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Legalizing Drugs Would Boost US Budgets By $100 Billion, Harvard Researcher Concludes

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Ending the prohibition of marijuana and other currently illegal drugs and instead taxing and regulating their sales would supplement federal and state government budgets to the tune of up to $106.7 billion a year, according to a new analysis from a Harvard University researcher.

“At both the federal and state levels, government budgets would benefit enormously from drug legalization policies,” Jeffrey Miron, director of undergraduate studies in the Department of Economics at Harvard University, wrote in the report published on Monday by the libertarian Cato Institute.

“This report estimates that $47.9 billion is spent annually on drug prohibition enforcement, whereas $58.8 billion could potentially be raised in tax revenue.”

Miron, who also serves as director of economic studies at Cato, published a previous estimate of the economic impact of legalizing cannabis and other drugs in 2010, but actual revenues from states that have since legalized marijuana blew those projections out of the water.

“Washington collected nearly $70 million in marijuana tax revenues during the first year of legalization, almost exactly the estimate in the 2010 report once adjusted for inflation. In fiscal year 2016, however, Washington collected nearly triple that amount, and in fiscal year 2017 tax revenues reached nearly $320 million. Oregon collected only $20.6 million in fiscal year 2016, about half the 2010 estimate, but it collected $70.3 million in fiscal year 2017, well above the 2010 estimate. In Colorado, marijuana tax revenues have risen from $67.6 million in calendar year 2014 to $247.4 million in calendar year 2017. Even adjusting for inflation, those figures far outstrip the 2010 estimates as well as the updated estimates presented in this paper.”

In the new analysis, Miron speculates that the real numbers could be higher because of robust cannabis tourism in legalization state so far, or it could be because marijuana prices haven’t fallen as far as he initially projected would occur under legalization.

“Revenues may continue to increase over time as more stores open or if demand increases as a result of greater cultural acceptance of marijuana,” he wrote. “But revenues in existing legalization states may also moderate if other states or the federal government legalize marijuana. Another consideration is that a nontrivial share of tax revenue in Colorado, Oregon, and Washington has been generated from collection of one-time application and licensing fees… As recreational marijuana becomes a more established industry, states will likely see a decline in the number of new entrants and therefore a decline in licensing revenue.”

Aside from revenues, Miron also looks at potential criminal justice cost savings resulting from the end of drug prohibition, which he estimates are “likely to be modest in practice, even if the number of drug arrests falls substantially.”

“Early experience suggests that governments will reallocate rather than reduce those expenditures.”

See below for Miron’s state-by-state calculations on the impact of drug legalization, courtesy of Cato:

Table 1: State and local expenditures attributable to drug prohibition, billions of dollars, 2016

All drugs Heroin/cocaine Marijuana Synthetic Other
29.37 12.78 6.04 4.93 5.62

 

Table 2: State and local expenditures attributable to drug prohibition, millions of dollars, 2016

State All drugs Marijuana Heroin/cocaine Other
United States 29,374.9 6,036.9 12,779.2 10,555.4
Alabama 252.9 51.2 111.5 90.2
Alaska 111.8 17.4 54.0 40.4
Arizona 615.1 96.7 286.3 232.0
Arkansas 192.9 40.3 82.8 69.9
California 5,963.4 951.4 2,718.4 2,293.0
Colorado 422.3 64.2 200.1 157.9
Connecticut 314.9 74.1 142.3 98.5
Delaware 113.5 25.1 48.5 39.9
Florida 1,170.0 180.4 564.3 425.2
Georgia 1,339.2 424.0 457.9 457.8
Hawaii 172.6 33.9 72.8 65.8
Idaho 140.7 23.2 63.8 53.7
Illinois 713.1 125.4 334.9 252.7
Indiana 637.6 236.5 193.0 207.4
Iowa 204.8 59.0 77.1 68.5
Kansas 206.5 54.2 81.5 70.7
Kentucky 276.9 56.8 122.2 97.9
Louisiana 376.2 72.2 170.0 133.9
Maine 174.5 63.5 67.1 44.0
Maryland 514.9 77.5 248.7 188.6
Massachusetts 481.0 115.5 215.5 150.0
Michigan 860.3 200.9 356.2 302.7
Minnesota 443.5 130.7 164.1 148.4
Mississippi 278.7 86.3 96.9 95.6
Missouri 335.8 76.6 141.5 117.5
Montana 160.4 28.7 68.4 63.3
Nebraska 147.2 31.1 63.2 52.8
Nevada 223.3 34.6 106.6 82.1
New Hampshire 175.7 65.2 67.0 43.5
New Jersey 669.3 117.8 320.5 231.0
New Mexico 345.1 59.3 149.4 136.4
New York 1,889.6 308.8 915.1 665.4
North Carolina 891.2 263.3 319.0 309.3
North Dakota 310.7 153.7 62.6 94.0
Ohio 650.2 111.0 311.3 227.7
Oklahoma 589.5 209.5 182.1 198.2
Oregon 375.4 57.2 177.7 140.4
Pennsylvania 1,033.0 179.6 493.7 359.6
Rhode Island 203.6 76.1 77.4 50.2
South Carolina 244.7 47.4 108.9 88.4
South Dakota 158.8 67.5 40.9 50.2
Tennessee 342.7 53.9 165.1 123.7
Texas 1,711.5 291.3 798.2 621.9
Utah 767.3 151.9 300.1 315.3
Vermont 69.3 19.5 29.5 20.4
Virginia 602.1 81.2 296.1 224.7
Washington 545.8 82.4 259.3 204.0
West Virginia 270.1 94.5 85.4 90.3
Wisconsin 414.8 62.7 199.1 152.9
Wyoming 223.5 42.9 89.3 91.3
District of Columbia 47.2 8.5 22.0 16.7

 

Table 3: Federal expenditures attributable to drug prohibition, billions of dollars, 2015 (in 2016 dollars)

All drugs Marijuana Cocaine Heroin Other
18.47 3.96 8.42 1.47 4.61

 

Table 4: State and federal tax revenues from drug legalization, billions of dollars, 2016

Total Marijuana Cocaine Heroin Other
Federal revenues 39.21 8.04 17.28 10.18 3.71
State revenues 19.60 4.02 8.64 5.09 1.86

 

Table 5: State tax revenues from drug legalization, distributed by population, millions of dollars, 2016

State Total Marijuana Cocaine Heroin Other
All states 19,603.33 4,020.00 8,640.00 5,090.00 1,856.67
Alabama 296.52 60.81 130.69 76.99 28.08
Alaska 45.07 9.24 19.86 11.70 4.27
Arizona 416.48 85.41 183.56 108.14 39.45
Arkansas 181.91 37.30 80.18 47.23 17.23
California 2,382.11 488.49 1,049.89 618.51 225.61
Colorado 332.86 68.26 146.71 86.43 31.53
Connecticut 218.99 44.91 96.52 56.86 20.74
Delaware 57.67 11.83 25.42 14.97 5.46
Florida 1,236.75 253.62 545.09 321.12 117.13
Georgia 623.07 127.77 274.61 161.78 59.01
Hawaii 87.06 17.85 38.37 22.61 8.25
Idaho 100.97 20.71 44.50 26.22 9.56
Illinois 784.33 160.84 345.69 203.65 74.29
Indiana 403.97 82.84 178.05 104.89 38.26
Iowa 190.72 39.11 84.06 49.52 18.06
Kansas 177.57 36.41 78.26 46.11 16.82
Kentucky 270.30 55.43 119.13 70.18 25.60
Louisiana 285.22 58.49 125.71 74.06 27.01
Maine 81.22 16.65 35.79 21.09 7.69
Maryland 366.23 75.10 161.41 95.09 34.69
Massachusetts 414.44 84.99 182.66 107.61 39.25
Michigan 605.87 124.24 267.03 157.31 57.38
Minnesota 334.92 68.68 147.61 86.96 31.72
Mississippi 182.62 37.45 80.49 47.42 17.30
Missouri 371.19 76.12 163.60 96.38 35.16
Montana 63.05 12.93 27.79 16.37 5.97
Nebraska 115.69 23.72 50.99 30.04 10.96
Nevada 176.17 36.13 77.64 45.74 16.69
New Hampshire 81.26 16.66 35.81 21.10 7.70
New Jersey 545.86 111.94 240.58 141.73 51.70
New Mexico 127.09 26.06 56.01 33.00 12.04
New York 1,206.34 247.38 531.68 313.23 114.25
North Carolina 613.04 125.71 270.19 159.18 58.06
North Dakota 46.23 9.48 20.38 12.00 4.38
Ohio 708.95 145.38 312.46 184.08 67.15
Oklahoma 238.70 48.95 105.21 61.98 22.61
Oregon 245.86 50.42 108.36 63.84 23.29
Pennsylvania 781.45 160.25 344.42 202.90 74.01
Rhode Island 64.49 13.22 28.42 16.74 6.11
South Carolina 299.02 61.32 131.79 77.64 28.32
South Dakota 52.41 10.75 23.10 13.61 4.96
Tennessee 402.89 82.62 177.57 104.61 38.16
Texas 1,675.66 343.62 738.53 435.08 158.70
Utah 182.70 37.46 80.52 47.44 17.30
Vermont 38.25 7.84 16.86 9.93 3.62
Virginia 511.17 104.82 225.29 132.73 48.41
Washington 437.42 89.70 192.79 113.58 41.43
West Virginia 112.47 23.06 49.57 29.20 10.65
Wisconsin 352.36 72.26 155.30 91.49 33.37
Wyoming 35.83 7.35 15.79 9.30 3.39
District of Columbia 40.95 8.40 18.05 10.63 3.88

 

Table 6: Summary of expenditure savings and additional revenues from drug legalization, billions of dollars, 2016

All drugs Marijuana Heroin/cocaine Other
Expenditures State 29.4 6.0 12.8 10.6
  Federal 18.5 4.0 9.9 4.6
Total 47.9 10.0 22.7 15.2
Revenues State 19.6 4.0 13.7 1.9
  Federal 39.2 8.0 27.5 3.7
Total 58.8 12.0 41.2 5.6

 

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.

Tom Angell is the editor of Marijuana Moment. A 15-year veteran in the cannabis law reform movement, he covers the policy and politics of marijuana. Separately, he founded the nonprofit Marijuana Majority. Previously he reported for Marijuana.com and MassRoots, and handled media relations and campaigns for Law Enforcement Against Prohibition and Students for Sensible Drug Policy. (Organization citations are for identification only and do not constitute an endorsement or partnership.)

Politics

Feds Award $3 Million In Grants To Study Marijuana Ingredients As Alternatives To Opioids

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The federal government has awarded $3 million in grants for research into the therapeutic benefits of ingredients in marijuana other than THC, emphasizing their potential as alternatives to prescription opioids.

In a notice published on Thursday, the National Institutes of Health (NIH) explained why the studies were necessary and listed grant recipients and the subjects they will investigate. That includes research into the use of CBD for arthritis pain, which will be led by New York University School of Medicine.

“The treatment of chronic pain has relied heavily on opioids, despite their potential for addiction and overdose and the fact that they often don’t work well when used on a long-term basis,” Helene Langevin, director of the National Center for Complementary and Integrative Health (NCCIH), said in a press release. “There’s an urgent need for more effective and safer options.”

A total of nine grants were issued, with NIH stating that the funds will help identify alternative treatment options for pain and provide information about the impact of consuming cannabis compounds such as CBD and other lesser-known cannabinoids as well as terpenes found in the plant.

“The cannabis plant contains more than 110 cannabinoids and 120 terpenes, but the only compound that’s been studied extensively is THC,” the press release said.

But while THC is known to treat certain forms of pain, NIH is concerned that its intoxicating effects limit its medical applicability.

“THC may help relieve pain, but its value as an analgesic is limited by its psychoactive effects and abuse potential,” David Shurtleff, deputy director of NCCIH, said. “These new projects will investigate substances from cannabis that don’t have THC’s disadvantages, looking at their basic biological activity and their potential mechanisms of action as pain relievers.”

NIH first announced that it would be issuing grants for studies into minor cannabinoids and terpenes last year.

Federal health agencies aren’t the only institutions interested in learning about marijuana compounds other than THC. On Wednesday, a Senate committee issued a spending report that called for research into CBD and CBG while also criticizing the federal drug scheduling system for inhibiting such research.

Read descriptions of the federal cannabinoid and terpene research grant awards below:

Mechanism and Optimization of CBD-Mediated Analgesic Effects; Boston Children’s Hospital, Boston,; Zhigang He, Ph.D., B.M., and Juan Hong Wang, Ph.D. This project will investigate how the pain-relieving effects of cannabidiol (CBD) and other minor cannabinoids may be modulated by the activity of potassium-chloride cotransporter 2 (KCC2), a chloride extruder expressed in most neurons. (Grant 1R01AT010779)

Neuroimmune Mechanisms of Minor Cannabinoids in Inflammatory and Neuropathic Pain; University of California, San Francisco; Judith Hellman, M.D., and Mark A. Schumacher, M.D., Ph.D. This project will explore the effects of minor cannabinoids on inflammatory and neuropathic pain in vitro and in vivo, focusing on the interactions of the cannabinoids with the peripheral receptor called TRPV1 and a cannabinoid receptor, CB1R. (Grant 1R01AT010757)

Minor Cannabinoids and Terpenes: Preclinical Evaluation as Analgesics; Research Triangle Institute, Research Triangle Park, North Carolina; Jenny L. Wiley, Ph.D. This project will evaluate purified biosynthesized minor cannabinoids and selected terpenes alone and in planned combinations to determine their potential efficacy as pain relievers against acute thermal, inflammatory, neuropathic, and visceral pain. (Grant 1R01AT010773)

Identifying the Mechanisms of Action for CBD on Chronic Arthritis Pain; New York University School of Medicine, New York City; Yu-Shin Ding, Ph.D. This project will use neuroimaging studies and behavioral assessments to investigate the mechanisms of action of CBD in the modulation of chronic pain associated with osteoarthritis in a mouse model. (Grant 1R21AT010771)

Synthetic Biology for the Chemogenetic Manipulation of Pain Pathways; University of Texas, Austin; Andrew Ellington, Ph.D. This project will use a novel method to evolve individual variants of cannabinoid receptor type 2 (CB2) that interact with high affinity with minor cannabinoids and evaluate the new variants in a mouse model of pain. (Grant 1R21AT010777)

Exploring the Mechanisms Underlying the Analgesic Effect of Cannabidiol Using Proton Magnetic Resonance Spectroscopy; University of Utah, Salt Lake City; Deborah A. Yurgelun-Todd, Ph.D. This project will use proton magnetic resonance spectroscopy (1H-MRS) to evaluate changes in brain chemistry in critical pain-processing regions after short-term administration of a cannabis extract enriched in CBD. (Grant 1R21AT010736)

Mechanistic Studies of Analgesic Effects of Terpene Enriched Extracts from Hops; Emory University, Atlanta; Cassandra L. Quave, Ph.D. This project will take a multidisciplinary approach to investigate the analgesic effects of terpenes from Humulus lupulus (hops), a plant that is closely related to cannabis and has a very similar terpene profile. (Grant 1R21AT010774)

Systematic Investigation of Rare Cannabinoids With Pain Receptors; University of Illinois at Urbana-Champaign; David Sarlah, Ph.D. This project involves synthesizing several classes of rare phytocannabinoids, systematically evaluating their anti-inflammatory potential, and examining the effects of the compounds with the strongest anti-inflammatory potential on the major receptors involved in pain sensation. (Grant 1R21AT010761)

Analgesic efficacy of single and combined minor cannabinoids and terpenes; Temple University, Philadelphia; Sara J. Ward, Ph.D. This project will use rodent models of pain to evaluate the effects of four biologically active components of cannabis that may act synergistically to protect against pain development and to assess the interactions of these four substances with morphine. (Grant 1R01AT010778)

Senate Report Slams Drug Scheduling System For Blocking Marijuana Research

 

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Beto O’Rourke Proposes Drug War Reparations Funded By Marijuana Taxes

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Marijuana would not only be legalized under a plan proposed on Thursday by Democratic presidential candidate Beto O’Rourke, but cannabis tax revenue would be used to directly repay formerly incarcerated people through a new “Drug War Justice Grant” program.

Unlike other contenders who have come around to supporting marijuana legalization in just the past couple of years, the former Texas congressman has long called for ending prohibition—and his new plan in many respects goes further than those rolled out by other campaigns.

Please visit Forbes to read the rest of this piece.

(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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Support Grows For Marijuana Legalization Bill In Colombia

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Colombia’s legislature will soon take up a bill to legalize and regulate the production and consumption of marijuana for adults.

The legislation, which is being filed by Sen. Gustavo Bolivar of the opposition Colombia Humana party, seeks to end prohibition as a means of curtailing crime and supporting a public health-focused approach to drug policy.

Bolivar, an author who has written several books centered on drug trafficking, has characterized the bill as being about “regularization, not legalization,” but it would provide for legal sales to adults with restrictions similar to those imposed for tobacco and alcohol. There would be penalties for selling to underage individuals and smoking wouldn’t be permitted in public spaces.

The senator pointed to Uruguay, Canada and states in the U.S. as regulatory models for legalization.

“It has been proven that crime levels are lowered and public health is improved,” he said, according to Colombia Reports.

Sen. Alberto Castilla Salazar of the leftist Polo Democrático party said that his coalition supports the reform measure.

“Colombia must overcome prohibitionism and break the ties of illegal groups with the control of cannabis, so that it is the State that regulates, defines the forms and understands consumption as a public health problem,” he said on Tuesday.

Sen. Julián Gallo Cubillos of the FARC party said his coalition supports the legislation and that it represents “a new way to fight the scourge of drug trafficking.”

The proposal has also garnered the support of former President Juan Manuel Santos, who has been an outspoken advocate for ending the war on drugs. His Liberal party could make or break the legislation depending on where members fall.

While left and center-left lawmakers seem largely united around legalizing marijuana, the issue will likely face resistance from President Ivan Duque, who last year signed a decree banning low-level possession of cannabis and cocaine despite court rulings that such activity is permissible.

As Colombia Reports noted, however, Duque’s far-right Democratic Center party is in the minority.

“We’ll have to see how many senators are left to former president Juan Manuel Santos and see how public opinion receives the idea that marijuana can be consumed in public spaces,” Sen. Paloma Valencia, a member of the president’s party, said.

If the country does opt to pursue a regulated cannabis program, it will join Mexico, where lawmakers are readying legislation to legalize marijuana for adult use following a Supreme Court ruling establishing that a ban on possession and cultivation for personal use is unconstitutional.

Former White House Drug Czar Offers Marijuana Legalization Advice To Mexico

Photo courtesy of Brian Shamblen.

Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
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