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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 20-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

Mexican Lawmakers Circulate Amended Marijuana Legalization Bill That’s Set For A Vote On Monday

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Lawmakers in Mexico’s Chamber of Deputies are finally set to take up a bill to legalize marijuana nationally in the coming days, but the proposal has recently been subject to several significant revisions since being approved by the Senate last year.

First, a joint hearing of the chamber’s Health and Justice committees will take place on Monday, and a vote in the full chamber is expected the following day or on Wednesday. Advocates have been eagerly awaiting the introduction of new language, hopeful that it would address certain concerns with the Senate proposal, and now they’re getting details about what is being changed by the joint panels.

Generally speaking, most of the main provisions of the legislation remain intact. Adults 18 and older would still be allowed to purchase and possess up to 28 grams of marijuana and cultivate up to six plants for personal use, for example. But lawmakers revised the regulatory structure, rules for the commercial market and licensing policies, among other aspects.

Among the most significant amendments is that the revised bill would not establish a new independent regulatory body to oversee the licensing and implementation of the program as was approved by the Senate. Instead, it would give that authority to an existing agency, the National Commission Against Addictions.

Another change would be the creation of a license category for vertically integrated marijuana businesses that could control all areas of production and sales. However, there is language included in the measure to “prevent undue concentration that affects the market.”

While the bill would give priority for those licenses to marginalized communities, advocates are worried that there might not be strict criteria to actually ensure that ends up being the case. They had wanted to specific percentage of licenses to be set aside for those communities, but that’s not in the new bill.

For the purposes of public consumption, cannabis would be treated the same as tobacco under the amended legislation, but it could not be sold online or through the mail.

According to Heraldo de Mexico, the amended legislation includes “substantive modifications” to 15 provisions, deletes seven components and adds five new ones.

The text of the revised measure also seeks to reframe the reform as being about protecting public health rather than economic growth.

“Given that the proposed legislation would open the legal market for cannabis, a substance considered to be a narcotic in the international treaties signed by our country, it is essential that the law issued for this purpose has a clear and defined public health approach,” it says. “For this reason, it is essential to modify the approach that predominates in the bill, which considers the cultivation of cannabis as a means for economic growth and community development; which, if maintained like this, would encourage production and commercialism, neglecting public health, contrary to the guiding model that these committees intend to build.”

Already, there’s been criticism of the revised bill.

The advocacy group Mexico Unido said that the revised proposal still “criminalizes users, puts criminal and administrative sanctions on them and invades their privacy.”

“The current ruling removed the locks on vertical market integration and the entry of the junk food and beverage industry,” it said. “And it did not eliminate excessive requirements such as seed control, traceability and testing, which exclude small participants.”

Activists are happy, however, that a proposed permitting requirement for people to grow their own cannabis that was included in an earlier draft in circulation is no longer in the new version. They also appreciate that proposed fines for possessing too much marijuana have been reduced.

“The Federal Law for the Regulation of Cannabis is intended, through a public health approach, to link the right to consume cannabis with the right to production for self-consumption, either personally in homes, or as participants in legally constituted civil associations,” the bill states. “Through the proposed system, the production of cannabis and its derivatives would be aimed at self-consumption, either at home or in cannabis associations.”

There would be six licensing categories under the proposal: production, distribution, sales, marketing and research—in addition to one that would provide for vertical integration.

Another change in the latest version concerns edibles, which would not be allowed to be marketed on a temporary basis until additional research is conducted into the products, 24 Horas reported.

Martha Tagle Martínez, a member of the chamber’s Health Committee, said earlier this week that the original Senate reform legislation did not fulfill the requirements of the Supreme Court, which deemed the prohibition on personal possession and cultivation of marijuana unconstitutional in a 2018 ruling. Lawmakers have since been tasked with ending criminalization, but they’ve repeatedly pushed back deadlines to enact the policy change.

Now the legislature has until the end of April to legalize cannabis nationwide, and it seems next week’s action will set the stage for Congress to make good on its obligation.

In the meantime, the Health Committee already held a preliminary discussion on the issue last month.

Members of the panel said they wanted to hold four sessions to debate the legislation, but its president, Carmen Medel Palma, has yet to convene them and wants to speed up the process, La Jornada reported.

The Justice Committee also met to discuss the matter on Sunday, according to the group Cáñamo México. The two panels were initially expected to send a revised legalization proposal to the floor last month, but that didn’t happen. However, they met jointly on Thursday to discuss the latest version in advance of the expected formal approval on Monday.

Martínez of the Health Committee has signaled that she doesn’t feel lawmakers have been provided sufficient time to analyze the revised bill ahead of the planned floor vote in the coming days.

President Andres Manuel Lopez Obrador, for his part, said in December that an earlier anticipated vote on legalization legislation was delayed due to minor “mistakes” in the proposal.

He said “there was no time to conduct a review” in the legislature before the prior December 15 Supreme Court deadline, but he noted that issues that need to be resolved are “matters of form” and “not of substance.”

The Senate passed the legalization bill in November and transmitted it to the Chamber of Deputies. Several committees took up the bill, with the Human Rights and Budget and Public Account Committees representing one panel that considered and advanced it just before the the court granted lawmakers’ latest deadline extension request.

While advocates are pushing for lawmakers to formally end prohibition, they hoped the delay would give them more time to try to convince the legislature to address their concerns about certain provisions of the current bill, namely the limited nature of its social equity components and strict penalties for violating rules.

The legalization bill cleared a joint group of Senate committees prior to the full floor vote in that chamber, with some amendments being made after members informally considered and debated the proposal during a virtual hearing.

Members of the Senate’s Justice, Health, and Legislative Studies Committees had approved a prior version of legal cannabis legislation last March, but the coronavirus pandemic delayed consideration of the issue.

The legislation as ultimately approved by the Senate made some attempts to mitigate the influence of large marijuana corporations. For example, it stated that for the first five years after implementation, at least 40 percent of cannabis business licenses must be granted to those from indigenous, low-income or historically marginalized communities.

Households where more than one adult lives would be limited to cultivating a maximum of eight plants. The legislation also says people “should not” consume cannabis in homes where there are underaged individuals. Possession of more than 28 grams but fewer than 200 grams would be considered an infraction punishable by a fine but no jail time.

Sen. Julio Ramón Menchaca Salazar of the MORENA party said in April that legalizing cannabis could fill treasury coffers at a time when the economy is recovering from the pandemic.

As lawmakers work to advance the reform legislation, there’s been a more lighthearted push to focus attention on the issue by certain members and activists. That push has mostly involved planting and gifting marijuana.

In September, a top administration official was gifted a cannabis plant by senator on the Senate floor, and she said she’d be making it a part of her personal garden.

A different lawmaker gave the same official, Interior Ministry Secretary Olga Sánchez Cordero, a marijuana joint on the floor of the Chamber of Deputies in 2019.

Cannabis made another appearance in the legislature in August, when Sen. Jesusa Rodríguez of the MORENA party decorated her desk with a marijuana plant.

Drug policy reform advocates have also been cultivating hundreds of marijuana plants in front of the Senate, putting pressure on legislators to make good on their pledge to advance legalization.

Read the text of the revised Mexico legalization bill below: 

Mexican Chamber of Deputies… by Marijuana Moment

West Virginia Governor Would Support Taxing The ‘Absolute Crap’ Out Of Marijuana To Replace Income Tax

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West Virginia Governor Would Support Taxing The ‘Absolute Crap’ Out Of Marijuana To Replace Income Tax

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The governor of West Virginia isn’t personally a fan of marijuana legalization, but for the second time in a week, he said that he’d support the reform if the legislature sent a bill to his desk.

In response to a question about the prospect of taxing “the absolute crap” out of cannabis, Gov. Jim Justice (R) said during a virtual town hall event on Friday that he’s “not a proponent of recreational marijuana.” However, he noted, “it seems like the entire nation is going to end up moving that way.”

“If in fact the entire nation is going to move that way, if our legislature from the standpoint of the Republicans in the House were to bring me that, and it would be tied to using those extra dollars [to] get rid of additional personal income tax, I would support it,” he said.

Watch Justice talk about marijuana reform policy in the video below: 

“I’m not in favor, but I would support it if people got on board and brought that to me,” the governor said.

The voter who posed the question was primarily concerned that no new taxes be placed on nicotine vaping products, and wanted to suggest legalizing cannabis as an alternative means to raise revenue.

“Please don’t do a 70 dollar tax on my vapes, man,” he told the governor.

Friday’s event was focused on the state’s move to eliminate the personal income tax, but this isn’t the first time that Justice discussed how regulating cannabis sales could factor into that effort.

On Tuesday, he similarly said that he’d be inclined to sign legalization legislation if lawmakers sent it to him, in part because he’s heard from he’s from members of the medical community who feel that regulating cannabis sales could actually reduce “drug-type problems” like the opioid overdose epidemic, which has hit his state especially hard.

“I’ll just tell it like it is, I’m not educated enough to make a really good assessment as of yet,” he said. “But I can tell you just this: I do believe that that is coming, and the wave is coming across all of our states, and as that wave comes, if our House Republicans and Democrats and Senate Republicans and Democrats would get behind that effort from a standpoint of legalization of recreational marijuana and they would be supportive of that, I would too.”

These comments come after House Majority Whip Paul Espinosa (R) circulated an internal poll among Republican lawmakers, inquiring about what kind of policies—including marijuana legalization—they’d be willing to support to make up revenue for the state as part of the plan to gut the income tax.

When asked about legalization as a means to raise tax revenue that could theoretically be used to get ride of the income tax, the governor said this week that he’s principally opposed to broad reform but “I’m weakening on that position” because while his instinct is to reject regulating marijuana amid the state’s drug crisis, the medical community has shifted his perspective.

Experts “tell me that really and truly the legalizing of marijuana in certain areas or certain states that have that, from a recreational standpoint, have lowered their drug-type problems,” he said.

“If we could bucket the proceeds [from cannabis tax revenue] and use them in a way, just like this personal income tax reduction…in a really beneficial way for all our people,” he would be supportive of that.

West Virginia approved medical cannabis legalization in 2017, which Justice signed into law, and patients were just recently approved to start registering for the program. That said, the state must still partner with a testing laboratory before marijuana products are made available.

Two Democratic candidates who lost their bids for West Virginia House seats last year had pledged to introduce legislation to legalize marijuana in the state if they were elected.

Local Activists In Washington State Push For Psilocybin Decriminalization

Photo courtesy of WeedPornDaily.

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Local Activists In Washington State Push For Psilocybin Decriminalization

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Voters in Spokane, Washington could make the city one of the latest to decriminalize psilocybin mushrooms under a proposed ordinance that was recently filed by local activists.

The initiative, which was introduced by the group Decriminalize Spokane, would make enforcement of laws prohibiting the personal possession, cultivation and limited distribution of psilocybin for adults 21 and over among the city’s lowest priorities and would further ban officials from using “any city funds or resources to assist in the enforcement of laws imposing criminal penalties for the use, possession, transportation, cultivation, or distribution of psilocybin mushrooms.”

The measure, which activists intend to qualify for the city’s ballot, includes stipulations prohibiting the use or display of the psychedelic fungi in public spaces.

The “whereas” section of the measure points to scientific research on the therapeutic potential of psilocybin and the relatively low health risks it poses.

“Psilocybin can alleviate end-of-life anxiety for hospice and terminal cancer patients, can reduce prison recidivism, and can effectively treat depression, cluster headaches, addiction and trauma,” it says.

The proposed ordinance was submitted to the City Council last month, and lawmakers had the option of endorsing and enacting it into law themselves, rejecting it and proposing an alternative or approving the petition and placing it before voters. But while the proposal was on the agenda for Monday, local legislators chose not to act, which means it will be vetted by city officials to ensure its language is lawful and then cleared for signature gathering by activists.

If they are successful in collecting enough valid petitions from registered voters, the ordinance could go before voters as early as November of this year. As currently drafted, here’s the language of the ballot question that voters would see:

“Shall the Spokane Municipal Code be amended to make adult possession and transfer of limited quantities of psilocybin mushrooms the lowest possible law enforcement priority?”

According to The Spokane Spokesman-Review, activists will need 3,477 signatures to put the reform on the ballot.

Mason Lord, the chief petitioner, told the local newspaper that the proposal “is mostly about safety, and this is acknowledging certain legal substances that are accessible—like alcohol, for one—are far more dangerous.” He added that it’s about “the criminalization of a substance that has so much research showing that it’s so much safer than legal substance adults (can access).”

This is the latest iteration of a the decriminalization movement that’s evolved since Denver became the first city in the U.S. to decriminalize psilocybin mushrooms in 2019 via a citizen initiative.

Six other cities—OaklandSanta CruzAnn ArborWashington, D.C.Somerville and Cambridge—have decriminalized possession of a broader collection plant-and fungi-based psychedelics since Denver’s move.

In Oregon, voters approved historic initiatives to legalize psilocybin for therapeutic purposes and decriminalize drugs more broadly in November.

Legislators in California, Connecticut, FloridaHawaiiKansas, Missouri, Washington State and Virginia are also considering psychedelics and drug policy reform bills for the 2021 session.

A Republican lawmaker in Iowa introduced a bill to remove psilocybin from the list of controlled substances, which received a subcommittee hearing this week but did not advance. He also filed another piece of legislation to let seriously ill patients use psychedelic mushrooms, LSD, DMT and other drugs.

Read the text of the Spokane psilocybin decriminalization ordinance below: 

Spokane Psilocybin Decrimin… by Marijuana Moment

Hawaii Governor Has ‘Concerns’ About Legalization Bill Advancing In Legislature

Photo courtesy of Dick Culbert.

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