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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.