Footnote on drugs and revenues

Why didn’t Simpson and Bowles propose legalizing and taxing cannabis? That’s $5-$10 billion a year.

Legalizing cannabis and taxing it at half the current market price – let’s say, a nickle a milligram of THC – would produce $5-10b per year in net revenue, depending on the amount of tax evasion and the increase in quantity. Not a huge number, and it’s not a policy I especially like; I’d rather legalize cannabis on a non-commercial basis. But it’s one more illustration of what wasn’t even on the table as the Pain Commissioners did their work.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact:

6 thoughts on “Footnote on drugs and revenues”

  1. There is a story in our paper today how the growers are one of the only things keeping many warehouses from foreclosing here:

    Industrial brokers estimate that medical-marijuana grow houses have leased more than 1 million square feet of warehouse space — about the size of the Republic Plaza office building downtown — over the past year, propping up a commercial real estate market that has had a glut of vacant space.

    "Growers have saved numerous warehouse owners from going under in this economy," said Nick King, co-owner of Alpine Herbal Wellness, a medical-marijuana dispensary in Cherry Creek. "Without the influx of cannabis growers, many of these warehouses would be forced into short sale or foreclosure."

    Under House Bill 1284, signed into law in June, medical-marijuana dispensaries are required to grow 70 percent of the product they sell. The new law had dispensary owners scrambling to find warehouses to convert into grow facilities.

    "It's like calling all the burger joints in town and saying now you have to raise your own cows," said Eric DeWine, co-owner of Patients Choice of Colorado.

  2. Mark Kleiman wrote: "I’d rather legalize cannabis on a non-commercial basis."


    This is the United States. If you want to limit the impact of the lust for profits on a much needed policy reform, then you encourage people to DIY. Make it so that the regular working stiff finds it easier to put a patch in the closet or the garden. Tax commercial sales. Make sales of cannabis a tightly regulated activity based on attachment to the locale by code and tax policies, regulated for the public benefit, not the growers' benefit.

    We all know that current policy on alcohol is shaped far too much by commercial interests, whether they own a bar or a distillery.

    Perhaps a good way to think about how to accomplish this is to consider the differences between how beer and wine production at home are treated and how commercial sales are treated. I've got some opinions on this, but if I were to start a conversation about it, I would argue for treating personal growth, possession, and use like beer or wine. I would treat any sort of sale like hard liquor, requiring the purchase of tax stamps for instance, as one way to capture reasonable revenue from those too limited or lazy to DIY.

    In any case, the government's interest in reasonable regulation and revenue seems best served by some solution that embodies such principles. The people's interest is served by undermining negativemarket forces and encouraging a regulatory approach that limits government involvement to situations that clearly involvement commerce, rather than mere production and personal use.

  3. Mobius, a decent share of federal drug law enforcement and incarceration has to do with cannabis. Of course, you'd need some enforcement to maintain a high tax, but there would still be net savings.

    Warren, I'm not surprised. Merely noting that the commissioners' expressed willingness to embrace painful solutions has its limits.

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