The New York Times recently stirred controversy when it published an opinion piece titled "It's Time for America to Admit That It Has a Marijuana Problem." The editorial board pontificated that while more Americans have the freedom to purchase and smoke weed, there have been various drawbacks. The consequences of allowing adults to make decisions are the hallmark of a free society. They also teach valuable economic lessons.
Drug Legalization on the Public Ledger
The most commonly cited study to assess the financial cost of drug legalization, be it cocaine or heroin, is a 2010 white paper from the Cato Institute. Economists estimated that ending drug prohibition would save approximately $41 billion in government expenditures on enforcement. Additionally, it would raise almost $47 billion annually, "assuming legal drugs were taxed at rates comparable to those on alcohol and tobacco."
Data crunchers have been given empirical evidence from Colorado, which legalized marijuana more than a decade ago. The state imposes a 15% retail marijuana tax, a 15% wholesale excise tax, and a 2.9% sales tax. Revenues rocketed in the subsequent years, surpassing $424 million by 2021. Government coffers from the tax have been sliced in half, falling to around $231 million last year.
Similar trends have been unfolding in California, Oregon, and Washington State.
It is not entirely surprising that reefer madness wanes. The novelty wears off, prices fall as more supply comes to market, and cannabis tourism slows. While Mary Jane acolytes marketed it as a prescription for economic growth, its effect has been modest. A 2013 Kansas City Federal Reserve paper concluded that cannabis maintains a minor share of gross domestic product (GDP) at the state level, such as a 3% increase in state income per capita.
Put simply, marijuana has become more of a maturing commodity industry.
If class one narcotics – heroin, LSD, ecstasy, methaqualone, and peyote – were legalized, comparable economic data would likely arise. A sharp increase in supply, demand, and tax revenue, followed by a steady decline in consumption, resulting in less money for the state.
Like marijuana, however, there would be trade-offs. The severity can be debated.
No Solutions, Only Trade-Offs
Eminent economist Thomas Sowell famously wrote: “There are no solutions, only trade-offs.” Marijuana has been a positive economic force, but it has also produced social and health costs. For years, supporters contended that marijuana did not cause negative health effects. Now that more research has been done, regular consumption has been linked to a broad array of issues.
This is especially true the earlier you begin smoking the product. Users are more likely to develop respiratory illnesses than non-users. Frequent use has been associated with harm to working memory, driven by altered brain structure and function. A few puffs will not lead to disaster, but regular use can cause long-term health problems.
Meanwhile, products like ecstasy and peyote can cause physical, emotional, and mental harm – often immediately. Heroin destroys your life. But how does this differ from alcohol and cigarette consumption?
Cigarettes are horrible for you. But a library of research has also indicated that alcohol comes with a wide variety of health risks, and plenty of people have drank themselves to death in a single binge session or died in drunken accidents. In fact, the World Health Organization went as far as stating that "no level of alcohol consumption is safe for our health," though the institution encouraged using an experimental vaccine to fight COVID-19!
And yet the consensus view is that neither alcohol nor cigarettes should be prohibited. Your body, your choice. If John Smith wishes to poison his organs, that would be his decision. Of course, advocates of drug legalization need to consider the trade-offs on a grander scale as well, mainly homelessness, crime, and social decay.
The odor in places where marijuana is legal is foul. Even in the era of illegal drugs and communities with programs to help addicts, streets in major urban centers across the Western world remain littered with zombies, garbage, needles, and much more. In Toronto, for example, local facilities have become centers for black market dealmaking and transactions.
Some argue that drug legalization would produce similar scenes. Others present the case that a legalized free market-oriented approach would manufacture superior alternatives that are not laced with horse tranquilizers, bath salts, or fentanyl, which leads to these hellscapes.
Still, even if this type of utilization is confined to one’s home, the broader societal destruction would accelerate. People are already unwilling to leave their homes, chained to their sofas and smartphones to get their next dopamine rush. The human spirit is slowly deteriorating, appearing like the character in Edvard Munch’s Scream.
When a universal basic income is inevitably introduced, users will rely on this money to buy these types of drugs, no matter how benign. We have already seen this in the research: Recipients of guaranteed income rely on the money to purchase alcohol, cigarettes, and lottery tickets. Dependence will not only be on the narcotics but on the state for the money.
Roaring Twenties
It would be difficult to declare the War on Drugs to be a success. Just Say No has not yielded the gains politicians had hoped. Instead, when something is in demand and it is illegal, there will be entities and individuals willing to create the supply. Gangster movies, from The Roaring Twenties to Force of Evil, highlighted that organized crime will peddle any illicit good or service, whether alcohol or the numbers racket.
If Health Secretary Robert F. Kennedy were to ban potato chips and soda pop overnight, a black market would emerge, and a war on the streets over fatty foods would begin. Instead of James Cagney and Humphrey Bogart shooting each other for beer and whiskey, it would be Reddit moderators fighting for Lays and Coke.
