With 20 states having now legalized medical marijuana use, and two (Washington and Colorado) having legalized recreational use of marijuana, the days of legal prohibition of use of marijuana for recreational as well as for medical purposes seem numbered.
The case for prohibiting marijuana was never strong. It is a mind-altering drug, but no more so than alcohol, and it is considered less likely to induce violent behavior, and in general to have less destructive effects on the heavy user, the “addict.” There is little evidence that it is a “gateway” drug, in the sense that use of it induces the user to “progress” to more harmful drugs, such as cocaine, methamphetamine, Ecstasy, LSD, heroin, or, for that matter, alcohol; in fact there is evidence that marijuana is largely a substitute for alcohol. While prohibition doubtless deters many young people from using marijuana, it seems unlikely that young people with strong addictive propensities, for whom consumption of an addictive drug might be destructive, are deterred. Legalization would undoubtedly increase the use of marijuana unless very heavy taxes were imposed (which would in turn give rise to a black market, thus largely undoing the effects of legalization), but probably not the number of addicts. Actually, the emergence of a black market would be unlikely unless very heavy taxes were imposed on the sale of marijuana, given the natural consumer preference for a legal, FDA-regulated drug over an illegal one.
Although some 58 percent of Americans believe that recreational use of marijuana should be made legal, law enforcement activity aimed at discouraging marijuana use continues at a high level, with some 750,000 persons being arrested every year on marijuana charges, almost 90 percent for possession rather than for production or distribution. Despite the threat of criminal punishment (though punishment for mere possession, other than possession with intent to distribute, is largely nominal), the American market for marijuana is very large—some $36 billion a year (that’s the conservative estimate: estimates range as high as $113 billion). There is no doubt that the use of marijuana would increase if it were legalized, because many people are unwilling to violate criminal laws even if the expected punishment cost (the gravity of the punishment discounted by the probability that it will be imposed) is slight. But if the increased use decreased the use of substitute drugs (including alcohol), there might well be no net increase in the use of mind-altering drugs. Furthermore, legalization would undoubtedly be accompanied by the imposition of sales taxes comparable to those for cigarettes and alcohol (indeed the desire for tax revenue was apparently a major factor in Colorado’s decision to decriminalize marijuana), which would both generate needed tax revenues and limit the increase in use. Suppose marijuana were legalized and a 33 percent sales tax imposed. And suppose total sales remained at $36 billion because the effect of the higher price resulting from the sales tax was offset by greater demand for the drug and by the efficiencies in production and distribution that would be obtained making it a legal product. Then the sales tax would generate $12 billion in annual tax revenues. Along with tax revenues would come the further benefit to government finances of eliminating an estimated $7.6 billion in annual police and prison costs of marijuana prosecutions and convictions.
Although my analysis strongly suggests that there would be net benefits from decriminalizing the sale of marijuana throughout the United States, it does not follow that enacting a federal law that would do that would be a good idea—not only because opposition to legalization remains strong in a number of states, but also because the steps that the liberalizing states have already taken—20 to legalize medical use of marijuana and 2 of them to legalize recreational use as well—are likely to make enforcement of marijuana laws in other states ineffectual. In all 20 states there will be increased availability of marijuana, production will be cheaper because it will be done openly, and it will be difficult to prevent exportation to the prohibitionist states, overwhelming law enforcement resources in those states. The death knell of prohibition would be a decision by the Department of Justice to reduce prosecution of producers and distributors of marijuana, because federal criminal penalties of drug crimes are far more severe than state penalties and so have greater deterrent effect, though neither deterrence nor incapacitation seems to have much effect on the supply of illegal drugs, since the elasticity of supply of drug dealers is very high. Dealers make good incomes relative to alternative employment opportunities and expected punishment costs are low.