Pubdate: Sun, 17 Apr 2005
Source: Bellingham Herald (WA)
Copyright: 2005 Bellingham Herald
Author: Dick Startz
Note: Dick Startz is Castor Professor of Economics and Davis Distinguished 
Scholar at the University of Washington.
Bookmark: (Decrim/Legalization)


Washington State Would Save About $105 Million A Year If We Legalized 

Economics isn't the first issue that comes to mind when talking about 
illegal drugs, but perhaps we can talk about the economic aspects of 
marijuana without tempers flaring. Let's talk numbers first, and then bring 
a little economic theory into the discussion.

The $105 million figure comes from a study by Boston University economist 
Jeff Miron. Miron put together two numbers: the savings to government from 
not locking people up for marijuana-related offenses, and the increased 
revenue from taxes we could collect if marijuana were treated just like 
coffee or chocolate.

Most of the money, about $88 million a year, comes from the reduction in 
law enforcement costs.

Locking people up is expensive. About one in 20 arrests in Washington is 
for marijuana use or sales. Using this number and the average cost per 
arrest for police, prosecution and incarceration, Miron computed Washington 
marijuana enforcement costs are about $88 million. Of course, many 
marijuana busts are incidental to arrests for some other violation. In such 
cases, the marijuana arrest doesn't really cost anything extra - the arrest 
was going to happen anyway - so Miron did the best he could to exclude any 
cost savings from these multiple-arrest arrests.

The rest of the $105 million comes in the form of collecting taxes on the 
production and sale of marijuana. This $17 million is a softer number than 
the $88 million because there aren't good state-by-state data on marijuana 
production and consumption. So $17 million is a conservative guesstimate. 
There's some evidence that marijuana use is a little higher in Washington 
than the national average. If so, state revenue might pick up another $5 
million a year. However, tax revenue could be even higher. Miron assumed a 
standard sales tax level in his estimate, but Washington imposes very high 
"sin" taxes on tobacco and alcohol. If we did the same for marijuana, tax 
revenue might well increase by $35 million or $40 million, rather than 
"only" $17 million.

Turning from numbers to ideas, the key to understanding what economic 
theory tells us about marijuana legalization is the word "substitution."

When we prohibit marijuana, people make one of three decisions: they use 
marijuana anyhow and risk getting caught; they spend the money that would 
have gone for pot on something relatively innocuous, like chocolate or 
lattes or booze; or they spend the money on harder drugs. In other words, 
people "substitute" something else in place of marijuana use.

The question is, if we chose to make marijuana legal again, what would pot 
replace? An intriguing possibility is that if we legalized marijuana while 
keeping the rules against meth and crack, a fair number of people might get 
the feeling they want from pot - which is pretty safe - and stay away from 
really dangerous drugs. Call the substitution of marijuana in place of 
harder drugs a "reverse gateway" effect.

My two most faithful readers are my teenage daughters. The first reason I 
tell my girls to stay away from marijuana is that when you buy pot you risk 
associating with people who sell some much nastier things. Not every casual 
dope seller is an evil fiend, but if you buy dope regularly you're 
eventually going to end up around some not-real-high-class folks.

An extra $100-plus million would be nice for the state budget. But an even 
better economic argument for legalizing marijuana is that it would move the 
legal line, so that relatively safe drugs like caffeine, alcohol and 
marijuana are all on one side of the law and the truly dangerous drugs, 
such as crack and meth, are on the other.
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