Since the Obama administration has not responded in any substantive way to the impending legalization of marijuana in Colorado and Washington, we must look elsewhere for clues to its thinking. Judging from an October 2010 "fact sheet" about marijuana legalization prepared by the Office of National Drug Control Policy (ONDCP), thinking may be too charitable a description. The ONDCP warns that "legalization would lower price, thereby increasing use." As if that's a bad thing. A rational calculus would count greater consumer satisfaction and savings from lower prices as benefits of legalization.
In any event, by the end of the fact sheet the ONDCP has stopped worrying that "legalization would cause the price of marijuana to plummet" and started worrying that the price would be too high—so high that Mexican cartels, operating under the same legal and practical constraints they face now, could beat it. The ONDCP says "legalization would do little, if anything, to curb drug violence." One reason: "Under the most commonly proposed legalization regime—one that imposes high taxes on marijuana—violent drug cartels would simply undercut legal prices to keep their market share." So according to the federal government, the price of pot will plummet following legalization while remaining above the black-market level. Pot will be dangerously cheap yet dangerously expensive at the same time. So the Obama administration admits that marijuana legalization can do miracles.
[Thanks to Allen St. Pierre for the tip.]