Marijuana Revenue
March 3, 2009 8 Comments
Matthew Yglesias has a post up where he is discussing marijuana as a source of revenue for troubled state budgets.
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Jesse McKinley takes a look at states searching for unorthodox revenue sources including this one:
Nowhere is that more true than California, where Assemblyman Tom Ammiano, a freshman from San Francisco, made a proposal intended to increase revenue, and, no doubt, appetite: legalizing and taxing marijuana, a major – if technically illegal – crop in the state.
“We’re all jonesing now for money,” Mr. Ammiano said. “And there’s this enormous industry out there.”
I don’t think this is the optimal policy. I fear the creation of a legal marijuana industry with lobbyists and advertising aimed at creating as many problem pot smokers as possible. It would be better, I think, to decriminalize possession and growing for personal use but keep maintain a ban on selling and marketing marijuana. That said, the revenue possibilities of moving to full legalization are pretty tempting. And what Ammiano is proposing would be a significant improvement over the status quo. I think it’s a real sign of the poverty of our policy conversation that this idea isn’t in wider circulation.
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I’ve always had a problem with the notion of relying on vice to fund the needs of a state. That’s why I’m not a big fan of state lotteries that funnel money into education, etc. I just don’t like the idea of my children’s education being paid for by some of my fellow Kentuckians who are / might become gambling addicts. It’s bad enough when a state depends on horse racing or casino taxes for their basic budget needs, but with regards to lotteries you have states actually creating a vice in order to get revenue. Isn’t that something we should oppose?
It’s interesting that this discussion about potential marijuana revenue is getting a lit bit of traction out there. It seems that the best way to get some of these vices legalized is not to argue the moral route but instead to argue the financial one. It has worked for casinos and I have seen more than one ‘dry’ county in my state begin to allow liquor sales when proponents successfully argued that it would help restaurants increase sales. I think we may see financial desperation work in favor of pro-marijuana legislation at least in places like California where it is already de-criminalized. How ironic that a drug which often symbolized counter-culture might get its strongest push from the forces of capitalism. Times they are a-changing….
Mike,
I”m actually with you on this one. I hate it when a new lottery or slot machine or video poker proposal gets dragged out to “fund” a real need like schools. Such vice – funding proposals are, IMHO, the work of intellectually lazy politicians who haven’t the stomach for making real decisions and hard choices.
I’ll add, however, that I’d be thrilled if we could pull the regulation of agricultural hemp away from marijuana. Sure, they are both Cannibas plants, but hemp has real promise as a multi-use fiber (it’s good for much more them rope), and adding a dynamic agricultural hemp secotr to our economy could be a real boon (and a clean way to generate additional tax revenue).
I don’t know if marijuana is comparable to a lottery. In a lottery, the state is the entity encouraging the vice. It’s the casino.
With marijuana, the state is simply saying that those who wish to profit from this vice must pay a hefty tax to do so.
The disconnect is that we’re comparing “legalize and tax” to the current policy, “throw them all prison”.
If one starts from scratch, a government policy charging much higher taxes for vices than just the typical sales tax is still a policy incenting people to avoid that activity.
This is what we do with tobacco. I don’t hear anyone complaining that the government’s high taxes on tobacco are “profiting from vice.” It is, of course, but, it’s also viewed as a significant incentive to quit smoking.
As long as government is not in the business of producing and selling marijuana and also charges high taxes for it, I think that is “punishment” enough. Plus, we get better roads and schools! Sweet!
Noseeum,
Living in a tobacco state I can tell you that higher taxes are generally aimed at meeting increased healthcare costs and cutting usage…. I don’t think that’s what people are proposing with marijuana. i have no problem with the decriminalization…but i’m curious as to whether it will effect laws regarding driving while using, etc. we certainly don’t need to fill up our prisons with mid-level pot dealers or small time growers.
For the now-defunct online magazine, culture11, I wrote a long-ish article on the costs of the war on weed and the potential revenues we could gain from legalizing, regulating and taxing it.
I included a fair amount of research on how the economy during the Great Depression helped bring an end to alcohol prohibition.
Although the magazine is out of business, the article is still up:
http://www.culture11.com/article/36438
I don’t understand the lack of imagination nor the lack of willingness to discuss options regarding our “War on Drugs”. There are four major, well identified and understand type of economies and I don’t know why we are limiting ourselves to discussing only two of them.
Pot, like any other product, can be sold through a free market, a black market, a command economy or a hybrid economy. Each system empowers the distributors and as such big business, criminals, the government and entities operating a hybrid economy would be empowered under the various systems.
For whatever misguided reasons, we have chosen to empower criminals. There is a legitimate fear of creating financial incentives for big business or the government to hook the next generation of potential users. Therefore, I think more serious thought and discussion needs to go into a hybrid system.
Under my vision of a hybrid system, pot (as well as other drugs) would be sold by heavily regulated non-profit agencies. Revenue in excess of costs would go toward drug rehabilitation and drug education. Yes, the government would still benefit because jobs would be created in the farming, manufacturing, distribution, and selling of the drugs. Plus there would be administration jobs (HR, Accounting, IT, Security, etc.) created under this system. All would be tax paying jobs creating extra revenue for the state and all the decreased costs (gradual reduction in police, court and prison costs) would all be very beneficial to state/federal government budgets.
There is not a direct incentive to hook people on drugs. All incentives for doing so would be greatly minimized (far more so than any other distribution method). The harm caused to society would be minimized and more assistance could be offered to drug addicts which would be funded by drug users.
Let’s have the debate and not get bogged down in being limited to debating the pros and cons of having big business or criminals in charge of our drug trade. There are two other options and it is worth exploring the strenghts and weaknesses of each to come up with a sane approach to the presence of drugs on this planet.
PubliusX, I appreciate the imagination, but your solution has a whole bunch of incentives to encourage usage. If the government can hire more people and get more tax revenue, as well as swipe all the profits off the top, those are some big incentives.
Just because profit is taken out of the game, that doesn’t mean there are no incentives. There’s no reason to create a whole new bureaucracy or have the government involved in selling drugs. Private business will do a much more efficient job of funneling the money to the government without additional waste or bureacracy, the government can force a percentage of revenue, not profits, to be used to fund drug education, just like it’s now doing with cigarettes. Advertising can be strictly regulated, as it is in many other areas. Cannabis cafes can be severely curtailed, prohibited, or regulated.
This is a very simple problem to solve, and there’s no reason to reinvent the wheel IMO. It would be a terrible idea to create a whole new government bureauacracy to sell drugs.
I am doing a paper for school 8 pages long. I’m doing it on the legalization of marijuana and how it would bring the economy up a great deal with certail laws so the DEA can still maintain the drug and keep their jobs for the most npart. Any one who has information on what i could add to it for revanue and they must be fact my email is SuperRadDudeMann@rocketmail.com
There is plenty of money with medical marijuana but I wish they would stop trying to use a personal choice as a way to hike taxes, like they did with cigs and alcohol.