Tag Archives: economic costs

Have I Got a Revenue Enhancement for You!

I’ve been pondering the arguments about how to reduce the national debt, and I have a proposal. Dump the drug war.

The fiscal consequences of our current policies are staggering. While other estimates have been as high as 88 billion, an economics professor at Harvard reported in 2005 that replacing marijuana prohibition with a system of taxation and regulation similar to that used for alcohol would produce combined savings and tax revenues between $10 and $14 billion per year.  Even that’s not chump change. (Estimates from a variety of sources are that marijuana prohibition costs U.S. taxpayers nearly $42 billion dollars a year in criminal justice costs and lost tax revenues alone. This is just from marijuana prohibition—not efforts to control harder drugs.) As of August 19th of this year, state and federal governments together had spent $25, 969,752,344 on an effort that has–as the AP recently reported–has failed to meet any of its goals. The federal government alone spends approximately 500 dollars a second on drug prohibition.

Then there are the opportunity costs. Indiana used to have a robust hemp industry. Hemp is an enormously versatile and useful product that cannot be smoked or used as a recreational drug, but our indiscriminate policies outlaw its growth. They also prohibit use of marijuana to alleviate the side effects of chemotherapy. And the drug war diverts desperately needed dollars from serious crime-control efforts and other government programs.Estimates are that the money spent annually on the drug war would pay for a million additional teachers.

Law Enforcement Against Prohibition is an organization formed by law enforcement professionals–current and former police officers, sheriffs, prosecutors and judges. These are people who have seen the drug war up close and ugly, and their message is simple: it has been a costly disaster. Just as with America’s prior experiment with alcohol prohibition, the result has been policies that have created a set of perverse incentives that have made drug dealing so profitable that they outweigh the prospects of being caught. Last year the FBI reported that there is a drug arrest every 19 seconds in the US, and 82% of those were for simple possession. That isn’t surprising, since government estimates are that 47% of Americans over the age of 12 admit to using illegal drugs–mostly marijuana, which is no more harmful than those legal drugs, tobacco and alcohol.

There is a copious academic literature documenting the failure of American drug prohibition–and wide consensus on the magnitude of its social and human costs. There is also wide recognition that politicians of both parties are loathe to act on the basis of evidence when that evidence contradicts their ideology or (heaven forbid) threatens their electability by causing them to be seen as insufficiently concerned about law and order. On the other hand,  the country’s current fiscal crisis may finally provide a rationale for doing what most students of the issue have long advocated: discard a policy that has never worked. Decriminalize, tax and regulate marijuana, and focus on treatment and prevention for those with genuine addictions. (Ironically, federal law does not distinguish between use and abuse: it simply declares that any use of a substance that has been declared illegal is a crime, no matter how sporadic or casual the use. This “zero tolerance policy” has cost us a fortune–on average, it costs $25,251 to incarcerate a federal prisoner for one year.) Surely, even the most rabidly anti-tax Republicans would not object to taxing another “sin.”

Over the past 30+ years, we have ignored the numerous books, scholarly studies and organizations advocating the repeal of drug prohibition. Perhaps the current focus on national financial issues can help us achieve both savings and sanity.