Should we tax pot? – Los Angeles Times
Now, as we’re desperately trying to reinvent the economy, should we consider marijuana?

We’ve dipped a toe in those waters already in California. Sales of medical marijuana are taxable — $11.4-million worth for 2005-2006, the most recent (though admittedly murky) figures available.

Marijuana is a huge component of the nation’s underground economy. A couple of years ago, the legalize-it forces estimated that the U.S. marijuana crop was worth $35 billion a year. California’s share of that was $13.8 billion.

If the number is even half that, any tax windfall, on top of money saved by not prosecuting marijuana crimes, would mean a bonanza, wouldn’t it?

Sacramento would be doing the backstroke in black ink. With all the new parks and health clinics, we’d have more ribbon-cuttings than a baby shower. Is this just a pipe dream?

Rosalie Pacula says that in all likelihood, yes. She’s a senior economist at the Rand Corp. and co-director of its drug policy research center. Here’s how she burst my bubble:

First, you have to consider that legalizing it would have its own costs. Recent research, Pacula says, shows marijuana to be more addictive than was thought. Because marijuana is illegal, and because its users often smoke tobacco or use other drugs, teasing out marijuana’s health effects and associated costs is almost impossible. And more people would smoke it regularly if it were legal — Pacula estimates 60% to 70% of the population as opposed to 20% to 30% now — and the social costs would rise.

She takes issue with figures from Harvard’s Jeffrey Miron, among others, who says that billions spent on enforcing marijuana laws could all be saved by legalization. Rand’s research, Pacula says, finds that many marijuana arrests are collateral — say, part of DUI checks or curfew arrests — and many arrestees already have criminal records, meaning they might wind up behind bars for something else even if marijuana were legal.

Legalization also wouldn’t do away with pot-related crime entirely. There would likely be a black market, just as there is in other regulated substances, such as cigarettes and liquor. That means police and prosecution, which cost money.

As to the tax benefit, that’s partly a function of the price point for legalized pot. If everyone could legally grow and consume dope, then the crop probably wouldn’t be worth $35 billion and the taxes wouldn’t be anything to write home about.

How many ways do you think we can debunk Pacula’s premise, which seems to be that arresting 872,721 Americans for marijuana-related offenses and eradicating hundreds of millions of marijuana plants every year is cheaper than not legalizing marijuana?  Did you find all seven?  Read on…

1) Marijuana is more addictive?  Please.  Increases in treatment admissions for marijuana “addiction” are due to increases of arrests for marijuana where pot smokers are sentenced to drug rehab.  Pot is no more addictive now than it was in the ’60s because THC is THC – the chemical has not changed.  More potent marijuana does not make it more addictive – the effects are the same, just less pot is used.  NIDA even rated marijuana about as addictive as caffeine.

2) There are plenty of marijuana users (like myself) who do not use tobacco or other drugs.  I might drink one alcoholic beverage per month, on average, and don’t even use aspirin, acetominophen, naproxen, nose spray, eye drops, or cold medicines.  The National Survey on Drug Use and Health tells me there were 19.8 million Americans who used some illicit drug in the past month.  Of those, 14.4 million used marijuana.  9.2 million used drugs other than marijuana.  If I’m figuring this right, that means there are 3.8 million who use both marijuana and other drugs.  Then there has to be 10.6 million monthly pot smokers who use no other drugs.

3) 70% of the population would smoke pot if it were legal?  Right now, the NSDUH figures say just 8% of the population use any illicit drug, with only 5.8% smoking pot monthly.  70% would smoke this “more addictive” legal pot, when only 28.6% smoke highly addictive legal tobacco and 51.1% drink highly addictive legal alcohol?

4) The social costs would rise?  What are those costs?  These nebulous assertions are often based on lost wages, productivity, crime, and health care costs that are associated with heroin, cocaine, or meth abuse, that end up lumping in marijuana as well under the umbrella term “drug abuse”.  It’s interesting to me that Pacula says it’s tough to “tease out” the costs of marijuana because its users use other drugs, but then in the same paragraph claims legalizing only marijuana would cause social costs to rise.

5) Some marijuana arrests are collateral to other arrests, true.  But most are collateral to what would normally be violations, like speeding, improper lane change, or broken taillight.  If some pot smokers might have been arrested anyway for curfew or DUI, then many more would’ve just gotten tickets instead of wasting a cop’s time with an arrest and booking.  Besides, if marijuana arrests have tripled over the past sixteen years, while both violent crime and property crime have declined, doesn’t that mean that you’ve had to arrest more people for nothing but marijuana?

6) There might indeed be a black market in marijuana when it is legal, just like the black market in cigarettes and liquor.  A 2000 study says that 3-4% of tobacco sales are black market.  Wouldn’t the enforcement costs on tobacco be much higher if 100% of its sales were black market like marijuana?  And we can look back to 75 years ago to determine whether the enforcement costs were higher on 100% black market sales of alcohol vs. whatever small percentage of black market booze sales may exist today.  Then you’d have to compare the enforcement costs on few remaining black market marijuana sales against the economic benefits and the tax revenue that would be generated by the white market marijuana sales.

7) As for the tax benefit, while everyone could legally grow their own, people like the writer and Rosalie Pacula have never actually tried to grow marijuana and must thnk you just drop a seed in some soil and forget about it.  People are allowed to brew their own beer, too, but they seem to be willing to buy beer commercially and pay higher-than-normal taxes on it.  Growing quality marijuana is a lot harder than home brewing beer.  Marijuana’s value in a legal market may be less without the risk costs of prohibition, but it won’t be worthless, either.  Suppose the price of an ounce dropped to 20% of current prices – say, from $300/oz. to $60/oz.  Even at just 20% of its current projected $35 billion in value, it would still be worth as much as wheat in this country, and the taxes on wheat are something we could write home about, huh?

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This entry was posted on Thursday, December 4th, 2008 at 7:59 pm and is filed under 4:20 NewsHour, Commentary, Decriminalization, Media, Social. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a trackback from your own site.