Legalizing Marijuana: An Exit Strategy from the War on Drugs

• U.S. drug policy needs to be altered; legalization must be subject to serious debate
• Legalization could eliminate illegal demand for Mexican marijuana and curb drug-related violence
• Medical dangers of marijuana may be largely exaggerated
• Economic costs and benefits should be balanced; legalization could reduce financial burden on the U.S.

Few topics of debate are as stigmatizing and polarizing as the legalization of marijuana. For the majority of the U.S. population, the idea invokes one of two reactions: a firm guffaw at the ridiculousness of it, or a tenacious, almost blind, support of it. Regardless of their stance, most people derive their opinions from personal beliefs and unsubstantiated myth rather than unassailable fact. Disinformation on marijuana is rampant and several U.S. presidents have been stubbornly opposed to any serious discussion about marijuana legalization. National interest in the subject is evidenced by the myriad of legalization-related questions directed at the White House, yet President Obama cannot stifle his laughter every time the topic is brought up. Secretary of State Clinton brushes off the idea, vaguely dismissing the subject with “[T]here is just too much money in it,”1—the implication of this statement is uncertain—while countless lawmakers simply cite “morality” in disregarding it. If the federal government is going to firmly oppose legalization, they must first establish that they have given significant consideration to the idea. Many Latin American nations, including Mexico and Colombia, the greatest victims of the drug trade, have already had serious debate about legalization. It is time for the U.S. to do the same.

There are a few “unknowns” when it comes to the marijuana industry—its effects on productivity and drug-related violence, for example. Experts need to examine these effects, and policymakers must open their ears to these experts. A government-sponsored marijuana commission is not a new idea; in fact, Nixon established one in 1972 when he formed the National Commission on Marihuana and Drug Abuse. When the commission opposed Nixon by supporting decriminalization, he ignored their recommendations and instead intensified his efforts on the “War on Drugs” campaign. This tradition of adhering to popular and personal beliefs instead of scientific facts is still common today. With the U.S. federal debt sky-high and drug-related violence in Mexico mounting, legalization is more relevant than ever and the topic is ripe for debate. Here we explore the domestic costs and benefits that the legalization of marijuana would incur, how it might affect the marijuana industry in the Americas (particularly in Mexico), and aims to debunk the multitude of popular falsehoods that surround marijuana.

Why Current Policies Are Not Working

Despite assurances from the Drug Enforcement Agency (DEA) that the current drug policy is making headway, there are clear signs that prohibition has not succeeded in diminishing drug supply or demand. Lowering demand for illegal drugs is the most effective way to lower illegal drug production—while vendors may not respond to the threat of legal repercussions, they certainly respond to market forces. As the largest consumer of Mexican drugs, it is the responsibility of the U.S. to address its own demand for marijuana. But American demand and accessibility to marijuana are not decreasing. In fact, marijuana use is currently on the rise and, although usage has oscillated in the past decades, the proportion of use among 12th graders is only a few percentage points below what it was in 1974. Eighty-one percent of American 12th graders said marijuana was “fairly easy or very easy” to acquire in 2010.2 In a 2009 survey, 16.7 million Americans over 12 years of age had used marijuana in the past month—that’s 6.6 percent of the total population.3 While the U.S. may be unable to control its own demand for marijuana, it could stop its contribution to drug cartel revenues by allowing a domestic marijuana industry to thrive, shifting profits from cartels to U.S. growers.

While figures on marijuana smuggling into the U.S. fail to provide conclusive evidence of how much of the drug is entering the country, marijuana seizures have been steady throughout the Americas in the past decade. However, this says nothing certain about actual production numbers.4 Domestically, the task of restricting U.S. production is becoming more difficult. Indoor crops that use efficient hydroponic systems are becoming more popular in the U.S. but pose a challenge to law enforcement agencies for a number of reasons. According to the United Nations Office on Drugs and Crime (UNODC), indoor systems:

“[have] the benefit of having lower chances of detection, high yields with several harvests per year with high potency cannabis and elevated selling prices. The equipment, knowledge and seeds for indoor growing have become very accessible… [and] The costs of building an indoor growing site can be quickly recovered.”5

Cultivating high-quality marijuana is becoming easier, less risky, and more profitable even for the casual grower. The rise of indoor crops will pose a new obstacle to drug enforcement agencies in stopping marijuana production in the U.S.

The UNODC outlines other negative “unintended consequences” that have resulted from the illegality of drugs. The first is obvious; when a good is forbidden, a black market inevitably rises. Black markets inherently lack safety regulations and often finance other criminal activities. A second consequence is that treatment programs are often underfunded when the bulk of any drug policy budget is spent on law enforcement. Two other consequences have been termed “geographical” and “substance” displacement. Both terms involve the idea of the “balloon effect”: when an activity is suppressed in one area, it simply reappears in another area. Geographical displacement can be illustrated by events in Colombia, the Caribbean, and Mexico: as the U.S. cracked down on Colombian drug trafficking, smuggling routes were shifted to Mexico and the Caribbean. Drug trafficking was not eliminated, but simply moved from one site to another. Substance displacement is an even more disturbing repercussion: as availability of one drug is mitigated through enforcement, consumers and suppliers flock to alternate drugs that are more accessible.6 While marijuana is not a harmless substance, most would agree that it is the least harmful of illicit drugs. Some drug users may be pushed toward more dangerous substances, or “hard” drugs, because marijuana is too difficult to or dangerous to obtain. Conversely, raising the accessibility of marijuana could pull users away from hard drugs. These ramifications of the current drug control system need to be taken into account in the debate over legalization.

A critical shortcoming of U.S. drug policy is that it treats drug addiction as a crime instead of a health matter. Almost 60 percent of the overall economic cost of drug abuse is due to expenditures spent on “drug crime”—the sale, manufacture, and possession of drugs.7 There seems to be a wide consensus that at the very least, drug policy must shift its focus to treatment. Tarnishing someone’s record for drug use makes no sense; it encourages criminal activity by obstructing job opportunities and it does nothing to address the factors that cause drug use. Additionally, treatment is not readily accessible to those seeking help despite its efficacy in preventing future drug use. In 2009, 20.9 million Americans (8.3 percent of the total population over age 12) who needed treatment for drug or alcohol abuse did not receive it in a specialty facility—a hospital, a rehab facility, or a mental health facility.8 This is an unacceptably high number. The U.S. overinvests in its prohibition strategy while severely underfunding treatment options. Marijuana legalization’s potential role in improving treatment options for all drugs will be discussed later in this article; for now, suffice it to say that the status quo is not producing the desired results and requires modification.

Legalization and The Mexican Drug War

The issue of legalization has been brought to the forefront in recent years because of numerous calls by Latin American leaders to discuss the matter as a viable policy option. Presidents Juan Manuel Santos of Colombia and Felipe Calderón of Mexico, while not personally advocating legalization, have publicly called for serious discussion of the concept. Former Mexican President Vicente Fox, who previously took a hard line against drugs, has altered his public stance and now supports legalization of all drugs, especially marijuana. He argues that prohibition does not work, that drug production ends up funding criminals, and that it is the responsibility of citizens to decide whether to use drugs or not.9 Former Presidents Fernando Henrique Cardoso of Brazil, Ernesto Zedillo of Mexico, and César Gaviria of Colombia all supported in a report by The Latin American Commission on Drugs and Democracy that the U.S. decriminalize marijuana use (Colombia and Mexico have already done so).10 The U.S. has ignored these requests to place drug legalization or decriminalization on the policy agenda. Drug trafficking is not a national problem; it transcends country borders and needs to be approached from a hemispheric perspective. Therefore, the United States needs to work with its southern neighbors to formulate a comprehensive drug policy. However, it is also telling that every Latin American leader who has formally supported legalization or decriminalization has done so only after leaving office, indicating that such policies are not politically “safe” stances.

The difference between decriminalization and legalization is in their degree of leniency towards drugs; decriminalization permits drug use while legalization permits both drug use and production. Those that favor decriminalization maintain that it would enable law enforcement agencies to shift resources from prosecuting drug users to prosecuting drug suppliers. Decriminalization would also free up resources for effective drug treatment programs. Those that favor legalization go one step further than decriminalization: in Vicente Fox’s words, “[W]e have to take all the production chain out of the hands of criminals and into the hands of producers—so there are farmers that produce marijuana and manufacturers that process it and distributors that distribute it, and shops that sell it.”11 Legalization would include the benefits of decriminalization, while also depriving gangs and cartels of a lucrative product; if both the supply and demand sides are legitimate, a black market would become obsolete. Legalizing marijuana in the United States, the largest buyer of Mexican drugs, could potentially weaken drug cartels by limiting their sources of revenue. The UNODC has acknowledged that this is a plausible way of reducing gang and cartel profits.12

Mexican and American Marijuana Markets

Eliminating the marijuana market share of Mexican cartels would hit them especially hard because it serves as a steady, reliable source of income and carries relatively little risk for them to produce. The percentage of total cartel drug revenues from marijuana is greatly debated—Mexican and American official figures range from 50-65 percent, but a study by the RAND Corporation suggests closer to 15-26 percent.13 Even the most conservative of these estimates—roughly a fifth of revenue—would strike a blow to cartel profits if eliminated. Marijuana is particularly valuable to cartels because they control the entire production line; they both grow and distribute it themselves, making it more reliable and less risky. Conversely, cocaine is imported to Mexico mostly from South America, heightening the risk of smuggling it. More troubling is that cartels are now even growing marijuana on U.S. public lands, mostly throughout national parks and forests, in order to avoid the task of smuggling drugs across the U.S.-Mexican border.14

If Mexico were to reach the point of legalizing marijuana, the U.S. could continue to buy the drug legally from south of the border, like many other consumer goods. But even if Mexico did not implement its own legalization, recent data indicates that a domestic U.S. industry could fill the role of the supplier and eliminate the need for Mexican marijuana. The drug is increasingly grown domestically15 and U.S. growers are already posing a threat to Mexican market share. Exact numbers are impossible to assess, but figures of American domestic marijuana production range from 30-60 percent of the total consumed in the U.S.16 Additionally, a report by the RAND Corporation found that legalizing marijuana in California alone (and a subsequent rise in state-wide marijuana production) could lower Mexican cartel marijuana revenues by 65-85 percent. This could occur if Californian marijuana were smuggled to the rest of the U.S. where the drug would still be illegal. The marijuana’s projected high quality and low price would make it an extremely competitive product.17 It seems reasonable to assume that if the drug were legalized in all fifty states, the domestic market could easily overwhelm the Mexican market share.

In terms of tangible effects on Mexican drug violence, the RAND Corporation and UNODC agree that removing U.S. demand for illegal marijuana would increase violence in the short run because Mexican cartels would be fighting for dominance in a shrinking market.18 But in the long run, once U.S. demand is met by domestic supply, cartels would be financially debilitated and, most likely, some of the violence quelled. The U.S. population is by far the largest drug market for Mexico, making our action necessary for any transnational legalization to be effective. While cocaine, methamphetamines, and heroin are still funding cartels, drug violence will not be completely eliminated; but any move to starve their resources is a step forward in weakening them and, ultimately, saving lives.

The Health Effects of Marijuana

UNODC executive director Antonio Maria Costa has said that drug legalization, “may reduce the profits to criminals, but it will certainly increase the damage to the health of individuals and society.”19 The executive director was referring to the damage of legalizing all drugs, but the argument still stands—what are the health effects of marijuana and are they severe enough that prohibition is imperative? While legalization may seem like an attractive option to subdue Mexican drug violence, marijuana is still a drug and can have harmful effects.

Short-Term Effects

The short-term effects of marijuana are mild when compared to other drugs. These effects can last anywhere from an hour to several hours after consuming the drug, and can include increased passivity, fatigue, loss of motor skills, memory impairment, increased heart rate, an altered sense of time, delayed reaction time, loss of motivation and, more commonly found in inexperienced users, paranoia. A marijuana overdose has never been recorded in humans, even at extremely high doses.20 Additionally, the concept of “second-hand smoke” does not apply to marijuana; the density of marijuana smoke required to affect a bystander is so great that discussion of it is irrelevant.21

Based on these effects, one of the societal dangers of marijuana could be outright laziness; however, reliable data to support whether marijuana actually lowers productivity is not currently available. The greatest danger posed by short-term marijuana effects is the risk of injury from an accident. The Drug Abuse Warning Network reported 308,547 emergency room visits due to marijuana in 200922 (by comparison, bicycles accounted for roughly 500,000 visits).23 The true risk of accident lies in operating a vehicle, because reaction time and motor skills are both impaired. A French survey showed that drivers who tested positive for marijuana were three times more likely to cause a fatal accident, with the likelihood increasing with blood concentration of marijuana. (The study also found that marijuana was responsible for 2.5 percent of fatal accidents, while alcohol was responsible for 28.6 percent; these results may cannot be generalized to the U.S. but are nonetheless interesting to note).24 Unlike alcohol breathalyzers, a highly accurate and instantaneous method of testing whether a person is “high” has yet to be developed. Some law enforcement officers have been trained to recognize signs of drug use in drivers with high rates of accuracy, but blood tests are still the most precise tool for detecting the presence and potency of marijuana in the blood stream. However, even if a driver has drugs in their system (marijuana can stay in the bloodstream for up to a month), such individuals are not necessarily impaired. A practical procedure for detecting impairment due to marijuana would be necessary to prevent driving under the influence, as well as a formalized threshold level determining at what blood content level of marijuana a driver becomes impaired.

Long-Term Effects and Questionable Experimental Methods

There are also studies linking marijuana to a myriad of long-term health disorders, including schizophrenia, reduced cognitive function, behavioral issues, lung cancer, bronchitis, brain shrinkage, infertility, memory loss, increased susceptibility to other drugs (the “gateway” effect), and addiction. This array of medical studies is probably the largest source of disinformation and myths about marijuana. They often interpret results presumptively and derive data from experiments that do not represent real life situations. Moreover, popular belief about marijuana is often based on sensational experimental results that have not been replicated—a problem that pertains especially to marijuana because, as an illegal substance, it is tricky to conduct experimental research on. In 1999, the White House Office of National Drug Control Policy commissioned the Institute of Medicine (IOM) to assess scientific studies that examined the effects of marijuana. The study has been cited as “[t]he most rigorous review of studies of smoked marijuana” by the DEA.25 The IOM report shed light on many of the holes in marijuana research and what conclusions could be made based on the data available at the time.

The most common mistake made in marijuana studies was the assumption of causality when only a relationship of correlation was apparent. The IOM report identifies several cases where this has occurred. One allegation is that marijuana leads to “conduct disorders” or behavioral problems. The report nullified this in pointing out that conduct disorders were usually the cause of marijuana use, noting that they were present before drug use began.26 Another case of assumed causality is the claim that marijuana causes psychiatric disorders, including schizophrenia; again, the report nullified this by concluding that marijuana did not cause psychiatric disorders, but had the potential to induce premature psychotic episodes in people already susceptible to such disorders.27 More recent evidence has shown that marijuana users develop these types of disorders roughly three years earlier than non-marijuana users.28 A third case of false causality, and possibly the most egregious and widespread in relation to marijuana, is the “gateway drug” theory; that, upon using marijuana, a person becomes more at risk to use other drugs. The IOM report concluded that, while correlative data supports the theory, “the legal status of marijuana makes it a gateway drug.”29 This statement supports the findings in the 1972 report commissioned by Nixon, which concluded that marijuana could lead to other drugs because “[the user] may eventually view himself as a drug user and be willing to experiment with other drugs which are approved by his peer group.”30 Marijuana has been stigmatized as an illicit drug like any other, creating the impression that its use is a small step away from, say, cocaine use. The image that marijuana is the same as hard drugs is not only false but potentially harmful. The IOM report further exonerated marijuana as the gateway drug by saying, “because underage smoking and alcohol use typically precede marijuana use, marijuana is not the most common, and is rarely the first, ‘gateway’ to illicit drug use.”31 These cases do not illustrate the full extent to which causality is misused to vilify marijuana.i Many people point to correlations between marijuana and, for example, heroin use or education levels, as “proof” of its degenerative effects. But correlation does not signify causality; there may be a third factor causing both marijuana and heroin use, or education levels may in fact be causing drug use. A causality mechanism must be established before making conclusions about the effects of marijuana based on correlative data.

Another error that is commonly committed in marijuana studies is relying on experimental designs that do not mimic actual drug use. Specifically, experimental subjects commonly use amounts of marijuana that are extremely high and not at all representative of typical marijuana usage. For example, one experiment linking marijuana to adverse mood and paranoia was based on subjects smoking 10-22 marijuana cigarettes, or “joints”, every day.32 In another experiment studying withdrawal effects of marijuana, subjects smoked 9-10 joints a day as a “high dosage.” These results were then compared to other “low dosage” results where subjects smoked 6-7 joints a day.33 These quantities are extremely large and would indicate that typical marijuana users are “stoned” all day every day (for readers unfamiliar with marijuana, one joint is enough to make the user high for 1-3 hours).34 Using huge doses in experiments appears to be a routine practice with little attention being given to moderate or casual use,35 possibly because in smaller doses these effects are not observable. The result is that these studies may be hugely exaggerating the effects of marijuana.

Another concern about marijuana use is its potential for addiction. Abstaining marijuana users do experience some withdrawal symptoms including restlessness, irritability, insomnia, nausea and cramping but, according to the IOM report, they are “mild and subtle compared with the profound physical syndrome of alcohol or heroin withdrawal.”36 Marijuana (including hashish, a more potent form of marijuana) also has, at 9 percent, a relatively low percentage of users who have ever become dependent. The comparative rates of other drugs are: 32 percent for tobacco, 15 percent for alcohol, 9 percent for anxiolytics (anti-anxiety drugs), 17 percent for cocaine, and 23 percent for heroin.37 While there is risk of marijuana addiction, the risk is lower and the withdrawal effects less severe than those of almost all other drugs.

The only proven long-term effect of marijuana, having been extensively observed, is an increased risk of bronchitis and other pulmonary disorders. One study found that in marijuana users who smoked three to four joints a day (again, a very high dosage), symptoms of chronic bronchitis were present in roughly a fifth. These symptoms are equivalent to those of tobacco users who smoke twenty cigarettes a day.38 Studies linking marijuana to lung cancer have been inconclusive, and some have even shown that marijuana usage has been effective in diminishing cancerous tumors.

Marijuana is Distinct from Hard Drugs

Next to other drugs, the short-term effects of marijuana are comparatively tame. Stimulants such as cocaine, ecstasy, and amphetamines can all induce erratic behavior. Far more dangerous is alcohol, which lowers inhibitions, impairs judgment, impairs motor skills, and can induce violent tendencies in many users. More importantly, it is possible to overdose on almost any other drug besides marijuana. The long-term effects of marijuana are even more starkly different from other drugs. Long-term use of hard drugs can cause severe brain damage, cancer, and various types of organ failure; most hard drugs are also more addictive than marijuana, making it more likely that effects associated with long-term use will occur. Placing marijuana in the same category as hard drugs is a grossly inaccurate characterization.

The most important implication to draw from the IOM report is that most current studies on marijuana have used exaggerative methods and liberally interpreted conclusions. This must be given due significance when discussing legalization. The possible negative effects of marijuana that are strongly supported by science include: an increased likelihood of an accident when operating a vehicle, a premature triggering of psychosis, bronchial damage, and dependence. U.S. authorities must ask themselves if these effects are substantial enough that individual freedom should be impeded and citizens stripped of the right to use marijuana—especially while far more dangerous substances are condoned and legal.

The Economics of Legalization

The biggest fault of U.S. drug policy is that the government has spent considerable sums of money on the “War on Drugs” without getting the desired results. Proponents of legalization argue that it is not only a logical but also a highly economical policy; marijuana could be a valuable source of tax revenue if legalized and the government would save billions in law enforcement costs. But the cost of any possible repercussions must be acknowledged as well. The following calculation of legalization costs and benefits is based on government expenditures in enforcing marijuana prohibition, the societal costs of marijuana use, and the projected economic returns of legalizing marijuana.

Government Expenditures

Marijuana offenses constitute a significant portion of law enforcement activities in the United States. While it is not true that marijuana-related offenders are filling the nation’s prisons (most marijuana arrests do not result in incarceration), the court system and law enforcement agencies are hugely burdened with marijuana offenses. In 2009, 6.3 percent (858,408) of all arrests in the U.S. were because of marijuana charges; they constituted the third most common source for arrest after driving under the influence and theft. Marijuana arrests number vastly more than all violent crimes combined.39 Of all drug arrests, over half were for marijuana; 45.6 percent of all drug arrests were for marijuana possession alone.40 This is an overwhelming proportion of law enforcement and legal resources being allocated to a relatively benign crime. Exact figures of how much the government spends on marijuana prohibition do not exist, but one assessment from Harvard University, the Miron report, estimates annual government expenditures related to marijuana in law enforcement, the courts, and incarceration to be around USD 7.7 billion.41 Over five hundred American economists, including the late Milton Friedman, have publicly endorsed the findings of the Miron report.42

Economic Costs to Society

The second part of the cost-benefit analysis is to calculate the economic costs to society of marijuana use. While society is already incurring the costs of marijuana use, there is the possibility that legalization would increase consumption43 and thus exacerbate these costs. Multiple studies have shown that decriminalization does not result in increased consumption (the commonly cited example of Alaska in the 1970s has been effectively debunked),44 but legalization is notably different. In addition to removing penalties for marijuana use, legalization would make the drug highly accessible and would likely decrease the price, ultimately resulting in an increase in consumption. A RAND Corporation study found that marijuana prices would be markedly lower even with substantial taxation, but that projected consumption increases varied significantly and were therefore impossible to calculate.45 However, the study did find with certainty that consumption would increase by some amount, so it is important to understand what societal ills might increase as well.

The Office of National Drug Control Policy (ONDCP) published a study in 2004 determining that the overall economic costs of all illicit drug abuse in 2002 totaled to about USD 180.9 billion, the third most costly health problem in the U.S.46 While the report did not delineate which costs are attributable to which drug, a deconstruction of the report roughly reveals which of those costs can be traced to marijuana use. The ONDCP report divides all drug abuse costs into three categories: health costs, productivity losses, and “other” costs.

ONDCP Report: Productivity Losses

Productivity losses due to drug abuse constitute the largest chunk of economic costs, coming in at 71 percent. The four primary sources of productivity losses are incarceration for drug-related charges (23 percent), drug-abuse related illness (18 percent), “crime careers” (25 percent), and premature death (29 percent).

Two of these areas, premature death and “crime careers”, hardly apply to marijuana. Premature deaths are attributable to overdose or poisoning, homicide, HIV/AIDs, and hepatitis B or C; marijuana overdose is essentially impossible and the latter diseases are attributable to injected drugs. “Crime career” is the term for when a user turns to crime to pay for their drug addiction, but these careers are usually motivated by very expensive drug habits like heroin and cocaine. The third part of productivity losses, incarceration, includes both direct drug charges and crimes committed because of drug use or addiction. Incarceration costs are largely irrelevant because legalization would eliminate marijuana arrests and because “crime careers” generally do not correlate with marijuana. Marijuana contributes little to these three areas, which make up 77 percent of all productivity losses.

The fourth major source of productivity losses is drug abuse-related illness, which is the only area that may pertain to marijuana use. However, in the “medical consequences” area of the report, the medical conditions “drug-exposed infants”, HIV/AIDs, Hepatitis B and C, and effects of violent crime are the primary cost-inducing items listed, with HIV/AIDs being the largest contributor by far. Neonatal care for drug-exposed infants is largely associated with maternal cocaine use, violent crime pertains to users addicted to expensive drugs, and, again, HIV/AIDs and hepatitis are both caused by injected drugs. Health costs caused by marijuana use would probably involve, for example, cases of bronchitis, but this was not significant enough to appear in the report. Thus, while some drug abuse-related illnesses, and productivity losses in general, could be nominally caused by marijuana use, they are overwhelmingly due to other drugs.

ONDCP Report: “Other” Costs and Health Costs

“Other” costs constitute the second-largest portion of overall economic drug abuse costs at 20 percent of the total. This category overwhelmingly consists of law enforcement and corrections expenses and thus warrants little discussion when imagining a hypothetical situation where marijuana is legal. The costs would simply disappear if marijuana were legalized. The last section, health costs, comprises only 9 percent of the total costs.47 This section of the report only speaks in general terms about treatment costs, so there is little information indicating how much of it comes from marijuana use. However, recalling that marijuana has much lower rates of dependence and less severe overall health effects, it could be concluded that treatment costs are moderate at most.

This analysis of the report provides evidences that, although drug abuse is an extremely costly health problem, marijuana is not a significant contributor to total drug abuse costs. There is nothing in the report that unquestionably incriminates marijuana use; the same cannot be said for other drugs, which can be blamed for drug-related illnesses, drug deaths, drug crime, and drug violence. A more marijuana-specific assessment of the economic costs would be a useful reference in the debate about legalizing marijuana (such a report, funded by the National Institute on Drug Abuse, is currently in the works). However, based on the available information, marijuana appears to be responsible for a small part of the economic costs of all drug abuse, a fraction that would likely grow if consumption increased with legalization.

Economic Benefits

The most commonly proponed benefit of legalization is the tax revenue that would be generated if marijuana were treated like any other commodity. The Miron report estimates that legalizing marijuana could generate USD 2.4 billion in annual tax revenue if taxed like other consumer goods, and USD 6.2 billion if taxed like alcohol and cigarettes.48 Combined with the money saved in government expenditures, that makes USD 10.1-13.9 billion in funds likely to be generated. While this is highly relevant to the dire fiscal situation in which the U.S. finds itself, it also has implications for drug policy overall. The funds from marijuana could be concentrated on drug treatment programs and lower overall drug consumption, especially of more harmful narcotic drugs that have drastic health consequences (consider that all drug abuse health costs totaled USD 16 billion in 2002). It is unknown how much treatment programs would decrease consumption. The example of Portugal, the country with the most liberal drug laws in the developed world, sets an optimistic example. After just five years of decriminalizing all drug use and putting more funding into treatment programs, the country saw astoundingly less drug use, higher treatment rates, and lowered HIV/AIDs rates.49 These results all point to lower overall societal costs of drug abuse. Better treatment options will certainly bring these results and legalization could be used to fund these programs.

This analysis does not exhaust every cost and benefit of marijuana legalization. There are two economic factors that have not been considered: the cost of control, regulation, and distribution of marijuana, and the economic gains of a legitimate marijuana industry. Discussion of these factors is far beyond the scope of this article, but there is one tantalizing fact to reflect on in relation to the marijuana industry: merely USD 100 of investment in equipment and seeds can produce roughly USD 9,000 of marijuana.50 It is an extremely lucrative product and the jobs and businesses generated by the marijuana industry could make a huge contribution to the formal economy.

There are positives and negatives to legalizing marijuana from an economic standpoint. Marijuana misdemeanors continue to place a disproportionate burden on the justice system, ensuring wasteful use of money and resources. Marijuana would bring in substantial revenues that could be diverted to treatment programs for more harmful substances. While marijuana consumption would almost certainly increase with legalization, it appears that marijuana is not responsible for most of the economic drug abuse costs of the United States. This is the haziest aspect of the cost-benefit analysis that has been tabulated; hopefully the pending marijuana report funded by the National Institute on Drug Abuse will clarify these numbers.


The example of Portugal’s success reminds us that counterintuitive policies might be the most effective. The federal government cannot allow myths and personal feelings to obscure what might be the right policy for the United States. Marijuana is unique from other substances in that the effects are not as severe and it remains highly popular despite the “War on Drugs.” Nation-wide use makes its prohibition expensive and possible tax revenues huge. But the discussion on legalization does not simply revolve around a cost-benefit calculation. Freedom is at issue here as well: U.S. citizens are being deprived the right to use a substance that is less harmful and has higher potential for responsible use than its legal counterparts. All of these factors need to be balanced to make a rational policy, keeping in mind that this particular issue has far-reaching implications for Latin America as well. It would be wise for U.S. policymakers to discuss legalization with Latin American leaders and to truly listen, instead of discounting their proposals. Most importantly, empirical evidence needs to be an integral part of U.S. drug policy; personal beliefs should not keep experts and data from being heard.

i. One example of mistaken causality is the commonly cited statistic that 6-8% of drivers in motor accidents test positive for marijuana. Testing positive does not mean that the driver is “high”, only that they have used marijuana in the past weeks or month, depending on the user. Since roughly 7% of the population uses marijuana on a monthly basis, the 6-8% statistic, far from proving anything about the effects of marijuana, simply affirms what would already be expected.

References for this article can be found here.

4 thoughts on “Legalizing Marijuana: An Exit Strategy from the War on Drugs

  • April 19, 2011 at 3:14 pm

    The idea of the commercialization of marijuana is daunting, as tobacco companies will undoubtedly embrace marijuana products, and market them similarly to tobacco products. Interesting article on freeing mary jane:

  • April 19, 2011 at 4:27 pm

    California is the #1 agricultural state in the US and Marijuana is the #1 crop in California. Realism needs to be brought to bear in this issue. Marijuana should be separated out of the drug equation and dealt with by bureaucrats and politicians using plain talk.

    Drugs are another factor, corporate laboratory production of street drugs are the biggest problem, then comes illicit terribly addictive cultivated drugs. All these drugs should immediately be made available to addicts at cost by medical professionals. Drug producing corporations will oppose this loss of revenue they never talk about but we must keep in mind that there is no such thing as a happy drug addict and concentrate on healing our citizens rather than delivering them up as cash cows for drug corporations and then as paid guests of prison corporations.

    Marijuana is a diversion issue used by corporations to maintain thei lucrative illegal drug trade.

  • April 20, 2011 at 8:54 am

    @ Zoë,

    I understand your focus on marijuana, but the call for legalisation and regulation should be independent of what type of drugs we deem less harmful. What makes legalisation and regulation such critical an issue is the irrationality of Prohibition and the so-called War on Drugs. By all means, let's legalise and regulate marijuana, but the same goes for other drugs, both soft and hard. Crucially, let's legalise and regulate their consumption, but the same goes for their production and distribution. Drugs are not the root of the problem, Prohibition is!

    Gart Valenc

  • July 28, 2012 at 2:24 pm

    Awesome website you have here but I was curious if you knew of any user discussion forums
    that cover the same topics discussed here? I’d really love to be a part of community where I can get opinions from other knowledgeable people that share the same interest. If you have any recommendations, please let me know. Kudos!


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