Lost Taxes and Other Costs of Marijuana Lawsby Jon Gettman Introduction

5 min read

The social and economic costs of drug abuse are often used to justify contemporary policies which treat marijuana use, cultivation, and sale as criminal offenses in most of the United States. These costs are frequently an excuse to refuse to consider whether alternative policies might be more effective. For example, it is argued that marijuana’s legalization cannot be considered because legalization would result in a substantial increase in its use and would produce unacceptable increases in the social and economic costs of drug abuse. This report challenges the premise of such an argument by looking at both the costs and results of current policies.

Certainly, there is widespread consensus that easy access to marijuana can be harmful to adolescents and people afflicted with mental illness such as schizophrenia. However, it is equally obvious that current laws making marijuana possession illegal have failed to protect these vulnerable groups.

After funding decades of scientific research, the United States Government has failed to make a convincing case that marijuana is more harmful to individual health than alcohol or tobacco. An examination of the scientific record is beyond the scope of this report, however it is relatively easy to support the assertion that the government has failed to convince many scientific and other experts, let alone millions of marijuana users, that the drug is more dangerous than alcohol. Consider the following offhand remarks reported by the national media during 2007.

A June 14, 2007 report by ABC News on marijuana cultivation features comments on whether marijuana is a gateway drug by Columbia University neuroscientist Dr. Carl Hart:

“I don’t know of any evidence to support the statement that marijuana is the biggest cause of addiction,” Dr. Hart told ABC News, who also challenged Walters’ claim that 60 percent of drug treatment goes to marijuana users. “About ten percent of the folks who ever try marijuana will become addicted or dependent, whereas about 15 to 20 percent of those individuals who [try] cocaine will become addicted,” he said, citing DEA statistics he’s studied.

“A quarter of the people who try heroin become addicted, Hart said, and a full third of those who try tobacco become addicted.

“Is marijuana a gateway drug?” Hart asked rhetorically. “It’s a difficult question because I think people focus on, ‘you try marijuana you’re going to go on to other drugs,’ when the vast majority of the folks who [use] marijuana do not go on to other drugs. But certainly, those individuals who’ve tried cocaine and they have tried heroin, most of them have used marijuana. And most of them have used alcohol underage, and most of them have smoked tobacco as well. So if you think about ‘gateway’ in that sense, certainly you can say it’s a gateway. But what is the meaning of gateway when you put it together like that?”(1)

A June 25, 2007 article in Newsweek regarding parent-sanctioned alcohol use by teens reported the following comment:

“Aaron White of Duke University Medical Center, who studies adolescent alcohol use . . . says parents should think twice about offering alcohol to teens because their brains are still developing and are more susceptible to damage than adult brains. ‘If you’re going to do that, I suggest you teach them to roll joints, too,’ he says, ‘because the science is clear that alcohol is more dangerous than marijuana.'”(2)

The Washington Post provided a profile of Dr. Drew Pinsky and his appearance before a group of conservative Congressional Staff members at a presentation sponsored by the Independent Women’s Forum advertised as a “Campus Sex and Dating Conference” hosted by House Minority Leader John Boehner. According to the Washington Post:

“The conservative National Review several years ago described Pinsky, host of the radio show ‘Loveline,’ as a ‘hip cultural warrior’ who delivers family values in a stealthy package. . . Turning to drug use, Pinsky asserted that, as a matter of health, marijuana ‘is certainly no worse than alcohol and cigarettes and maybe better.'”(3)

Just as there is a lack of consensus that marijuana is more harmful than alcohol or tobacco, and thus requires greater legal suppression and criminal penalties rather than a regulatory and more public-health oriented public policy approach, there is also a lack of consensus and data that current policies are either successful at restricting access to marijuana, cost-effective, or both. The government publishes considerable data on marijuana, including its supply, use, availability, and price. Marginal changes in these figures are often spun by Administration officials as proof their policies are successful. Indeed, over the long-term, these data are reasonable indicators with which to evaluate the effectiveness of public policy.

But this data has two specific functions within the scope of this report. First, over the long term this data demonstrates the boundary of what the government asserts is acceptable performance for their marijuana-related policies. Despite the rhetoric and hyperbole that accompanies their annual strategies and budgets, consistent data suggests that marijuana use and supply have not significantly diminished over the long-term and are unlikely to diminish in the future. Second, these data provide us with additional boundaries within which to estimate the cost of this approach to marijuana laws.

We really don’t know the exact number of marijuana users, the precise amount of marijuana the market supplies, the specific frequency and amounts users consume and what they pay for it. But the extensive data supplied by the government gives us boundaries within which the precise figures can be found; they provide us with what modeling experts call a solution area. This report estimates the costs of marijuana laws within this context of current policy performance and available data.

The report opens with a critical appraisal of the government’s estimation of the costs of drug abuse with emphasis on the minor role of marijuana’s contribution to these costs. Section 1 also looks at the role of utilizing such costs in analysis of contemporary public policies that rely on criminal sanctions to control marijuana’s use, production, and sale in the United States.

Section 2 of the report reviews data from the National Survey on Drug Use and Health on the extent of marijuana use in the United States since 1990, with particular attention to use by age group. This section also reviews information on the consumption of marijuana, frequency of use, the effects of developing tolerance to marijuana, and profiles of heavy marijuana use in order to provide some background on how the vast sums of marijuana available in the US are consumed by the using population.

Section 3 of the report reviews data from both the National Survey on Drug Use and Health and the Monitoring the Future survey on the topic of the availability of marijuana. Despite law enforcement’s best efforts marijuana remains widely available to all age groups, particularly adolescents and teenagers. Survey data also indicates how many individuals sell drugs, providing additional understanding on the mechanisms by which marijuana is available in the nation’s schools – school children sell marijuana to other adolescents.

Section 4 presents data on the price of marijuana is provided from several sources. Historical and contemporary data are presented, including data derived from police purchases of marijuana, NSDUH survey data, and reports from High Times magazine on the price of marijuana in the United States. A composite price from these various sources is compiled to represent the price of marijuana over the last four years for use in placing a value on the annual supply of marijuana in the United States.

Section 5 provides data on the supply of marijuana and introduces three types of supply estimates. The first is based on seizures of marijuana by federal law enforcement agencies. Another source of supply estimates consists of reports from federal inter-agency committees as well as reports on marijuana’s availability by the Federal Research Service of the Library of Congress. A third approach to estimating annual supply is based on calculating the consumption of marijuana accounted for by data from NSDUH and its predecessor surveys. A composite supply estimate is derived by taking the average of 4 supply estimates from these various sources.

The economic value of the annual marijuana supply is generated by applying the price index derived in Section 4 to the supply estimate generated by Section 5. The budgetary impact of this value is derived in Section 6 with the use of data from the Office of Management and Budget on the tax revenue derived from the nation’s Gross Domestic Product. The reasoning behind this valuation is that the diversion of funds to the marijuana market represents a loss of capital to the taxable economy and subsequently a loss of tax revenue to local, state, and the federal government. The concluding commentary reviews the benefits and advantages of the regulation and legalization of marijuana.