An Economic Jolt
For some it may come as a shock to find out that legalization of marijuana equates to a taxable wind fall for government. When prohibition ended what ensued was that the government was now able to tax the sale of alcohol which in turn provided funds the government so desperately needed during the depression. Today, even though some might argue the United States is indeed in a Depression the government still needs what ever taxable revenue it can get. This considering the fact that the Republican right wing fanatics pushed the sequester down the throats of the American public. When it was passed it continues to cause irrevocable harm to the economy. Their short sightedness and total disregard for the general public in their misguided attempt at tackling the nations national debt has only exasperated the already deteriorating economic conditions here in the US.When we think of taxable items tobacco, alcohol, and non consumable items come to mind and they are taxed. In Florida a 7% is taxed on these items.
When we turn our attention to Europe they have for some time come to realize that marijuana prohibition doesn't work, costs to much for arrests, prosecution and incarceration not to mention all the other intangible aspects of waging a loosing battle with a substance that has know medical and health benefits. Sure there are some who say marijuana use leads to addiction and more substance abuse. But, so is a glass of wine where it is known for it's beneficial health effects. Whether it is prohibition on alcohol or marijuana has become so costly, to wage a continued futile war to stop it's use, really is the real crime. The war on drugs was and always will be a lost cause costing billions of dollars to the taxpayer every year. When we actually think about drugs and drug trafficking there are so many innocent lives lost due to the fact that the US has not nationally legalized marijuana and other drugs.
To join the nations who have come to the realization that they can't afford to keep marijuana illegal any longer is Switzerland. Like Norway and Sweden and other European countries Switzerland has now realized that they too can't afford not legalizing marijuana. They have moved to national decriminalize the use and possession of all forms of marijuana. They are one step closer to ushering in a total legal use and possession of marijuana. As it stands now anyone over the age of 18 caught with 10 grams or less of the drug will no longer have to make a court appearance and will not have offenses entered into their permanent record; instead, violators will have to pay a fine of 100 Swiss Francs (approximately $110), then be on their way. Lawmakers in the country relaxed weed regulations in an effort to unify what had been a patchwork of often confusing policies that varied from one local area to another. Per The Independent, the measure is also expected to save money by cutting back on the 30,000 marijuana-related cases courts have had to handle each year. It will also free up police resources to pursue larger drug trafficking incidents.
In the United States we have a hypocritical view on our drug policies. This is where some states have moved to legalize medical marijuana with many restrictions where other states have put the full weight of the law against anyone caught using, selling, or buying any type of marijuana which is costing states millions if not billions of taxpayer money, money we don't have. Yet, there is relatively no national cry to legalize marijuana either in medical form or not. A hypocritical consciousness continues to dominate our congress and in state legislatures all across the country.
Over the past four decades, federal and state governments have poured over $1 trillion into drug war spending and relied on taxpayers to foot the bill. Unfortunately, these tax dollars have gone to waste. In 1980, the United States had 50,000 people behind bars for drug law violations. Today, we have more than one and a half million. The U.S. is now the world’s largest jailer, drugs remain widely available and treatment resources are scarce. Not only have billions of tax dollars been wasted, but drug war spending has also resulted in the defunding of other important services. Money funneled into drug enforcement has meant less funding for more serious crime and has left essential education, health, social service and public safety programs struggling to operate on meager funding. The Drug Policy Alliance is working to shift funding away from the same old failed policies and toward effective drug treatment and education. We are leading the movement to end prohibition’s drain on our economy and to protect your tax dollars from wasteful drug war spending. And, yet government only continues to enforce a prohibition on marijuana while draining whatever tax dollars to do so.
All one has to do is realize the enormous economic impact that a national legalization of marijuana would have on every states economy. According to a 2010 study from Cato, legalizing marijuana would generate more than $9 billion in federal and state tax revenue annually. The researchers assumed that legalized marijuana would be taxed similarly to alcohol and tobacco and that the income earned by pot producers would be subject to standard income and sales tax. Taxes aren't the only source of revenue that would come from legalizing weed, according to the study. State and local governments also stand to save billions of dollars that they currently spend regulating marijuana use. Washington and Colorado, both states that have legalized the use of marijuana recreationally. So why aren't the rest of our states? Hypocrisy at the national level continues to thwart and national move for legalization. The state of Washington estimates it will generate as much as $1.9 billion in additional revenue in five years due to the legalization of marijuana.
In addition to excise taxes, states could impose sales taxes on cannabis. Unlike excise taxes, sales taxes would be proportional to final retail price, including the added markup for premium brands. Just like alcohol, it can be expected that marijuana would often be sold for substantially more than its minimum price: in a hotel bar, a good sinsemilla joint might well go for $5. Assuming average retail prices of $ 1.50 - $2.50 per joint, and sales taxes between 4% and 6%, the total revenues raised might range from $200 million to $1.3 billion. legalization would create numerous revenue-generating spin off industries, such as coffee houses, gardening equipment and paraphernalia. The city of Amsterdam, with a million people, boasts 300 coffee houses retailing cannabis.Translated to the U.S, this would amount to over 60,000 retailers and 100,000 jobs. And, finally, the legalization of cannabis would also permit the agriculture of hemp, a versatile source of fiber, protein, biomass and oil, which was once one of America’s top crops. Hemp production might well rival that of other leading crops such as cotton or soy beans, which are currently on the order of $ 6 to 10 billion per year.
On the other side of the ledger, legalization would save the considerable economic and social costs of the current criminal prohibition system. Current federal drug enforcement programs run at over $16 billion per year. State and local programs are probably of similar or greater magnitude: in California, the Legislative Analyst’s Office estimated the cost of state drug enforcement programs at around $640 million per year in 1989-90, plus perhaps twice as much more in local expenditures. It has more than tripled since then. A sizable chunk of these costs involve cannabis, which accounts for 30% of drug arrests nationwide. Legalization of cannabis would also divert demand from other drugs, resulting in further savings. If legalization occurred it would reduce current narcotics enforcement costs by one-third to one-fourth, it would save over $9 billion per year.
The economic benefits of marijuana legalization are summarized in Table 2 below. The total direct savings to government in taxes and enforcement comes to over $16 billion per year. Nonetheless, the benefits of legalization are both substantial and undeniable. The bottom line is that the US will drastically improve the overall economy, and reduce our national debt all at the same time when we put policies in place to legalize marijuana. We can't afford not to.
Economic Benefits of Cannabis [Marijuana] Legalization
Excise Taxes$4.5 - $8.5 BillionSales Taxes$1.5 - $2.5 BillionEnforcement Savings$9 - $16 BillionHemp Industry$6 - $10 BillionOthers: Spin off industries, Reduced hard-drug and alcohol abuse