“Ever see 41 Billion Dollars?…. On Weed!”
You are about to read a blog post about a Canadian teacher advocating for marijuana to be legalized. That might have been a lot more noteworthy a few months ago before Liberal leader Justin Trudeau (a former teacher) came out and stated that he was in favour of full legalization (not that faint-hearted decriminalization stuff) of marijuana.
Up until now I have not been a big fan of Mr. Trudeau’s if I’m being honest, but this new plank to his platform is brilliant in all kinds of ways. Many people were quick to point out that this would go over well with the youth voters (these exist?) and the more liberal (lowercase l) parts of his base. The less-covered aspect of this is how it appeals to libertarian-based “small c” conservatives like myself. See, I’ve never tried marijuana (much to my students’ disbelief), and I don’t intend to any time soon. I have seen people become psychologically addicted to the effects of the drug (I’ve read all the stats on non-addiction and I can say for certain that while you might not go through withdrawal from THC leaving your system, there is a definite dangerous dependency on what the drug does for people in terms of dulling their sensory inputs) and I can’t stand the smell. Yet I firmly believe we should legalize marijuana, if only for the monetary benefits!
Before we get to the juicy part where a teacher tells people why weed is great, I should point out a few things quickly.
- I’m not ignorant to the negative physical effects of long-term marijuana use. I would never advise someone to start smoking marijuana under any circumstances – save for maybe certain extremely select medical instances that I’m not an expert on.
- We absolutely need to focus on developing better roadside tests for people that drive while under the influence of marijuana – and don’t give me that crap about how you drive better stoned because it’s ridiculous and all it does is turn reasonable people like myself against you.
- Marijuana rarely has a positive overall effect on people’s lives – but last time I checked, neither did potato chips, pop, energy drinks, cigarettes, Jersey Shore, and/or alcohol.
- We need much better programming and an overall strategy to deal with the abuse of THC amongst Canada’s youth.
Ok, on to the part where my students’ parents would cringe. If we accept that the harmful physical effects of marijuana (not all the other stuff that drug kingpins spice marijuana up with) are no worse than those caused by the long-term use of several other legal substances (as has been pretty effectively proven in numerous studies) then we can leave that argument alone. Yes, marijuana is bad for you. Yes, even occasional use of marijuana is not good for you. Yes, in a perfect world there would be no need for recreational drugs of any kind. And yes, we have already set a pretty strong precedent with other recreational drugs.
Here are some facts about legalizing marijuana. These are not numbers I found on “ILoveWeed.com” or “CanadianMaryJaneLover.ca”. These are reputable studies and polls quoted in Canada’s most trusted news publications:
In a recent Maclean’s article:
“In Canada, Gerald Thomas, an analyst with the Centre for Addictions Research of B.C., and Chris Davis, an analyst with the Canadian Centre on Substance Abuse, used Health Canada data to chart the health and social costs of cannabis, tobacco and alcohol. Their findings: tobacco-related health costs are over $800 per user; alcohol-related health costs were $165 per user; cannabis-related health costs were $20 per user. Enforcement costs added $153 per drinker and $328 for cannabis user. In other words, 94 per cent of the cost to society of cannabis comes from keeping it illegal.”
Also noted in the same article:
“Stop the Violence B.C.—a coalition of public health officials, academics, current and former politicians—is trying to take the emotion out of the legalization debate by building science-based counter-arguments to enforcement. One of its member studies concludes B.C. would reap $500 million a year in taxation and licensing revenues from a liquor-control-board style of government regulation and sale.”
The National Post wrote:
“A recent study published in the International Journal on Drug Policy shows exactly what’s at stake. According to a coalition of researchers from the University of British Columbia and Simon Fraser University, B.C.’s domestic marijuana market could be worth more than $500-million annually. With relatively low production costs, most of that revenue goes directly into the pockets of increasingly sophisticated criminal organizations — the proceeds of which are known to fuel the importation of cocaine and firearms into Canada. Tough law-enforcement efforts have failed to limit the supply and consumption of marijuana, while lining the pockets of gang members.”
The National Post also stated:
“Estimates vary wildly on the cost impact of marijuana use and of enforcement. Back in 2002 the Senate report pegged the annual cost of cannabis to law enforcement and the justice system at $300 million to $500 million. The costs of enforcing criminalization, the report concluded, “are disproportionately high given the drug’s social and health consequences.”
USA Publications Have Stated:
The government would save an estimated $13.7 billion on prohibition enforcement costs and tax revenue by legalizing marijuana, according to a paper endorsed by 300 economists.
Marijuana Prohibition Costs Taxpayers $41.8 Billion A Year Including lost tax revenues, a 2007 study found that enforcing the marijuana prohibition costs tax payers $41.8 billion annually, Forbes reports.
Legal Marijuana Could Be $100 Billion Industry Economist Stephen Easton estimated in 2010 Bloomberg Businessweek reports.
So there are some obvious monetary benefits, but who is this teacher that doesn’t care about the kids you might ask? Well here’s the thing…
“Tax it, regulate. It’s one of the only ways to keep it out of the hands of our kids because the current war on drugs, the current model is not working. We have to use evidence and science to make sure we’re moving forward on that.” – Justin Trudeau
“It’s certainly not the best case on the evidence. Regulation doesn’t always keep booze and cigarettes away from kids, now does it? Still, it’s tough to imagine that selling marijuana at government-licensed stores would make it easier for children to obtain it. A UNICEF report released in April found that 4% of children aged 11, 13 and 15 reported smoking cigarettes “at least once a week”; 16% reported having been drunk on at least two occasions; and fully 29% reported “having used cannabis in the last 12 months.”–National Post
Perception Meet Reality
I can tell you this much. I live in a rural prairie town where things like “homegrown values” are still talked about. It is probably one of the most conservative places in Canada – and yet every single one of my students recently put their hand up when I asked the question, “Who here is confident that hypothetically, if they wanted to, they could get their hands on marijuana inside of fifteen minutes?” The statistics bear out this reality. We are currently doing a terrible job of managing this unfortunate reality. We have developed all kinds of strategies to try and convince young people not to smoke cigarettes and yet we allow adults to have the freedom to make the choice. I’d be a huge advocate of taking a solid percentage of the revenues collected from legalizing marijuana and working off the tobacco-precedent in terms of showing minors the negative effects marijuana can have on your health (make it a part of the presentation that shows what smokers who get cancer look like, and what liver cancer due to alcoholism does to a person). Right now we’re chasing them into the arms of drug dealers who obviously have their best interests in mind right?
On a moral level, I’m a libertarian who believes people should have the right to do what they want as long as they don’t need to take my money to do it (there seems to be an ever-increasing number of people who need my tax dollars to do anything – or nothing at all) and it doesn’t infringe on my rights. Smoking marijuana in your home does not affect me, driving while under the influence does, it’s that simple.
It’s All About the Green
Apart from that however, I’m going to get back to the economics on this because it boggles my mind. Now admittedly I’m no expert, but the broader Canadian public stands to benefit from legalizing marijuana in the following ways:
- Decreased enforcement costs (less police, lawyers, judges, and paperwork needed to go after small-scale drug offences).
- Decreased jail costs (less people in jail = less guards, less food, less necessities etc.)
- Huge tax revenue from sales
- Huge tax revenue from producers – current drug producers and distributors (i.e. drug dealers) don’t pay taxes, but Marlboro and Budweiser do.
If reports produced by Canada’s senate put enforcement costs at $500 million back in 2003, it has to be significantly higher today right? So that’s a nice little savings right there, and it frees up police time to go after stuff like white collar crime that affects our everyday lives in a huge way and yet is rarely ever looked at.
Who Wants a Piece of the Marijuana Profit Pie er… Brownie?
As a financial geek and someone who hates paying taxes, the key for me really comes down to the tax revenue we are missing out on by not taxing the marijuana industry at either end. In Canada, 70% or so (depending on the province) of the cost of a cigarette is taxes. The balancing act one has to play in the Sin-tax market is to set the tax rate as high as possible without setting it high enough to encourage too much black market consumption. Imagine the revenue the feds and the provinces could produce if they had a 300% tax on marijuana? Anyone that says this is too high a tax rate that it will result in a price that is too high is forgetting several factors such as:
- The current “street price” of marijuana has to take into account a profit margin for several layers of drug dealers and the additives they put in for various reasons.
- Currently, marijuana is only grown in very small quantities (from a tobacco-related standpoint). Legalizing it would allow for large-scale industrialization where it could be cultivated on a level where fields or large greenhouses of it could make use of economy of scale.
- The distribution system in place for marijuana today is extremely inefficient and has to take into account all sorts of legal costs etc. Allowing it to go through legal distribution and shipping lines would take a massive percentage of the costs down.
The bottom line is that marijuana could likely be produced and sold to consumers for an insanely small percentage of what it currently goes for on the street (maybe 5-10%?).
Profits = Tax Dollars
Then we get into the taxation on producers. After carefully regulating the market, corporations would have to produce a consistent product that they would likely make a good profit margin on (however, also one that would be held in check by the free market). This profit would then be taxed. Everyone that works for these companies would also have their wages taxed. Shareholders that made money on these corporations would be taxed as well. Right now we are getting none of this because drug dealers don’t pay taxes!! Not only that, but often the profit made from marijuana deals fuels activities such as prostitution, gun running, harder drug peddling, and other activities that cost the government HUGE amounts of money to enforce laws against! The way these costs add up is astounding. It makes it tough to even come up with a reasonable estimate. If you put marijuana sales at a quarter of cigarette sales for instance, you’re easily in the $3 billion range when all costs are figured out. That is revenue that is sitting there waiting to be taken with absolutely no negative lifestyle changes from the current way of doing things that I can figure out.
Health Care Costs Go Up In… Steam?
So here’s a controversial side note to consider. If we’re worried about the public health costs of THC would it not make sense to have some sort of tax-incentive or government subsidization applied to the purchase of vaporizers? For those of you who aren’t familiar with this product, the basic idea is that you apply a little grade ten chemistry to marijuana and you get the THC without the vast majority of bad stuff that is in non-filtered joints (and the bad stuff in cigarettes for that matter). By heating up marijuana and turning the THC into a gas, a person can then inhale almost pure THC without several more harmful substances. One of my health-conscious friends in university used to use one all of the time (which I appreciated due to my abhorrence for the smell associated with weed). If vaporizers were scientifically proven to reduce the various harmful physical side effects that our public health care system eventually has to pay for, wouldn’t that be a good investment for the Canadian government to encourage?
With every poll that comes out it appears that my view is no longer a minority. Where do you stand on the topic?