Why There's No Money in Drug Trafficking

Julian notes the fuzziness regarding basic economics that Justice John Paul Stevens displayed during yesterday's oral arguments in Ashcroft v. Raich. In a similar vein, the government's brief in the case quotes a 9th Circuit ruling claiming that "laws criminalizing the possession of a good decrease the demand for that good. This decreased demand results in a decrease of supply as production becomes less profitable and therefore less attractive." The barriers created by prohibition almost certainly deter some use, so that overall demand for the proscribed substance is lower than it would otherwise be, even allowing for a "forbidden fruit" effect. But one of the most familiar aspects of prohibition is that it allows black-market traffickers to earn a huge risk premium, which makes drugs much more profitable, not less so.

The government also asserts that "local manufacture, distribution, and use of controlled substances–and their possession for those purposes–directly increase the supply of those substances, which in turn increases demand for these substances, which leads to further increases in supply and the marketing to users, thus 'swelling' the traffic in the drug." Not only is the government suggesting that supply creates its own demand; in this context, it is claiming that letting patients grow marijuana to treat their own symptoms will make pot more popular. That has not been the case so far in California, where pot smoking among teenagers has declined substantially since the passage of the state's medical marijuana initiative in 1996. But perhaps it's just a matter of time before the association with AIDS, cancer, nausea, vomiting, muscle spasms, and agonizing pain makes marijuana cooler than ever.