The economics of marijuana legalization and taxation

Filed in Gather News Channel by on November 17, 2009 0 Comments

There’s been a great deal of talk over the last year or so of legalization and taxation of marijuana. In fact certain states have decriminalized possession of the narcotic – including the great Commonwealth of Massachusetts. There’s even a Cannabis Cafe that opened up in Portland, testing a new federal policy not to prosecute medical users (Oregon state law allows for medical marijuana usage) despite use and possession of marijuana still being illegal on the federal level. Health and moral arguments aside, there is a very compelling economic argument to be made to legalize marijuana and thus make it subject to taxation. So-called “sin” taxes on alcohol, cigarettes, and gambling are often resorted to in tough economics times – again, the Commonwealth recently introduced a sales tax on alcohol to combat budget problems – so throwing marijuana into the mix could be a big winner. Check out this excellent infographic from, depicting money spent fighting pot-related crime and potential tax revenues that could be realized:

Marijuana is almost laughably benign, especially contrasted with widely available legal drugs such as alcohol, nicotine, and prescription drugs. The trend is toward growing decriminalization of the drug. I think weak moral and public health arguments supporting its continued criminalization plus overwhelming economic arguments will over the next couple decades or so see it completely legal, regulated, and taxed – just like alcohol and cigarettes. And I think this would be a big win as public policy.

What do you think about the probability of marijuana being legalized over the next few years? Do you agree or disagree with it – either as public policy or a matter of principle?

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I'm an avid reader, professional marketeer, freelance writer, blogger, amateur chef, and I love warm, sunny weather despite the fact that I live on the East Coast for some silly reason.

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