A Tax on Marijuana?
Having sat through a lecture from my Microeconomics professor, it occurred to me as to just what he may have been indirectly advocating. The basis of the lecture was to center around the “Application of Elasticity” in any given market. Topic for the day? You guessed it, ILLEGAL DRUGS. Being it a 9:00 AM class, the lethargic hangover of sleepiness was cast aside and I was immediately injected with a sense of excitement. This is what college is all about, I thought. Stirring topics that immediately spark up debate and intellectual exploration.
The meat of the discussion was essentially this: the government’s attempt to limit the consumption and/or sale of an illegal substance with INELASTIC (inelastic meaning any change in price will have little or no effect on demand) demand, results in an increase of the scarcity power of that particular substance and ultimately a higher potential profit for those law-forgoers electing to sell the drug. Gov’t enforcement does in fact curb the use/sale of illegal substances (with a limited effect), but at the same time, even more significantly, indirectly enhances the street value of these drugs. That now higher valued product attracts a healthy share of sellers and in turn, spawns potentially dangerous competition. I say dangerous simply given the fact that there is without regulation a possibility for the creation of gangs and turf warfare. Further discussion led to the idea that a viable alternative to law enforcement might be the issuing of a tax on one of these substances. Now my professor didn’t go much further than here with the topic as it was likely he was more concerned with the inelasticity or elasticity of the given market rather than policy making. However, I couldn’t help but consider the fact that he was in fact toying with the idea.
It’s safe to say that our economy is spiraling down at an unprecedented rate. Much already has been done to combat the reeling economy under the new administration of President Obama, including one of the largest stimulus packages ever passed through Congress. Yet, many question the potency of such a massive bill. Is there substantial meat to the stimulus or is it simply a rushed product laden with pork-barrel projects? Despite the White House’s approval, I personally believe this bill will not do enough quickly enough to right the economy back on track. Housing prices will continue to deflate until trust is restored to the credit line between banks and consumers and I don’t visualize that happening any time soon. Consumer confidence has hit an all-time low and with good reason. With little or no equity left in their once overvalued homes, consumers have lost their ability to consume like they were doing from the mid 1990′s to just a couple years ago. Several states across the nation are in excessive debt including but not limited to: California, South Carolina, and New York. Solutions are running thin these days, and Governors are having a tough time balancing their budgets. Yet just recently, a rather spontaneous but intriguing proposal was brought forth by the likes of Assemblyman Tom Ammiano, D-San Francisco. On February 23rd, Ammiano proposed legislation, that if approved by the State of California, would result in the legalization of Cannabis and, in turn, the ability of the state to tax it.
Out of all the horrible and life-destructing substances out there, there is one that may just happen to deserve a class of its own. Cannabis sativa, or “marijuana”, a legally defined Type I drug, that is, a drug flanked by the likes of Heroin and Cocaine, is entirely misrepresented. Although I am no expert in Medicine, based on my own experiences, I would argue Cannabis is a relatively innocuous substance. We know that the buds of female Cannabis plants are already being utilized in hospitals across the nation as well as in states such as Vermont and Massachusetts, where marijuana has been decriminalized to the extent that it is legal to possess small amounts. With each day, I believe, we inch closer to wide-scale decriminalization. But why stop there?
Assemblyman Ammiano’s proposal is a major step in the right direction. California’s marijuana crop is estimated at $14 billion annually. Already, in the rolling hills of Northern California, growers have found their niche making quite a nifty profit from the “medicinal-marijuana dispensaries” who purchase the buds of their plants (Medicinal marijuana was legalized by the State of California in 1996). Analysts suggest that anywhere from 1-2 billion dollars could be collected in revenue from a tax on Cannabis. Given the current state of affairs, that is a whopping sum of money that the State of California would love to have at their disposal. Hell, what state wouldn’t.
Though, the general public has a negative view of marijuana because we have had it drilled in our heads since the very beginning of our school days that marijuana is the “gateway” drug. “Smoking pot kills brain cells, smoking pot promotes violent behavior”. Yet none of these claims have been verified. Not a SINGLE death has been reported that was directly due to the consumption of Cannabis. That in itself is a pretty powerful statement.
Yet despite the public views on Cannabis, what it really all boils down to is economics. Sound economics. People are losing their homes, their jobs. Families are being torn apart, blue-collar, white-collar citizens thrown on the streets. The almighty United States has hit a significant roadblock in its storied past. When all is said and done, this recession may just happen to go down as “The Great Recession”. I know we may be a way’s away from full-scale legalization. However, I believe California may just be the stepping stone this nation needs. The legalization of marijuana in the state of California and the subsequent tax placed on it possesses greater potential benefits than the costs. No longer would it be left up to the despised drug-dealer of the street corner, and instead placed on the shelves of legitimate corner-stores and small businesses. Demand may initially skyrocket, but would eventually bottom out once the craze died out. Just look at the sovereign nation of Holland, where marijuana is legalized and they have one of the lowest crime rates in the world. Law enforcement could shift their resources from the prosecution of minor-drug offenders, potentially saving millions of dollars. Less people would be convicted and, in turn, less inmates to house saving YOU tax dollars (that is if you are a resident of California).
It is time to put aside the prude debate over whether or not Cannabis is a safe drug. Would hopitals be supplying their patients with a truly destructive substance if they didn’t believe it was in the best interest of both the patient and the doctors providing the treatment? Californian legislators must take full consideration of such a proposal. The cloud must be lifted and real facts made transparent. I believe the future of Cannabis in this country rests solely on the hulking shoulders of the Republic of California. I can only hope there is more Ammianos out there.
