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
Table 2: State and local expenditures attributable to drug prohibition, millions of dollars, 2016
|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)
Table 4: State and federal tax revenues from drug legalization, billions of dollars, 2016
Table 5: State tax revenues from drug legalization, distributed by population, millions of dollars, 2016
|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
Senate Schedules Hearing On Marijuana Business Banking Access
In one of the clearest signs of marijuana reform’s growing momentum on Capitol Hill, a Republican-controlled Senate committee has scheduled a hearing for next week that will examine cannabis businesses’ lack of access to banking services.
The formal discussion in the Senate Committee on Banking, Housing and Urban Affairs on Tuesday comes as legislation aimed at resolving the marijuana industry’s financial services problems is gaining momentum. A House cannabis banking bill that cleared that chamber’s Financial Services Committee with a bipartisan vote in March now has 206 cosponsors—nearly half the body—while companion Senate legislation has 32 out of 100 senators signed on.
(Marijuana Moment’s editor provides some content to Forbes via a temporary exclusive publishing license arrangement.)
Congressman Files Marijuana Bill After Leaving Republican Party
In one of his first legislative acts since leaving the Republican Party earlier this month amid a feud with the president, Rep. Justin Amash (I-MI) filed a bill on Monday that would let states set their own marijuana policies without federal interference.
If that sounds familiar, it’s because bipartisan legislation that would accomplish the same goal has already been filed this Congress.
But unlike the nearly identical Strengthening the Tenth Amendment Through Entrusting States (STATES) Act, Amash’s new bill excludes one provision that would require the Government Accountability Office (GAO) to study the effects of cannabis legalization on road safety and issue a report on its findings within a year of the law’s enactment.
That language states that the GAO must study “traffic crashes, fatalities, and injuries” in legal cannabis states, actions taken by those states to “address marihuana-impaired driving,” testing standards being used to detect impaired driving and federal initiatives “aiming to assist States that have legalized marihuana with traffic safety.”
Given Amash’s libertarian leanings, it stands to reason that he opposes spending government dollars to conduct the research and simply supports the broader states’ rights intent of the original legislation.
That would also put him at odds with social justice advocates who feel that the STATES Act itself doesn’t go far enough and are pushing for more comprehensive legislation that includes additional provisions addressing social equity and restorative justice for people harmed by drug law enforcement.
Members of the House Judiciary Crime, Terrorism and Homeland Security Subcommittee heard that debate play out during a historic hearing on ending federal marijuana prohibition last week.
A newly formed coalition of civil rights and drug reform organizations, including the ACLU, is also insisting on passing wide-ranging legislation to deschedule cannabis entirely that also invests in communities that have been disproportionately impacted by prohibition.
Amash is a long-standing critic of the war on drugs and earlier this year signed on as a cosponsor of a separate bill that would federally deschedule marijuana. Rep. Tulsi Gabbard (D-HI), a 2020 Democratic presidential candidate, filed that legislation, which is also silent on social equity provisions.
— Justin Amash (@justinamash) March 8, 2019
Gabbard also introduced a separate bill that would require the U.S. Department of Health and Human Services and other federal agencies to study the impacts of legalization. True to form, Amash declined to add his name to that measure as well.
Read the text of Amash’s new cannabis bill below:
Photo courtesy of Kyle Jaeger.
Berkeley City Council Considers Decriminalizing Psychedelics This Week
A resolution to decriminalize psilocybin and other psychedelics will go before a Berkeley, California City Council committee on Wednesday.
Decriminalize Nature, the group behind the measure, also led the charge to successfully get a measure decriminalizing entheogenic plants and fungi approved by the City Council in neighboring Oakland last month.
In Berkeley, the Public Safety Committee will discuss the proposal and can either decide to hold it for a future meeting or advance it to the full Council. The public is able to attend Wednesday’s special meeting and share their perspective on the resolution, but Decriminalize Nature stressed in a tweet that this “is a small meeting, so you do NOT need to attend.”
Is it time for #DecriminalizeNature #Berkeley? Agenda 4 at the public safety meeting this Wed. July 17, with the Decriminalize Nature team! This is a small meeting, so you do NOT need to attend. But if you live in Berkeley, write your City Council! https://t.co/gMSDkegMPU
— Decriminalize Nature (@DecrimNature) July 15, 2019
However, city residents are being encouraged to write to their Council members and urge them to vote in favor of the measure, which would codify that “no department, agency, board, commission, officer or employee of the city, including without limitation, Berkeley Police Department personnel, shall use any city funds or resources to assist in the enforcement of laws imposing criminal penalties for the use and possession of Entheogenic Plants by adults of at least 21 years of age.”
The resolution defines the covered substances as “plants and natural sources such as mushrooms, cacti, iboga containing plants and/or extracted combinations of plants similar to ayahuasca; and limited to those containing the following types of compounds: indoleamines, tryptamines, phenethylamines.”
Councilmembers Rigel Robinson and Cheryl Davila are sponsoring the resolution, which does not allow for commercial sales or manufacturing.
The lawmakers provided background information on the measure in a report to their colleagues and the mayor, describing the medical potential of various psychedelics as well as the success of decriminalization measures in Denver and Oakland.
“It is intended that this resolution empowers Berkeley residents to be able to grow their own entheogens, share them with their community, and choose the appropriate setting for their intentions instead of having to rely exclusively on the medical establishment, which is slow to adapt and difficult to navigate for many,” they wrote.
While efforts to eliminate criminal penalties associated with psilocybin and other psychedelics have so far centered in jurisdictions that have historically embraced marijuana legalization and broader drug reform, the conversation around decriminalizing psychedelics is spreading nationally.
Shortly after Oakland approved its measure, Decriminalize Nature received inquiries from activities in cities from across the country. The group has kept track of each city where organizers are pursuing decriminalization.
Nature lovers are organizing coast to coast (and Hawaii)! Is your city on the map? Connect to join with your local community, or if you have the motivation to propose a similar initiative in your city/town/county, let’s start growing! contact [email protected] #DNUSA pic.twitter.com/38UxLKK9RN
— Decriminalize Nature (@DecrimNature) July 2, 2019
On Monday, a conversation around changing laws governing psychedelics reared during a City Council meeting in Columbia, Missouri. One resident implored the body to take up a resolution to decriminalize the natural substances, pointing to their therapeutic benefits.
Councilmember Mike Trapp said that the student’s proposal should be considered and that a government advisory board on public health should provide input on the medical potential of psychedelics, describing it as “very promising.”