The Economic Cost of Not Legalizing Marijuana in the U.S.

The possible benefits of states legalizing marijuana are clear from tax revenues collected by states that have legalized it. Besides increased revenues, legal marijuana provides jobs all through the value chain. Failure to legalize weed creates bottlenecks that impede the full exploitation of the potential benefits the marijuana industry affords the economy. Prohibition also causes governments to spend money on enforcement. The following are some details on what the U.S. is losing, and the good marijuana revenue can do.

How much is the U.S. losing each year by opposing marijuana legalization?

According to research, the Federal Government lost $25.64 billion in forfeiture of revenue and in the money spent on enforcing the ban. The country lost, even more, when the losses incurred by individual states were factored in as the states lost $10.05 billion. These losses at the state level also include the money lost in tax revenue and the amount spent in the enforcement of the prohibition.

The composition of these losses may have shifted between loss of revenue and enforcement costs since 2016. The shift would have been occasioned by a change in the general attitude towards marijuana. The drug is now more popular with consumers and more acceptable with authorities. It follows, therefore, that more people are buying it, and this increases the tax revenues it generates. This shift also means that more governments don’t consider enforcing marijuana ban a law enforcement priority, and they, therefore, save on the cost of prohibition. Despite these shifts in dynamics, the amount of losses incurred could only have increased over time.

How can we spend $53 billion?

The $53 billion lost due to governments’ insistence on banning marijuana is a very substantial amount of money that could have a positive impact on many lives. To put it into perspective, we can have a look at some of the things this amount of money can do.

  • Coronavirus is the most significant public health headache at the moment, with more than two million cases confirmed to date. The average cost of treating a COVID-19 patient is $1,425.  $53 billion could, therefore, fund the treatment for 37,354,386 patients.  This might very well be all the people who will ever be infected by the virus, and it would be a welcome Coronavirus-marijuana interaction.
  • Wearing face masks and sanitizing hands are among the actions in the first line of defense for the prevention of COVID-19. According to a USA Today’s report on March 3th, two bottles of 12 ounces’ sanitizer cost as much as $149. $53 billion is enough to buy about 356 million pairs of bottles of sanitizer, which is enough sanitizer to reach every American.  Concerning facemasks, the money can buy 134 million boxes of 20 masks each. There are more than enough masks to reach every single person in the country.

The money can also provide health insurance and food to a substantial number of people who may have lost their livelihoods due to the virus.

Marijuana tax revenue distribution: Some prime examples

The states that levy taxes on marijuana usually have laws governing how they spend the revenue they collect from marijuana. The following are some highlights on how some select states have appropriated marijuana revenues.

  • Alaska: Alaska marijuana law demands that the state should deploy 50% of marijuana revenues to the Alaska Department of Administration. 25% more is to be used on marijuana education for the general public and in schools.  The remaining 25% of revenues are supposed to be deposited to the general fund, where it is spent at the discretion of the state legislature.
  • California: The bulk of California’s collections from marijuana goes to the youth anti-drug programs at 60%. The remaining 40% is divided equally between Public Service Management and environmental conservation.
  • Oregon: Oregon allocates 40% of its proceeds from marijuana to K-12 education. 20% is dedicated to mental health and treatment for addiction, while 15% and 5% go to the police and states authority respectively for the prevention of drug abuse.

– This article was provided by Dwight K. Blake, Editor in Chief of AmericanMarijuana.org

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