Tag Archives: marijuana

Better to Make Money than to Spend it

6 Jan

Colorado is making money on recreational use and sale of marijuana

Nations have been waging war on “drugs” for decades now, and it’s been a complete disaster. Like waging war on “terror”, we are learning that you can’t just declare and wage war on something that has always existed, still exists, and will always exist. The war on drugs is destroying communities and poorer nations much more palpably than use of the drugs themselves would. 

Marijuana decriminalization has been gaining some momentum in recent months, because of all the prohibited drugs, it’s the least harmful. It comes from a plant that grows in the ground and, unlike substances like crystal meth, crack, or heroin, you don’t need an explosive laboratory to prepare it for use. The worst thing about marijuana is that it makes people sleepy, lazy, and hungry. Maybe it makes them act a bit silly.  Unlike alcohol, it doesn’t make them black out, pass out, belligerent, loud, or obnoxious. I’d rather encounter a stoner than a drunk any day, and the war on drugs has been disproportionately harsh on the poor and the brown. 

So, Uruguay, Washington State, and Colorado have decriminalized and taxed marijuana. Consumers can legally buy, consume, grow, sell, and possess small quantities, and all of it is healthily taxed by the local authorities. 

The arguments will come that decriminalization will be a slippery slope to the legalization of harder drugs, and perhaps this is a debate that needs to take place. But the amount of money spent on enforcing anachronistic marijuana prohibition laws that were brought about through an organized misinformation campaign is enormous, and perhaps it’s time for the people to have a smidge more freedom, and that a legal marijuana trade helps to fund government, rather than the status quo whereby the government feeds an illegal, violent black market. 

Back in mid-December, state Senator Liz Krueger introduced a bill to decriminalize pot sales to 21 year-olds, and possession for 18 year-olds. Small amounts could be traded, grown, possessed, and taxed. As of right now, it is estimated that marijuana is a $3 billion annual market, yet the government doesn’t get its cut. 

The Assembly bill is here, and the text of the identical Senate bill is here. As Governor Cuomo moves to minimally liberalize medical marijuana, catching up to many other states, perhaps it’s time to at least put marijuana decriminalization before the voters of the state.

It’s time the people made money off of this thriving market, rather than spending money trying, ever in vain, to stop it. 

Obligatory Legalization of Marijuana Post on 4/20

20 Apr

Happy 4/20!  For you nerds out there who don’t know what today is, click through for the Wikipedia entry on the term which is maintained by the team from High Times magazine.

4204:20 or 4/20 (pronounced four-twenty) refers to consumption of cannabis and, by extension, a way to identify oneself with cannabis subculture. The notable day for these is April 20.

Since today is the national holiday for weed smokers everywhere, it seems natural to have an adult conversation about the legalization of marijuana and the positive effects such a decision would have on the local and regional economy.

Now, I’m not a regular consumer of marijuana, it’s just not my thing.  But I’m cool with people who do.  I also see the obvious economic benefits of legalization, especially in New York State.  Governor Andrew Cuomo projects that New York State will face a $2 Billion deficit in fiscal year 2012-2013.  This deficit remains after draconian cuts in the 2011-2012 budget lowered the projected deficit by $13 Billion.

The choice for Cuomo and the NY State Legislature is simple, either hike taxes on what revenue sources are left (us) or cut spending to the bone.  Since this is New York, cutting the budget beyond the 2012 cuts is not a realistic option.  How about a third option?  Why not write some legislation which would result in new taxable entities and products?

Step 1.  Legalize marijuana.

Step 2.  ???

Step 3.  Profit!

Leading financial minds and economists such as Milton Friedman, Nobel winner George Akerlof, George Soros, and Howard Margolis put out a study detailing the economic impact of legalization. They estimate that if just the same people who use marijuana now continued to use it once it was legal, the legalization would generate/save $12BN annually on a national level.  The study does not even account for the anticipated increased uses of medical marijuana, the industrial adoption of commercial grade hemp or the likely increase in recreational pot smokers/users if it were legal.  If you factor in those things, it pushes the numbers tenfold higher. Basically, it is a $120BN, annually renewable resource waiting to be tapped.

Of course, these estimates are based upon national economic figures, usage rates and such; but tremendous economic value could be derived from being the one state to legalize marijuana.

The study by Friedman notes that New York spends an estimated $564 Million annually in total marijuana prohibition costs (enforcement, judicial, incarceration), one of the highest rates in the nation.  The study also estimates that New York State would be one of the largest economic beneficiaries of a legalization plan, generating an additional $65 Million annually through the imposition of a low marijuana consumption tax.

Assuming that many of the prohibition costs are “legacy” costs in that the apparatus, personnel and capital expenditures related to enforcement can not be written off in one year, we’re looking at a 5-7 year draw down of prohibition costs while consumption tax revenue pours in.

$2.5 Billion in lower total costs for New York State over a five year period while generating $325 Million in revenue?  Sign me up.

I could write more, but I don’t want to sound like some high school debate club contestant detailing the economic benefits of hemp as a replacement for paper, plastics whilst marveling at the incredible tensile strength of hemp rope.

However, we are at a critical juncture in our collective history.  A time in which we need to be re-evaluating our consumerist culture, our massive reliance on credit and other issues too numerous to mention.  One of those issues is whether or not the continued prohibition of marijuana in this day and age makes sense. It has become a hot issue because many states are facing significant revenue crises and legalization is a way to raise new tax revenue and reduce the cost of arresting, prosecuting and housing marijuana criminals.

So, the discussion we need to have in this country is about the public health costs, taxation, changes in drug enforcement funding, changes in employment law, legalization or decriminalization and a multitude of different factors related to this change in public policy.

Let’s get over our ideological xenophobia and stereotypes and have a real discussion about the issue.