Do we think we can stick our bicuspids under the pillow and the national tooth fairy will leave $800 billion? No? Then what about legalizing and taxing one of our biggest, oldest vices?
That notion arose because Friday is the 75th anniversary of the end of a nationwide ban on a substance that millions of Americans broke the law and bought anyway: liquor.æ Criminalizing it turned out to have complications so enormous and expensive that in 1933 a new president, faced with a profound economic crisis, wanted it legalized and taxed again.æ
Now, as we’re desperately trying to reinvent the economy, should we consider marijuana? […]
Sacramento would be doing the backstroke in black ink.æ With all the new parks and health clinics, we’d have more ribbon-cuttings than a baby shower.æ Is this just a pipe dream?
So, to find out, she turns to Rosalie Pacula, Co-director, RAND Drug Policy Research Center; Faculty Research Fellow, National Bureau of Economic Research. Now, you might think that someone like that might know what they’re talking about on this subject.
But apparently you would be wrong.
Is this just a pipe dream?
Rosalie Pacula says that in all likelihood, yes.æ She’s a senior economist at the Rand Corp.æ and co-director of its drug policy research center.æ Here’s how she burst my bubble:
First, you have to consider that legalizing it would have its own costs.æ Recent research, Pacula says, shows marijuana to be more addictive than was thought.
Really? What recent research? Care to mention some? It turns out that NIDA is currently funding a study which has been billed as the “first comprehensive study of marijuana addiction.” That won’t be done for four years. The only other new study on the subject I know of is the laughable one that studied a whopping “12 heavy users of both marijuana and cigarettes.” Otherwise, we’re looking at the same information we’ve always had — a small percent of marijuana users do have problems with dependency, and their marijuana-related dependency tends to be mild compared to other drugs.
Because marijuana is illegal, and because its users often smoke tobacco or use other drugs, teasing out marijuana’s health effects and associated costs is almost impossible.
Actually, no. There have been so many studies trying to find marijuana’s negative effects, that we have a pretty good idea by now (after all, that’s all that NIDA will fund). No lung cancer, some other lung-related problems in long-term heavy smokers of marijuana, and… that’s about it. What we have yet to find more of is some of the potential positive effects, such as the impact on reducing Alzheimer’s disease, or stopping cancerous growths. Plus the potential for dramatically lowering prescription drug costs as marijuana substitutes for more dangerous and expensive prescription drugs.
And more people would smoke it regularly if it were legal — Pacula estimates 60% to 70% of the population as opposed to 20% to 30% now – — and the social costs would rise.
Really? And from just what orifice did you pull that figure? Do you have some historical evidence? Perhaps you took a look at the states that previously decriminalized marijuana to get some guidance. Did they shoot up to 60%? No, they actually declined. How about the Netherlands? It’s legal there to consume. Usage must be up around 70%. Right? No, it’s dramatically lower than in the United States. So tell me, Rosalie, where do you get your numbers?
She takes issue with figures from Harvard’s Jeffrey Miron, among others, who says that billions spent on enforcing marijuana laws could all be saved by legalization.
So Ms. Pacula takes issue wIth Jeffrey Miron’s research. Why is Rand’s research better? Have they done better digging into the nuts and bolts of legalization? Let’s take a look at their major report on drug policy – How Goes the “War on Drugs”? An Assessment of U.S. Drug Problems and Policy by Rosalie’s colleagues Jonathan P. Caulkins, Peter H. Reuter, Martin Y. Iguchi and James Chiesa, where they state:
Nor do we explore the merits and demerits of legalizing drugs, even though legalization is perhaps the most prominent and hotly debated topic in drug policy. Our analysis takes current policy as its starting point, and the idea of repealing the nation’s drug laws has no serious support within either the Democratic or Republican party.
So, Rand, in a major drug policy study, cannot be bothered to even “explore” legalization, while Jeffrey Miron of Harvard has actually spent lots of time, you know, studying it. So why should we listen to Ms. Pacula?
Rand’s research, Pacula says, finds that many marijuana arrests are collateral — say, part of DUI checks or curfew arrests — and many arrestees already have criminal records, meaning they might wind up behind bars for something else even if marijuana were legal.
OK, that’s just bizarre. We won’t save money from arresting 800,000 marijuana users a year, because we’ll probably just have to arrest them for something else? (And that collateral stuff doesn’t wash either — in many cases, the DUI checks or curfew arrests are excuses to search for pot.)
Legalization also wouldn’t do away with pot-related crime entirely.æ There would likely be a black market, just as there is in other regulated substances, such as cigarettes and liquor.æ That means police and prosecution, which cost money.æ
This is just a downright dishonest argument that we hear time and again. Start out with the implied straw man: “Legalizers claim that legalization would eliminate the black market entirely.” Then find the small exception: Sales tax differential black market. Conclude therefore, legalizer’s argument that legalization would reduce the black market is wrong.
She’s actually comparing the police activity to ferret out illegal smuggling of cigarette cartons from a low sales tax state to a high sales tax state, to the entire drug war apparatus! She studied economics? Was she awake?
As to the tax benefit, that’s partly a function of the price point for legalized pot.æ If everyone could legally grow and consume dope, then the crop probably wouldn’t be worth $35 billion and the taxes wouldn’t be anything to write home about.æ
This is also ridiculous. Certainly, some people will choose to grow their own pot if it’s legal. But most won’t. You could legally make your own beer or grow your own tobacco now, but most people don’t. You can even legally buy tobacco cheaper and roll your own cigarettes to save money, but people don’t. Sure, if you taxed marijuana at a rate of $10 a joint, you might lose your benefit, but you can still tax it pretty dramatically without having any significant loss in consumers (particularly compared to the actual cost of producing it).
“I have a hard time believing the tax revenue would offset the full cost of regulating and enforcing the legal market,” Pacula concludes
Again. Really? What are the actual costs of regulating and enforcing other legal markets compared to their tax revenue? Miniscule. We make tons of money off alcohol and tobacco taxes. Why wouldn’t we off marijuana taxes? Do you have any reason for your statement, Rosalie?
Even then, the actual question involves the elimination of all the marijuana enforcement costs (OK, except for sales tax smuggling), which is (still) in the billions of dollars and the addition of sales tax revenue (which, yes, would be in the billions of dollars). Would we bring in significant savings financially? Clearly, yes.
But Pacula seems to be willing to simply make up stuff, put it under the heading of “words from an economics and drug policy researcher” and shove it out there for public consumption.
And Patt Morrison dutifully laps it up, concluding with an even more bizarre statement:
No golden pot tax in the pot at the end of the rainbow, then? Pacula left me thinking that the unintended consequences of legalizing marijuana in 2009 might match the unintended consequences of outlawing liquor in 1919.
That has got to be an award-winning example of up-is-downism.
Note: in this analysis, I am assuming that Morrison correctly represented Ms. Pacula’s positions. And I would be happy to hear from either Patt Morrison or Rosalie Pacula regarding my critique and any defense of their positions. I’d be happy to print their replies.