charge them that? Certainly, if taxes were too high, a black market would develop. As we have seen with tobacco, however, people would be willing to pay a lot of taxes to avoid dealing with the black market. While I think marijuna's potential as a cash crop is grossly overrated, its potential as a tax revenue generator is most certainly not.

  • ||

    "Forty "pot-growing licenses" would be auctioned off much like radio spectrum, thereby keeping prices artifically high. Imported pot would be subject to sky-high tariffs. The War On Marijuana would simply be replaced with a War On ILLEGAL Marijuana. Keep the same asset forfeiture penalties in place and local cops will flock to that enforcement like flies on shit."

    That is certainly a danger, but most people are willing to pay a prememium not to have to deal with the black market. You can buy homemade corn liquer a hell of a lot cheaper than you can Maker's Mark. Yet, outside of a few areas in the blue ridge, illegal liquer runnning is not a problem in this country. You are right that it would be very easy to fuck the whole thing up by over taxing and over controlling it, but it doesn't have to be that way.

  • ||

    Its a no win situation for the government, politicians and their buddies in alcohol and pharmaceuticals.

    I think the loss of tax revenue from the sale of alcohol would be greater than the tax made on pot if legalized and taxed. I also think most people would tend to grow their own pot I know I would myself. Just like home brewed beer, wine people will do it themselves. Some may say yeah but that beer and wine sucks and I would agree to some extent I have had both good and bad home brews. However with a plant its genetics determine its flavors and appreciable qualities and has nothing to do with a brewmaster/distiller.

    How many people drink now simply because they can not smoke pot. Budweiser etc would surely lose profits, resulting in less taxes from already overly taxed alcohol. While it may have been made illegal for a few years last century it is now a depended on tax generator for governments, they will not want to lose their cut.

    It is no win also to pols that depend on big pharma $$$$. Who do you think is pushing hardest to claim pot is medically useless? Could it be perhaps the people that make "legal," drugs that want to be able to sell you some for what ails ya, when a few bong hits may relieve your issue without other side effects. So you have pressure from this industry as well because it would lose sales which would mean less taxes to government again and less incentive for big pharma to be in the pols pockets.

    So many reasons why its a no win situation for government. But the biggest loser in this whole deal is the American people who have to suffer with these oppressive laws and taxes.

    The main thing everyone must consider when it comes to changing drug laws and marijuana reform is that politicians aren't well known for admitting they were wrong. They are not known for changing direction, they are more likely to keep taking the path to failure while taking different routes to get there.

    Not until all those that have lied to us with our own tax money die off or finally get sent home. Elect someone with common sense and no connection to this ill fated WoD that can change things will anything be done.

    What are the current 20-40 year career politicians going to do now? Admit they locked up millions, ruined peoples lives, spent billions yearly trying to stop something and having failed repeatedly with a 0% success rate? Don't hold your breath, not till the old alcoholics that run things now die off or just plain go away will anything change.

    Those are just a few reasons, when you think about how many people the WoD employs now and how many industries have been created around it things seem even worse. The piss test Industry probably alone has more power and lobby money than all the pot reform initiatives combined. Scary but true.

  • Guy Montag||

    I wait patiently for the "cotton lobby made it illegal" freaks to join in on the discussion. They are a bunch I really miss from college and late-night-television.

    Also, it seems that we are ignoring another problem down the road: making money on something legal.

    You know, just like the tobacco sellers are getting sued left-and-right currently. The core reason, of course, is because they are 'big evil [insert something] corporations'.

    As soon as the Leftist anti-other-people's-money nuts see a free market develop they will try to destroy it in court.

  • ||

    Dee,

    I never thought about people not drinking if pot were legal. That is a good point. I think I would drink less and probably be healthier if it were legal.

  • ||

    If legal and reasonably priced people wouldn't grow their own, at least not indoors. It's expensive and difficult. It took me several tries to get it right, and I'm no dummy. Perhaps folks in the right climate might set a few out on the balcony or in the vegetable garden. Of course, the difficulty and expense of homegrown is relative to the going price.

    And with regards to the effect on consumption. I know a lot of folks that don't smoke for fear of loosing their jobs, myself included. Assuming that changed with legalization, well, I would love to start getting high again.

  • ||

    Pig,

    I think you are right. There will always be the hippies growing the stuff in the backyard, but those clowns are not where the money is. The money is in college kids and yuppies and they are not going to be growing their own. They will be buying the store brand stuff and paying a premium for it.

  • Guy Montag||

    On this healthier issue . . .

    So, how is it that taking unfiltered smoke into your lungs is healthier than drinking alcohol in moderation?

    Certainly a little a day is less damaging than drinking like Hitchens or Ted Kennedy, but so is drinking less than they are rumored to also.

    Oh, if one is looking for a different bad habit to substitute for the abuse of another bad habit they probably have other issues going on. Thinking that if one drinks too much then they can switch to smoking and somehow not do that too much sounds a bit counterintuitive.

    I certainly do believe that is should be legal to make stupid decisions like that on one's own, er, dime as it were.

  • ||

    "Oh, if one is looking for a different bad habit to substitute for the abuse of another bad habit they probably have other issues going on."

    I'm looking to hook up the two. At a new-years party years back a friend busted out a bottle of gin which had a large kind bud soaking in it for a week or so. It tasted wonderfully strange, and the effect was also very pleasant.

  • ||

    Guy,

    Marijuana never makes you sick. I doesn't leave a hangover. You can literally drink yourself to death; kill yourself via poisoning or destroy your liver through chronic abuse. I am unaware of anyone ever dying as a result of even chronic marijuana use. When you also consider the fact that liquer makes some people violent, I really can't see how marijuana is any worse of a habbit than drinking.

  • daksya||

    Guy Montag: So, how is it that taking unfiltered smoke into your lungs is healthier than drinking alcohol in moderation?

    Why the qualification for the latter?

    Secondly, contrary to the adolescent-audience-styled propaganda, just like most other risky activities, the dose makes the poison. Lung cancer risk in cigarette smokers typically increases after 15-20 pack years i.e. approx 100,000 - 150,000 cigarettes. The heaviest pot smokers in the Tashkin study smoked 22,000 joints or more i.e. 3 "pack years". Even if you assume that each joint deposits twice as much tar as a cigarette, that still works out to 6 pack years.

    On the thread topic, Miron of Boston U. has worked this out and estimates tax revenues of $2 to $6 billion depending on the scheme.

  • Robert||

    "I have no assumption that if the US were to legalize pot it would do so as anything other than a Soviet-style centrally planned industry; this is the trend for everything the US government has done over the last 70 years"

    Sometimes it's been that way when jurisdictions legalized something formerly prohibited: gambling, cable TV, pro boxing, prostitution (NV).

    Sometimes supply has been thrown pretty wide open in jurisdictions that've legalized: consumer fireworks, exotic pets, gold coins & bullion.

  • John Rhoads||

    Ah, libertarians. Such insightful understanding of the drug war, such blindness about the economy.

    Yeah, it is unfortunate that libertarians have such a poor understanding of economics. This explains why economists are so disproportionately non-libertarian.

  • ||

    Another thing to consider regarding a marijuana industry:
    Marijuana is not one chemical, its is a combination and each unique blend of these chemicals produces a different high (every strain is different)
    it is likely that a marijuana company will use expensive breeding techniques and genetic engineering to give consumers a choice in exactly the type of high they want and flavor and scent of smoke.
    There will be smokeless marijuana products as well like foods and pills.
    They will pass on the costs of this to the consumer.

  • Robert||

    Then they'll be accused of manipulating the contents to addict people!

  • ||

    For a crop like hemp - which is likely the most efficient cellulose-producing crop in the world (and where cellulose has something like 50,000 industrial uses - many of them direct replacements for petroleum and petroleum by products) - your prediction on the tax revenues generated by its legalization are not adequate in my opinion.

    This is not to say that your predictions are not correct when considering recreational uses, but rather, its incomplete because you aren't seeing the whole picture when it comes to legalizing hemp as an industrial crop as well.

  • ||

    val,

    "The biggest problem with your theory is the fact that marijuana can be quite easily grown at home."

    Corn and tomoatoes, which are both easily grown at home, are both $billion markets, and home-grown products are a tiny fraction of total production. How many cigarette smokers in Carolina grow their own tobacco? Sure, I can grow tomatoes. And yet, I buy tomato sauce, canned tomatoes, and ketchup all year round. Most people do. Growing your own, when you can get better stuff conveniently packaged at the store, is a hobby, not a significant share of the market.

    Arensen,

    "Unless you're willing to keep the WoD people around for Control of Drugs" Yes, that is exactly what would happen. That is the best case scenario.

    jf, I used to get accused of sounding gleeful for noting that things weren't working out in Iraq. I'm just telling it like it is. Please don't adopt the Republican Reality Problem as your default mode when discussing the drug war. Also, microbreweries and home breweries are a single-digit portion of the market.

  • ||

    "Corn and tomoatoes, which are both easily grown at home, are both $billion markets, and home-grown products are a tiny fraction of total production."

    But joe, if corn and tomatoes were $2,000/lb. home grown would be big. Two years ago I grew enough tomatoes to last over a year. I flash froze some, dehydrated some, and I suppose I could have canned some. I still have two 5gal bags in my freezer; still have some corn too. But I prefer fresh, so I buy them at the store mostly, and will probably just toss the frozen stuff eventually.

    In my modest 200sq.ft. vegetable garden I could grow enough MJ to last myself and a handful of friends all year. And that's what I would do if MJ were legal but expensive, like you proposed.

  • ||

    This is total crap-o-la. Weed should be legal, but In small dosages all over the U.S. The u.s. would be making alot of money off it and saving money due to it. People can't overdose on the drug, its not addictive. The govt. sells the citizens of the u.s. alcohal, which im sure kills millions ever year, and is very addictive. So why not sell pot it makes people feel good. and can help with alot of diseases.

    In the midst of the street of it, and on either side of the river, was there the tree of life, which bare twelve manner of fruits, and yielded her fruit every month: and the leaves of the tree were for the healing of the nations. Revelations 22:2

    Im not saying they meant weed, BUT its a good possibility.
    I'm a young kid and most people would take me as a kid who just wants to smoke pot. But i don tsmoke pot i just think its morally wrong to stop a person of smoking something that is completely safe.
    TY

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