Marijuana could help Illinois out of its budget mess. Advocates have long
supported reforming current state and federal prohibitions against growing,
trading and consuming marijuana. But existing evidence of the economic benefits
of legalizing, regulating and taxing marijuana is even more compelling,
particularly in today’s trying times.
Illinois’ budget gap could be $9 billion by 2010. With some of the nation’s stiffest drug penalties, our state’s corrections system and county jails are bursting with drug users.
It should be noted that there is an important distinction between
decriminalization and legalization. Decriminalization removes penalties for
possession and consumption but still subjects sellers to prosecution. If
marijuana is made legal, it could be regulated like alcohol and tobacco, but
also taxed. Either scenario could provide an infusion of revenue to
governments, experts say.
The Springfield city council took action toward decriminalization earlier this
month, when Ward 2 Ald. Gail Simpson won approval of an ordinance that would
empower Springfield police officers to write tickets for possession of less
than 2.5 grams of cannabis or drug paraphernalia [See Amanda Robert, “Marijuana fines to help city finances,” Feb. 12].
Not only would some of the $46,165 in fines collected by the county in 2008 go
to the coffers of the city, which faced a $12.5 million budget shortfall, the
ordinance could help alleviate overcrowding at the Sangamon County jail. In
Illinois prisons today there are 574 inmates serving time for primary offenses
related to cannabis, at a cost of about $12.6 million to state taxpayers.
“Our current method of arresting, imprisoning, and prosecuting cannabis offenders
all costs the taxpayer money and police officers’ time,” says Dan Linn of the Illinois branch of National Organization for the Reform of
Marijuana Laws.
These days, government budgets are stretched so thin that they can no longer
afford to maintain this prohibition, says Linn whose group favors total
legalization.
So why not let taxpayers benefit? “The cannabis market is a viable tax option for our local, state and federal
governments, but they’re so entrenched in this war on drugs and war on marijuana that they can’t afford to go back on any of these laws that they’ve been trying to maintain,” Linn says.
However, Linn believes, “A cannabis consumer would much rather purchase a legal product with an excise
tax on it than to continue to purchase it illegally through an underground
market which also has an inflated price due to its illegality.”
Some scholars also believe that marijuana prohibition keeps as much as $40
billion dollars of tax revenue out of government treasuries.
In September 2007, Jon Gettman, a senior research fellow at George Mason
University’s School of Public Policy, published Lost Taxes and Other Costs of Marijuana Laws, a study that concludes that the lost tax revenue from the diversion of funds
to the illegal marijuana market combined with the cost of marijuana arrests
produce a budgetary cost to local, state and the federal government of $41.8
billion.
He places marijuana’s retail price at $7.87 a gram – a value of $7,871,480 per metric ton – and concludes that the annual supply of 14,349 metric tons of marijuana
available in the U.S. is worth $112.9 billion. From there, he calculates lost
revenues based the percentage of federal income, social security and state and
local sales tax that could be applied if marijuana were legal.
Economic arguments have fallen flat with policymakers thus far, not just because
marijuana legalization is a politically touchy subject but because people tend
to have ambiguous feelings about marijuana, Gettman says.
“On one hand, most people recognize that marijuana isn’t as dangerous as methamphetimines or heroin and most people do not support
sending people to prison for long periods of time. On the other hand they are
very uncomfortable, and rightfully so, with the prospect of teenagers gaining
access to marijuana.”
However, the “gateway theory,” that marijuana will lead to hard drugs, is largely unproved. And besides,
Gettman says, the real danger in marijuana for kids is the fact that there is
now a profit incentive for teenagers to sell drugs to one another.
Jeffrey Miron’s research, conducted in 2002, puts the potential tax benefit at $6.2 billion if
marijuana were legalized and taxed at rates comparable to cigarettes and
alcohol. Though the numbers vary greatly because Gettman’s analysis assumes greater marijuana consumption than does Miron, the men agree
in principle: legalization is preferable to decriminalization if the goal is
revenue generation.
“From decriminalization you’re not going to get any tax revenue because the sales themselves are still
illegal so they’re going to tend to take place underground out of the sight of the police so
there’s no easy or obvious way you can tax that,” says Miron, a senior lecturer in economics at Harvard.
Miron agrees that current pressures on government budgets might get marijuana
reform arguments slightly more reception with lawmakers. However, he would like
to see advocates for repeal to use a different tack and put the onus on
proponents of maintaining the status quo.
Historians believe that the desire to raise tax revenue in the 1930s when the
depression started was one of the reasons alcohol prohibition was repealed on
March 23, 1933, Miron says.
“It’s a reasonable hypothesis, though my sense is that it’s not so likely to happen. I just don’t think there’s much mainstream support for legalizing marijuana in the U.S.,” Miron says.
“I hope I’m wrong, I just don’t think it’s going to make a big difference even though there is a big budget deficit.” —R. L. Nave
This article appears in Feb 19-25, 2009.
