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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

South Carolina Lawmakers Approve Medical Marijuana Bill In Subcommittee Vote

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A South Carolina Senate subcommittee voted Wednesday to advance a bill that would legalize access to medical marijuana. The legislation, known as the Compassionate Care Act, now moves to the full Senate Medical Affairs panel for discussion and a possible vote.

The subcommittee vote of 5 to 1 came after lawmakers approved several amendments to the bill. Some of those changes include narrowing the list of medical conditions that would qualify a patient to legally use medical cannabis, banning certain workers from being able to access the treatment and requiring physicians to have specific qualifications before being able to recommend marijuana.

“I want to thank the law enforcement officials, business leaders and physicians who worked with members of this subcommittee to ensure that this medical cannabis bill reflects the will of the overwhelming majority of South Carolinians … but to also draw a bright line against the recreational use of cannabis,” said Sen. Tom Davis, the bill’s author.

Advocates say they’re happy the bill is moving, but are expressing concerns about the changes that were adopted. Judy Ghanem, the executive director of patient advocacy group Compassionate SC, said she worries the bill will ultimately limit how many people will actually be able to access cannabis for their medical needs.

“The main concern that we have is, will enough doctors actually be recommending [medical cannabis] and will enough patients be able to get the medicine,” she told Marijuana Moment in a phone interview.

The original text of the bill authorized primary care physicians to recommend cannabis to their patients with debilitating medical conditions. “There might not be as many specialists that are willing to recommend as there would be regular physicians,” Ghanem said.

“Concessions have to be made, and we understand that, but from a logistics standpoint, we need to have a law that’s workable,” she continued. “We hope that it’s not narrowed any more than it is now. We’re still going to be happy that patients will get the medicine, but that doesn’t mean we’re not going to do everything we can to increase the number of patients that can have access.”

Also on Wednesday, a group of faith leaders held a news conference at the State House to show their support for legalization.

The bill still faces an uphill battle, as opponents from the State Law Enforcement Division (SLED), S.C. Sheriffs’ Association and S.C. Medical Association have all said they won’t get behind the legislation without the Food and Drug Administration’s stamp of approval on medical marijuana.

“Never before have we determined what medicine is by popular vote or legislation,” SLED Maj. Frank O’Neal told the Post & Courier.

This is the fourth year the Compassionate Care Act has been introduced in the South Carolina legislature. Last year, it was approved by both the Senate Medical Affairs Committee and the House Medical, Military, Public and Municipal Affairs (3M) Committee, but it did not receive floor consideration in either chamber before the session ended.

A January poll found that a majority of South Carolinians support legalizing medical marijuana.

South Carolina Lawmakers Pre-File Four Marijuana Bills For 2019

Photo courtesy of Chris Wallis // Side Pocket Images.

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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FDA Chief Warns CBD Rulemaking Could Take Years Without Congressional Action

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The outgoing head of the Food and Drug Administration (FDA) suggested on Tuesday that it would take several years for the agency to come up with rules around allowing hemp-derived cannabidiol (CBD) in food products—unless Congress steps in.

At a Brookings Institution event, FDA Commissioner Scott Gottlieb recognized that there’s strong interest among the cannabis industry and lawmakers in developing a regulatory framework through which CBD from hemp could be extracted, sold and introduced into the food supply. The problem is that “CBD didn’t previously exist in the food supply, and it exists as a drug under the statute.”

“It can’t just be put into the food supply,” he said, arguing that current law only allows the FDA to “contemplate putting a drug that wasn’t previously in the food supply into the food supply if it goes through a rulemaking process.”

That rulemaking process can take two to three years for conventional products, and so because CBD is “more complex”—due to its association with marijuana—and has already been approved by the FDA as a drug to treat epilepsy (in the form of Epidiolex), it could theoretically take much longer to develop those regulations.

“We’ve never done this before,” Gottlieb said. “It would be a highly novel rulemaking process.”

In the meantime, the FDA is putting together a “high-level work group” that will work to identify “some potential legislative pathways might be to create a framework for allowing CBD into the food supply.”

Gottlieb said he expects the group to release some recommendations by the summer, as Business Insider first reported.

The commissioner said the work group will be formally announced within the next week and would involve a public meeting to solicit comments from stakeholders.

While Congress might have intended to permit the marketing of hemp-derived CBD through the 2018 Farm Bill, the commissioner indicated that additional legislation that specifically addresses CBD regulations would be necessary to allow the ingredient in the food supply. He said there’s precedent for such actions, citing legislation around human growth hormone and fish oil.

“I think you need to come up with a framework that defines concentration levels, where you would create some kind of cut off, and that would be up to the agency to do,” he said. “Congress would obviously give directions to the agency to do that.”

“CBD in high concentrations isn’t risk-free, and in low concentration, it probably is safe—I don’t want to make a declaration here. It’s also a question of whether it’s providing any kind of therapeutic benefit in those concentrations, although people seem to believe that it has some value. But this is a process that the agency would have to work through. I think the most efficient way to get to a pathway would be through legislation, probably that would just be legislation that would specifically address CBD.”

Gottlieb made similar comments in response to questions from members of a House Appropriations subcommittee last month, where he announced that the agency would hold a public meeting in April to gather input from stakeholders on CBD regulation.

In the new comments, the commissioner also added that he felt the Drug Enforcement Administration (DEA) would have to “formally de-schedule” hemp-derived CBD before moving forward with regulatory changes, in spite of the fact that the agriculture legislation shifted regulatory responsibility for the crop and its derivatives from the Justice Department to the U.S. Department of Agriculture.

“I think the prevailing view is that the plain language of the statute [of the Farm Bill] intended for that, but I’m not sure that DEA has done that yet,” he said. “But that’s another step that would have to take place. DEA would have to formally de-schedule CBD derived from hemp.”

The desire for clarity around CBD’s legality post-Farm Bill passage has been widespread. For example, the U.S. Postal Service issued an advisory earlier this month spelling out rules for mailing hemp-derived CBD. Representatives from state agriculture departments also heard talk about “alternative approaches” to regulating the compound at a conference last month.

In his remarks at Brookings, Gottlieb announced that the CBD work group would be co-chaired by Amy Abernethy, FDA’s principal deputy commissioner, and Lowell Shiller, the agency’s acting associate commissioner for policy.

In the meantime, it is clear that lawmakers want FDA to move on the issue.

“Every meeting I go into on Capitol Hill, almost every meeting, I get asked about this,” Gottlieb said.

U.S. Postal Service Issues Advisory On Mailing Hemp-Derived CBD

Photo courtesy of YouTube/Brookings Institution.

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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Beto O’Rourke Says Prosecute Pharma Execs And Legalize Marijuana

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The federal government should end the prohibition of marijuana and prosecute pharmaceutical executives who recklessly marketed addictive opioid painkillers, Beto O’Rourke argued at a rally in New Hampshire on Tuesday.

The 2020 Democratic presidential candidate received enthusiastic applause in response to the pitch from the crowd in the early primary state, which has been hard hit by the opioid crisis.

“We’re going to acknowledge an incredibly warped system of justice in this country,” the former congressman said, singling out Purdue Pharma, the maker of OxyContin, over its products’ role in the addiction problem.

“The vast majority of those who are addicted today began with a legal prescription,” he said. “Those executives understood the addictive properties of what they sold and did not share that with the public, and not a single one of them has done a single day in jail.”

“Yet, we have the largest prison population on the face of the planet, disproportionately comprised of people of color, far too many there for possession of a substance that is legal in most states of this country, marijuana.”

Watch O’Rourke’s marijuana and drug policy comments, about 20:00 into the video below:

The candidate expanded on the unfairness, noting that rates of cannabis use are roughly the same for different races but “only some are more likely than others to be arrested, to serve time, to upon release be forced to check a box” rendering them ineligible for student loans and making it more difficult to secure employment.

“We need real criminal justice reform,” he said. “We need to end the prohibition of marijuana, expunge the arrest records for everyone arrested for possession of something that’s legal in so many other places, and make sure that we have a full prosecution and accountability for those who are responsible for the deaths of tens of thousands of Americans in this country.”

There were signs that drug reform would be a main feature of O’Rourke’s campaign in the weeks leading up to his announcement, and he’s quickly confirmed that suspicion on the trail. He sent out an email blast about marijuana reform before declaring his bid and he discussed ending cannabis prohibition on the day of his announcement.

But contrasting the unchecked malfeasance of the pharmaceutical industry with the aggressive enforcement of cannabis laws represents an evolution in O’Rourke’s messaging on the issue.

It’s not dissimilar to a talking point often heard at rallies for Sen. Bernie Sanders (I-VT), who frequently talks about the injustice of failing to prosecute Wall Street executives for their role in the 2008 financial crisis while locking up individuals for non-violent marijuana offenses.

Sen. Kirsten Gillibrand (D-NY), another 2020 Democratic presidential candidate, has also criticized the pharmaceutical industry for misleading prescribers about the risks of potent opioid painkillers while opposing marijuana reform.

“To them it’s competition for chronic pain, and that’s outrageous because we don’t have the crisis in people who take marijuana for chronic pain having overdose issues,” she said, adding that she doesn’t see cannabis as a gateway to opioids. Rather, “the opioid industry and the drug companies that manufacture it, some of them in particular, are just trying to sell more drugs that addict patients and addict people across this country.”

Another contender for the Democratic nomination, Rep. Tulsi Gabbard (D-HI), has also been critical of the pharmaceutical industry while supporting cannabis legalization.

She said last month that the U.S. criminal justice system “puts people in prison for smoking marijuana while allowing corporations like Purdue Pharma, who are responsible for the opioid-related deaths of thousands of people, to walk away scot-free with their coffers full.”

Let States Decriminalize Heroin And Cocaine, Presidential Candidate Hickenlooper Says

Photo courtesy of Facebook/Circa.

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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