Aldrich, M. R. & Mikuriya, T. H. (1988) "Savings in California Marijuana Law Enforcement Costs Attributable to the Moscone Act of 1976—A Summary", , 8 pages. doi: Journal of Psychoactive Drugs 10.1080/02791072.1988.10524375. http://dx.doi.org/10.1080/027... Austin, J. (2005) Rethinking the Consequences of Decriminalizing Marijuana, JFA Institute. http://www.jfa-associates.com... Bates, S. W. (2004) The Economic Implications of Marijuana Legalization in Alaska, Alaskans for Rights & Revenues. http://www.prohibitioncosts.o... Abstract▼ This study focuses on the economic effects of marijuana prohibition and the consequences of
eliminating prohibition in Alaska. A central concern in this analysis was estimating the cost
savings associated with justice system expenditures for: Law Enforcement; Court System; Incarceration and Parole/Probation.
Following the methodology of Miron (2003) we find that a total of approximately $16 million in
direct expenditures is dedicated to marijuana prohibition annually by the State of Alaska (2004
dollars). Law enforcement is the least costly component of this expenditure, whereas
adjudication by the courts is the most costly.
In addition to the above, consideration was given to indirect economic costs associated with
prohibition, including: Lost economic output; Impact on family and social service budgets; Secondary justice system effects. Becker, G. S., Murphy, K. M. & Grossman, M. (2006) "The Market for Illegal Goods: The Case of Drugs", , 23 pages. doi: Journal of Political Economy 10.1086/498918. Abstract▼ This paper considers the costs of reducing consumption of a good by making its production illegal and punishing apprehended illegal producers. We use illegal drugs as a prominent example. We show that the more inelastic either demand for or supply of a good is, the greater the increase in social cost from further reducing its production by greater enforcement efforts. So optimal public expenditures on apprehension and conviction of illegal suppliers depend not only on the difference between the social and private values from consumption but also on these elasticities. When demand and supply are not too elastic, it does not pay to enforce any prohibition unless the social value is negative. We also show that a monetary tax could cause a greater reduction in output and increase in price than optimal enforcement against the same good would if it were illegal, even though some producers may go underground to avoid a monetary tax. When enforcement is costly, excise taxes and quantity restrictions are not equivalent. Caulkins, J. P., Kilmer, B., MacCoun, R. J., Pacula, R. L. & Reuter, P. H. (2012) "Design Considerations for Legalizing Cannabis: Lessons Inspired by Analysis of California's Proposition 19", , 7 pages. doi: Addiction 10.1111/j.1360-0443.2011.03561.x. http://dx.doi.org/10.1111/j.1... Abstract▼ Aims No modern jurisdiction has ever legalized commercial production, distribution and possession of cannabis for recreational purposes. This paper presents insights about the effect of legalization on production costs and consumption and highlights important design choices.
Methods Insights were uncovered through our analysis of recent legalization proposals in California. The effect on the cost of producing cannabis is largely based on existing estimates of current wholesale prices, current costs of producing cannabis and other legal agricultural goods, and the type(s) of production that will be permitted. The effect on consumption is based on production costs, regulatory regime, tax rate, price elasticity of demand, shape of the demand curve and non-price effects (e.g. change in stigma).
Results Removing prohibitions on producing and distributing cannabis will dramatically reduce wholesale prices. The effect on consumption and tax revenues will depend on many design choices, including: the tax level, whether there is an incentive for a continued black market, whether to tax and/or regulate cannabinoid levels, whether there are allowances for home cultivation, whether advertising is restricted, and how the regulatory system is designed and adjusted.
Conclusions The legal production costs of cannabis will be dramatically below current wholesale prices, enough so that taxes and regulation will be insufficient to raise retail price to prohibition levels. We expect legalization will increase consumption substantially, but the size of the increase is uncertain since it depends on design choices and the unknown shape of the cannabis demand curve. Clements, K. W. & Zhao, X. (2009) Economics and Marijuana: Consumption, Pricing and Legalisation, Cambridge University Press, 422 pages. https://books.google.co.il/bo... Abstract▼ Do marijuana users cut back on consumption when the price rises? To what degree is marijuana consumption related to drinking and tobacco usage? What would happen if marijuana were legalised and taxed in the same way as alcohol and tobacco? Is marijuana priced in a similar way to other goods? Economics and Marijuana deals with these and other questions by drawing on a rich set of data concerning the consumption and pricing of marijuana in Australia, a country where the drug has been decriminalised in some, but not all, states. The book applies the economic approach to drugs to analyse consumption, pricing and the economics of legalising the use of marijuana. The result is a fascinating analysis of this widely used, but little understood illicit drug that provides much needed information and policy advice for a wide range of readers, including economists, policy makers and health professionals. Donohue, J. J., Ewing, B. & Pelopquin, D. (2011) "Rethinking America's Illegal Drug Policy" in Philip J. Cook, Jens Ludwig & Justin McCrary [eds.] Controlling Crime: Strategies and Tradeoffs, University of Chicago Press, 67 pages. Chapter 5 http://www.nber.org/chapters/... Egan, D. & Miron, J. A. (2006) "The Budgetary Implications of Marijuana Prohibition" in Mitchell Earleywine [ed.] Pot Politics: Marijuana and the Costs of Prohibition, Oxford University Press, 23 pages. Chapter 2 https://books.google.co.il/bo... Evans, D. G. (2013) "The Economic Impacts of Marijuana Legalization", . Journal of Global Drug Policy and Practice http://jpo.wrlc.org/bitstream... Abstract▼ This is the first of a series of papers exploring the economic and social costs of legalizing marijuana. The
states of Washington and Colorado in the United Sates have legalized marijuana for recreational use. A
number of other states have legalized crude marijuana for “medical” use. As these experiments go on,
there will be more data to be recorded, analyzed and published. Our research will continue as to the
impact of marijuana legalization and future papers will explore this new data. Future papers will focus on
specific economic issues relating to marijuana legalization. For example, papers will be published that
will explore in more detail the environmental, medical, criminal, spiritual, productivity and other social
costs of legalization.
This paper will discuss the general economic and social arguments for legalizing marijuana then we will
explore the general economic and social arguments against it. Finally, we will discuss the economic and
social damage caused by “medical” marijuana. The “medical” marijuana argument is presented separately
because some people, who do not favor legalization of marijuana for recreational purposes, favor its legal
status as medicine.
While the public health, safety, and productivity implications of marijuana use are amply documented,
their dollar value has not been completely assessed to date. Fields, C. B. (2013) Economic Impacts of Marijuana Decriminalization in Kentucky, School of Justice Studies. http://justicestudies.eku.edu... Fine, D. (2012) Too High to Fail: Cannabis and the New Green Economic Revolution, Penguin Books, 384 pages. https://books.google.co.il/bo... Abstract▼ The nation’s economy is in trouble, but there’s one cash crop that has the potential to turn it around: cannabis (also known as marijuana and hemp). According to Time, the legal medicinal cannabis economy already generates $200 million annually in taxable proceeds from a mere two hundred thousand registered medical users in just fourteen states.
But, thanks to Nixon and the War on Drugs, cannabis is still synonymous with heroin on the federal level even though it has won mainstream acceptance nationwide.
ABC News reports that underground cannabis’s $35.8 billion annual revenues already exceed the combined value of corn ($23.3 billion) and wheat ($7.5 billion). Considering the economic impact of Prohibition—and its repeal—Too High to Fail isn’t a commune-dweller’s utopian rant, it’s an objectively (if humorously) reported account of how one plant can drastically change the shape of our country, culturally, politically, and economically.
Too High to Fail covers everything from a brief history of hemp to an insider’s perspective on a growing season in Mendocino County, where cannabis drives 80 percent of the economy (to the tune of $6 billion annually). Investigative journalist Doug Fine follows one plant from seed to patient in the first American county to fully legalize and regulate cannabis farming. He profiles an issue of critical importance to lawmakers, media pundits, and ordinary Americans—whether or not they inhale. It’s a wild ride that includes swooping helicopters, college tuitions paid with cash, cannabis-friendly sheriffs, and never-before-gained access to the world of the emerging legitimate, taxpaying “ganjaprenneur.” French, M. T., Roebuck, M. C., Dennis, M. L., Godley, S. H., Liddle, H. A. & Tims, F. M. (2003) "Outpatient Marijuana Treatment for Adolescents: Economic Evaluation of a Multisite Field Experiment", , 39 pages. doi: Evaluation Review 10.1177/0193841X03254349. Abstract▼ An economic evaluation of five outpatient adolescent treatment approaches (12 total site-by-conditions) was conducted. The economic cost of each of the 12 site-specific treatment conditions was determined by the Drug Abuse Treatment Cost Analysis Program (DATCAP). Economic benefits of treatment were estimated by first monetizing a series of treatment outcomes and then analyzing the magnitude of these monetized outcomes from baseline through the 12-month follow-up. The average economic costs ranged from $90 to $313 per week and from $839 to $3,279 per episode. Relative to the quarter before intake, the average quarterly cost to society for the next 12 months (including treatment costs) significantly declined in 4 of the 12 site-by-treatment conditions, remained unchanged in 6 conditions, and increased in 2 treatment conditions (both in the same site). These results suggest that some types of substance-abuse intervention for adolescents can reduce social costs immediately after treatment. Gettman, J. (2005) Crimes of Indiscretion: Marijuana Arrests in the United States, National Organization for the Reform of Marijuana Laws. http://norml.org/pdf_files/NO... Glauser, D. (2012) The Economic Effects of Legalizing Marijuana, Unpublished BSc dissertation, University of Utah, 36 pages [supervisor: D. Kiefer]. http://content.lib.utah.edu/c... Abstract▼ Marijuana legalization would offer an important advantage over decriminalization
in that it would allow for legal distribution and taxation of cannabis as well as decrease
costly enforcement and incarceration expenses. Despite these costly enforcement
efforts, marijuana is the most commonly used illicit drug in America. According to a
survey done in 2008 by the National Institute of Drug Abuse, 42% of 12th graders in the
United States have used marijuana at some point in their life.
High demands for marijuana likely indicate that legalization of the drug would
have an enormous effect on the American economy. In a time of economic recession and
government debt of record proportions, it is extremely beneficial to look into the possible
advantages and disadvantages of such legislation. By comparing different studies done
by various organizations and departments as well as analyzing areas that have already
legalized marijuana, such as the Netherlands, I was able to determine approximately how
the economy would be affected on several different issues. Some figures that would be
affected are: employment, the demand for marijuana, taxation rates and potential
government revenue, incarceration and enforcement costs, and social issues such as
rehabilitation programs. According to my research, the United States government would
experience an increase of $25,963,686,520 towards their budget. Godfrey, C. (2006) "Evidence-Based Illicit Drug Policy: The Potential Contribution of Economic Evaluation Techniques", , 18 pages. doi: De Economist 10.1007/s10645-006-9030-1. Abstract▼ Drug misuse is associated with a wide range of potential consequences for individual drug users, their families, communities and the rest of society. Debates about drug policy choices are influenced more by opinion and implicit values than scientific evidence. This paper argues that economic evaluation techniques provide a valuable framework to explore the different impacts of drug policy choices. Kilmer, B., Caulkins, J. P., Pacula, R. L. & Reuter, P. H. (2012) The U.S. Drug Policy Landscape: Insights and Opportunities for Improving the View, RAND Corporation, 66 pages. http://www.jstor.org/stable/1... King, R. S. & Mauer, M. (2006) "The War on Marijuana: The Transformation of the War on Drugs in the 1990s", . doi: Harm Reduction Journal 10.1186/1477-7517-3-6. http://www.ncbi.nlm.nih.gov/p... Abstract▼ Background:
As the "war on drugs" enters the latter half of its third decade since being forged into the American lexicon by President Ronald Reagan, the public has grown more skeptical of the current strategy and has proven to be receptive to a broader consideration of alternatives to incarceration. This has been the case most notably with marijuana offenses, where the policy discussion has shifted in some localities to one of decriminalization or de-prioritizing law enforcement resources dedicated to pursuing possession offenses. Despite the increased profile surrounding marijuana policy in recent years, there remains a significant degree of misunderstanding regarding the current strategy, both in terms of how resources are being allocated and to what eventual gain.
Previous studies have analyzed drug offenses as a general category, but there has yet to be a single study that has focused specifically on marijuana offenders at all stages of the system. This report analyzes multiple sources of data for the period 1990–2002 from each of the critical points in the criminal justice system, from arrest through court processing and into the correctional system, to create an overall portrait of this country's strategy in dealing with marijuana use.
The study found that since 1990, the primary focus of the war on drugs has shifted to low-level marijuana offenses. During the study period, 82% of the increase in drug arrests nationally (450,000) was for marijuana offenses, and virtually all of that increase was in possession offenses. Of the nearly 700,000 arrests in 2002, 88% were for possession. Only 1 in 18 of these arrests results in a felony conviction, with the rest either being dismissed or adjudicated as a misdemeanor, meaning that a substantial amount of resources, roughly $4 billion per year for marijuana alone, is being dedicated to minor offenses.
The results of this study suggest that law enforcement resources are not being effectively allocated to offenses which are most costly to society. The financial and personnel investment in marijuana offenses, at all points in the criminal justice system, diverts funds away from other crime types, thereby representing a questionable policy choice. Mercille, J. (2011) "Violent Narco-Cartels or US Hegemony? The Political Economy of the ‘War on Drugs’ in Mexico", , 17 pages. doi: Third World Quarterly 10.1080/01436597.2011.619881. Abstract▼ Mainstream analysis and commentary on drug trafficking and related violence in Mexico focuses overwhelmingly on the narco-cartels as sources of the problem and presents the US as a well intentioned player helping to conduct a ‘war on drugs’ out of concern for addiction, crime and violence. This article offers an alternative interpretation, grounded in critical political economy, showing that in addition to fuelling the narcotics industry in Mexico thanks to its large drug consumption and loose firearms regulations, the US shares much responsibility for its expansion thanks to its record of support for some of the main players in the drugs trade, such as the Mexican government and military, and by implementing neoliberal reforms that have increased the size of the narcotics industry. The war on drugs has served as a pretext to intervene in Mexican affairs and to protect US hegemonic projects such as nafta, rather than as a genuine attack on drug problems. In particular, the drugs war has been used repeatedly to repress dissent and popular opposition to neoliberal policies in Mexico. Finally, US banks have increased their profits by laundering drug money from Mexico and elsewhere; the failure to implement tighter regulations testifies to the power of the financial community in the US. Miron, J. A. (2010) The Budgetary Implications of Drug Prohibition, [Working Paper], Harvard University, Department of Economics, 43 pages. http://scholar.harvard.edu/fi... Abstract▼ Government prohibition of drugs is the subject of ongoing debate.
One issue in this debate is the effect of prohibition on government budgets. Prohibition entails
direct enforcement costs and prevents taxation of drug production and sale.
This report examines the budgetary implications of legalizing drugs.
The report estimates that legalizing drugs would save roughly $48.7 billion per year in
government expenditure on enforcement of prohibition. $33.1 billion of this savings would
accrue to state and local governments, while $15.6 billion would accrue to the federal
government. Approximately $13.7 billion of the savings would results from legalization of
marijuana, $22.3 billion from legalization of cocaine and heroin, and $12.8 from legalization of
The report also estimates that drug legalization would yield tax revenue of $34.3 billion annually,
assuming legal drugs are taxed at rates comparable to those on alcohol and tobacco.
Approximately $6.4 billion of this revenue would result from legalization of marijuana, $23.9
billion from legalization of cocaine and heroin, and $4.0 billion from legalization of other drugs.
State-by-state breakdowns provide a rough indication of legalization’s impacts on state budgets,
but these estimates are less reliable than those for the overall economy.
Whether drug legalization is a desirable policy depends on many factors other than the budgetary
impacts discussed here. Rational debate about drug policy should nevertheless consider these
The estimates provided here are not definitive estimates of the budgetary implications of a
legalized regime for currently illegal drugs. The analysis employs assumptions that plausibly err
on the conservative side, but substantial uncertainty remains about the magnitude of the
budgetary impacts Nolin, P. C. & Kenny, C. (2003) Cannabis: Report of the Senate Special Committee on Illegal Drugs, University of Toronto Press, 200 pages. http://www.jstor.org/stable/1... Office of National Drug Control Policy (2004) The Economic Costs of Drug Abuse in the United States, 1992-2002, Office of National Drug Control Policy. https://www.ncjrs.gov/ondcppu... Pacula, R. L. (2010) Examining the Impact of Marijuana Legalization on Marijuana Consumption: Insights from the Economics Literature, [Working Paper], RAND Corporation, 25 pages. http://www.rand.org/content/d... Abstract▼ A central question in the debate regarding the legalization of marijuana in California is whether
consumption would rise and by how much. In this report, we review the economics literature
which provides insights regarding how consumption might change and why. A key finding of
the review is that the current state of the literature is limited, having not yet fully explored how
average consumption among existing users will change in response to changes in price and legal
risks. However, information regarding the prevalence of marijuana, both in terms of new users
as well as regular users, is available. A review of this literature is considered in terms of the
responsiveness of marijuana initiation, regular use and heavy use to changes in the price of
marijuana, enforcement risk, decriminalization and other legal risks. From this review it is clear
that total consumption will rise in response to legalization due to increases in the number of new
users, increases in the number of regular and heavy users, and probable increases in the duration
in which marijuana is consumed for average users. Pacula, R. L., Kilmer, B., Grossman, M. & Chaloupka, F. J. (2007) Risks and Prices: The Role of User Sanctions in Marijuana Markets, [Working Paper], National Bureau of Economic Research, 36 pages. http://www.nber.org/papers/w1... Abstract▼ User sanctions influence the legal risk for participants in illegal drug markets. A change in user sanctions
may change retail drug prices, depending on how it changes the legal risk to users, how it changes
the legal risk to dealers, and the slope of the supply curve. Using a novel dataset with rich transaction-level
information, this paper evaluates the impact of recent changes in user sanctions for marijuana on marijuana
prices. The results suggest that lower legal risks for users are associated with higher marijuana prices
in the short-run, which ceteris paribus, implies higher profits for drug dealers. Additionally, the findings
have important implications for thinking about the slope of the supply curve and interpreting previous
research on the effect of drug laws on demand for marijuana. Rusche, S. & Sabet, K. A. (2015) "What Will Legal Marijuana Cost Employers?", . Journal of Global Drug Policy and Practice http://www.globaldrugpolicy.o... Abstract▼ The purpose of National Families in Action’s White Paper is to educate employers about how
marijuana laws are changing, how these laws will affect employers’ ability to conduct business,
and what employers can do to protect that ability. We contracted with Kevin Sabet, co-founder of
Project SAM (Smart Approaches to Marijuana), to help write the White Paper.
To begin, we assembled a group of experts from various fields to advise us on how the changing
legal landscape will affect employers. All agree that costs will increase as changing marijuana
laws present new challenges. Employers need to anticipate those challenges and plan ways to
maintain profitability, productivity, safety, and flexibility while litigation and case law sort out state
laws that conflict with federal laws and from state to state.
The adage that an ounce of prevention is worth a pound of cure has never been more relevant.
Employers have a significant opportunity to monitor both marijuana ballot initiatives that
advocates are proposing and bills that state legislators are writing to protect their interests and
those of their employees and the public. Please see Appendix A for information about National
Families in Action, Project SAM, and our expert advisors.
van Ours, J. C. & Pudney, S. (2006) "On the Economics of Illicit Drugs", , 8 pages. doi: De Economist 10.1007/s10645-006-9026-x.