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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

 

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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

Marijuana-Friendly Gubernatorial Candidates Win Big In Tuesday’s Primaries

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It was another big day for the marijuana legalization movement on Tuesday.

Voters in three out of four states that held primary elections nominated vocally pro-legalization Democratic candidates for governor.

From Vermont to Minnesota, all but one of the new Democratic gubernatorial nominees has gone on the record endorsing adult-use marijuana systems, and the fourth at least supports decriminalization and medical cannabis and wants a referendum on more broadly ending prohibition. As debates over the best direction for the party continue, it’s become increasingly apparent that cannabis reform is a winning issue for Democrats across the country.

Connecticut

Turning to Connecticut, Democratic gubernatorial nominee Ned Lamont has called for a system to tax and regulate cannabis. Speaking at a senior living facility in July, the businessman and politician said legalization is “an idea whose time has come.”

Another resident of the facility chimed in, The CT Mirror reported: “And it’s not bad for you!” Lamont went on to tell the audience that marijuana is “not a gateway drug compared to opioids” and that he’d use revenue from a regulated system to fund opioid treatment programs in the state.

On the Republican side, Bob Stefanowski won the party’s gubernatorial nomination. At the final Republican primary debate earlier this month, the then-candidate admitted that he’s used cannabis—but he said more research was needed before the state, which already has medical cannabis and marijuana decriminalization, legalizes for adult-use.

Minnesota

Minnesota’s Democratic gubernatorial nominee, Rep. Tim Walz (D-MN), also ran on a pro-legalization platform. The state’s current marijuana policy has “failed,” and he pledged to implement a recreational cannabis system that “creates tax revenue, grows jobs, builds opportunities for Minnesotans, protects Minnesota kids, and trusts adults to make personal decisions based on their personal freedoms.”

During his time in Congress, Walz repeatedly raised the issue of legal access to cannabis for veterans.

Walz opponent, Republican gubernatorial primary winner Jeff Johnson, doesn’t back an adult-use system. In an interview with Minnesota Public Radio last month, Johnson said he remained concerned about the impact of legalization on “work productivity, safety on the roadways and reproductive health.”

Vermont

In Vermont, Christine Hallquist became the first transgender candidate to win a major party gubernatorial nomination. She told Heady Vermont that she’d “work with the legislature to ensure that a tax and regulate system was passed into law in my first term” in an interview earlier this month.

“I think that enough research has been done and enough systems implemented that I don’t really feel the need to dictate a specific system,” Hallquist said. “Rather, I believe it would be my job to work collaboratively with all stakeholders—legislators, interest groups, et cetera—to make sure the system is a reality.”

Hallquist will face off against incumbent governor, Phil Scott (R), who said he signed a law allowing adults 21 and older to possess and cultivate cannabis in January with “mixed feelings.” He’s since expressed reservations about expanding the state’s marijuana system, saying “[w]e’re not ready, I don’t believe, for a tax-and-regulate system at this point in time.”

He said the state wouldn’t be ready for legal cannabis sales until it addressed issues related to education, mental health and impaired driving on highways.

Wisconsin

The outlier in Tuesday’s primary race—at least when it comes to full legalization—was Wisconsin’s Democratic gubernatorial nominee, Tony Evers. He was the only major Democratic candidate for governor that didn’t back legalization, saying he’d like to see a state referendum on the issue first.

(Numerous counties in Wisconsin will vote on non-binding advisory questions about legalization in November—a move that may bolster lawmakers and whoever is elected governor to take marijuana reform seriously in 2019).

In February,Evers responded to a tweet saying that he’d push for decriminalizing marijuana possession as a means of improving living conditions for marginalized groups in the state.

Evers’s campaign website notes that he supports legalizing marijuana for medical use in Wisconsin.

“Tony believes it’s time for Wisconsin to join nearly 30 other states and the District of Columbia in legalizing medical marijuana. As a cancer survivor himself, Tony is all too familiar with the side effects of a major illness that can make everyday tasks, like making your bed or even showering, a challenge.”

The incumbent governor, Scott Walker, clinched the Republican nomination on Tuesday. He’s consistently opposed cannabis legalization for both medical and recreational purposes, and he believes that marijuana is a gateway drug.

Marijuana Emerges As Key Issue In Nevada U.S. Senate Race

Photo courtesy of Philip Steffan.

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Marijuana Ballot Measures Could Affect Key U.S. Senate Elections

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Control of the U.S. Senate could hinge on the outcome of elections in states where voters will also decide on marijuana ballot initiatives this November.

Conventional political wisdom holds that cannabis on the ballot drives voter turnout by young people and progressives who are likely to back Democrats, but is that really the case? Hard evidence to date is slim at best, and the results of this year’s midterms could help shed light on the question.

Republicans currently enjoy the barest of majorities in Congress’s upper house, with 51 seats to 47 Democrats (and two independents who caucus and vote with Democrats).

In order to gain control of the Senate, and perhaps finally see cannabis bills called for hearings, Democrats need to eke out electoral victories in places like Nevada, where a booming recreational marijuana marketplace is entering its second year. And, they must also hold onto seats in states like Missouri and North Dakota, deeply conservative areas won by President Donald Trump in 2016 that CNN placed on a list of the ten Senate seats most likely to flip.

In Missouri, voters will decide on three separate medical cannabis measures. And in North Dakota, where medical marijuana won a shock, longshot victory in 2016, voters have the chance to legalize recreational marijuana.

For most of the past decade, cannabis has enjoyed relatively consistent and sometimes overwhelming success in American elections.

Four out of five legalization measures before voters in 2016 won. On the same day, medical marijuana was legalized in red states like Arkansas, North Dakota and Florida, where more than 71 percent of voters approved the ballot measure. And in June, voters in Oklahoma approved medical cannabis despite the fact that supporters were heavily outspent by opponents.

Both the turnout and the result of these upcoming Senate elections could provide a clue to marijuana’s true power in drawing voters to the polls, and demonstrate both mainstream political parties’ appetite to embrace cannabis as a campaign issue.

In Missouri, according to recent polling, Democratic Sen. Claire McCaskill is in a dead heat with Republican challenger Josh Hawley, the state attorney general. By contrast, the same poll showed medical marijuana ahead by a solid 54 percent to 35 percent margin.

It’s not exactly clear what would happen if more than one of the three marijuana measures on the ballot win, but in the poll, voters indicated their clear preference for some change in state law to allow medical use of the drug.

McCaskill said in a recent interview that she will support at least one of the cannabis initiatives. “I do think medical marijuana should be passed,” she said.

But for now, the Missouri Democratic Party apparatus is choosing not to highlight McCaskill’s support for the popular medical cannabis issue. Their reasoning is not known.

Meanwhile, for his part, Hawley announced on Wednesday that he is “inclined to support” at least one of the marijuana initiatives.

In North Dakota, state elections officials announced on Monday that a legalization measure has qualified for the ballot.

Polling in that state’s Senate race is inconsistent, but one June estimation gave Republican challenger Kevin Cramer a four-point edge over incumbent Democratic Sen. Heidi Heitkamp.

Heitkamp’s victory in 2012 was by a single percentage point, and she was the first Democrat to win statewide election there in almost a decade. Those two factors fueled Roll Call’s decision to declare the race tilting in Cramer’s favor.

For his part, Cramer, who is currently a member of the U.S. House, said he would vote against the legalization ballot measure. In 2015, he supported a floor amendment to shield state medical cannabis programs from federal interference, but opposed a broader measure to protect recreational laws.

Might Heitkamp gamble on cannabis to give her an edge, considering her state’s embrace of medical cannabis two years ago? She dodged the question in a recent interview with MyNDNow.com, but has said that marijuana is a state issue that should be free of federal interference.

She is also cosponsoring Senate legislation to let cannabis businesses access banks.

poll earlier this year showed that North Dakota voters favor cannabis legalization 45 percent to 39 percent.

In two months’ time, if Heitkamp still trailing Cramer in the polls, she could probably do worse than to fully embrace a popular issue like marijuana legalization, regardless of any turnout effect the measure’s appearance on the ballot might have.

Marijuana Emerges As Key Issue In Nevada U.S. Senate Race

Photo courtesy of Democracy Chronicles.

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Anti-Marijuana Group Wants Campaign Finance Transparency, Kind Of

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A leading anti-legalization group is cooking up a new follow-the-money tool, ostensibly to track contributions from the marijuana industry to lawmakers.

At least, that seems to be what Smart Approaches to Marijuana (SAM) is doing with this interactive map on its website:

SAM website screenshot

If you visit the page and click on a highlighted state, it brings you to a list naming select members of Congress, the district they represent and an undefined monetary “amount.”

SAM website screenshot

Presumably, this is a beta version of something that SAM has been talking about for some time.

Take last year, for example. A group of 44 U.S. House members signed a letter to the chairman of a key subcommittee, asking that language restricting the Department of Justice from interfering in state marijuana programs be included in an appropriations bill. In response, SAM president Kevin Sabet announced plans to “investigate campaign contributions” of signees.

“Legalization is about making a small number of people very rich,” Sabet said in a press release. “For them, it’s all about the money.”

“The representatives who sign on to this letter will be investigated, and any ties to the pot industry lobby will be exposed. There’s a money trail behind further relaxation of federal marijuana laws, and it points to politicians who have taken money from the next big addictive industry.”

It’s admittedly difficult to follow the money using the current version of SAM’s online map, though. There are few citations showing where the group’s information is coming from, and for most states, when you click on one of the hyperlinked “amounts,” it takes you here:

SAM website screenshot

For some reason, nearly every hyperlinked amount points to a URL apparently meant for Rep. Dana Rohrabacher (R-CA), and the page only shows a 404 error message.

At least one state, Washington, seems to be mostly functional.

SAM website screenshot

SAM website screenshot

SAM representatives did not respond to a request for comment by the time of publication, but they do appear to have slightly edited the webpage after receiving Marijuana Moment’s inquiry. The title “The Money Trail: Where Big Pot Meets Big Politics” was added above the map, and the phrase “(Work In Progress)” was appended to all sub-pages.

This story will be updated if the organization sends comment.

What SAM appears to be interested in accomplishing is drawing links between campaign contributions from cannabis industry interests and politicians who’ve come to embrace marijuana reform. Or in other words, campaign finance transparency.

Missing from that agenda, though, is disclosure of SAM’s own finances—a subject of particular interest to advocates and reporters following the marijuana legalization debate.

Sabet touted the group’s financial expansion over the past two years in a recent curriculum vitae (not linked here, as it appears to reveal his personal phone number). A summary of Sabet’s work at SAM noted that the 12-person organization has a $1 million budget, with $4.5 million in reserve.

The group also recently opened a new office in Manhattan.

When this reporter asked Sabet about financial contributions to SAM in a 2016 interview, he emphasized the role of grassroots, individual contributions. There is limited public information available about SAM’s financing.

An FAQ published on SAM’s website states:

“SAM is funded by small family foundations (with no interest in the opioid, tobacco, alcohol, or prison industries) and individuals affected by drug use and its consequences. SAM does not receive a dollar from the opioid, pharmaceutical, alcohol, or tobacco industries – unlike some pro-legalization groups like Law Enforcement Action Partnership (LEAP), which takes money from Big Tobacco.”

Another potential source of ongoing funding may be past supporter Julie Schauer, a retired art professor who donated at least $1.3 million to SAM Action’s efforts to defeat 2016 marijuana ballot initiatives in California and other states.

It remains to be seen when SAM will officially launch its online campaign donation tracking tool and what its impact will be.

Anti-Marijuana Funder Says Jailing Of Grandmother For Medical Cannabis No ‘Big Deal’

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