Contrary to what many claim, prohibition raises drug prices enormously. Conversely, legalization causes a price collapse, which in addition to increasing drug use also means that ad valorem taxes bring in less money per sale month by month. States that set cannabis taxes as a percent of price are thus not going to get the revenue they expected and indeed could end up subsidizing the marijuana industry out of the public purse.
Details at my latest Washington Post Wonkblog.
Author: Keith Humphreys
Keith Humphreys is the Esther Ting Memorial Professor of Psychiatry at Stanford University and an Honorary Professor of Psychiatry at Kings College London. His research, teaching and writing have focused on addictive disorders, self-help organizations (e.g., breast cancer support groups, Alcoholics Anonymous), evaluation research methods, and public policy related to health care, mental illness, veterans, drugs, crime and correctional systems. Professor Humphreys' over 300 scholarly articles, monographs and books have been cited over thirteen thousand times by scientific colleagues. He is a regular contributor to Washington Post and has also written for the New York Times, Wall Street Journal, Washington Monthly, San Francisco Chronicle, The Guardian (UK), The Telegraph (UK), Times Higher Education (UK), Crossbow (UK) and other media outlets.
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