On The Money;
Economics for the 99%
The Economics of Drug Prohibition
I’m sure that it comes as no surprise to you that dealers of illegal drugs enjoy large profit margins on the drugs they sell. American taxpayers insure these large profit margins through a massive government subsidy known as “The War on Drugs” which costs tens of billions of tax dollars annually. Prohibition is the generic term for the policy of using laws, and law enforcement, to keep certain drugs out of the open legal market. Despite over 70 years of drug prohibition, use of illegal drugs remains resilient, and demand remains, no pun intended, high.
The lion’s share of this massive subsidy, gets spent in efforts aimed at the nation’s most popular illegal drug, marijuana, and the plant it comes from, Cannabis Sativa. Government expenditures for the prohibition of marijuana alone include the cost of arresting, prosecuting and incarcerating over one-million Americans every year, far more than the total number of people arrested for all other illegal drugs combined. It also includes eradication efforts aimed at killing cannabis plants wherever they grow, often with chemical herbicides. Economically, this huge outlay of taxpayer dollars functions to artificially inflate the price of marijuana, or cannabis, a hardy weed that would otherwise grow wild in every state in the union.
Because of prohibition, this prolific annual weed has become tremendously expensive for marijuana users and taxpayers, as well as hugely profitable for black-market dealers. Despite the high prices and risk of arrest, an estimated 10-20% of all Americans use marijuana regularly, creating a tremendous demand for it. This demand, in turn, fuels a multi-billion dollar black-market industry that operates in every state, county and locality in the US, insuring that every state, county and locality spends even more taxpayer money to battle this black-market activity.
Thanks to grassroots organizing by marijuana consumers and advocates, several states have passed laws legalizing the use and distribution of marijuana, mostly for medical use. As more states pass these laws, both the price of marijuana, and the subsidies, at least in the states that have passed these laws, decline as well. Since the passage of California’s landmark medical marijuana law in 1996, the first of these laws, the price of marijuana has declined by more than half, nationwide. As more states pass these anti-prohibition laws, we can expect the price of marijuana to drop still further.
As police make fewer marijuana arrests, courts try fewer marijuana cases, and prisons hold fewer marijuana prisoners, taxpayers pay less for marijuana subsidies. While the Federal government has not budged on marijuana prohibition, and still spends billions on cannabis prohibition annually, many cash strapped states, counties and localities, even those that have not passed legalization laws, have de-prioritized marijuana prohibition to save money.
As these marijuana price-support subsidies decline, marijuana prices continue to slump. This comes as welcome relief to the millions of Americans who use marijuana regularly, and to taxpayers who have grown tired of subsidizing untaxed black-market profits. Still, thanks to vigorous Federal enforcement, and backlash from law enforcement, who stand to lose a tremendous amount of funding, marijuana prices, taxpayer subsidies and black-market profits remain high.
Although those who argue for marijuana prohibition argue that marijuana is a dangerous drug that no one should ever touch, very little evidence supports these claims. On the contrary, tens of millions of Americans use marijuana regularly, and like it. Not one person, in the history of humanity, has suffered a fatal overdose of it, nor has much evidence been found that marijuana causes long term health problems. Marijuana does not produce physical addiction symptoms, unlike alcohol, nicotine, opiates, many prescription drugs or even caffeine which all produce strong physical addictions that can be very difficult to quit. Even long-term chronic marijuana users can kick the habit without much difficulty, if they genuinely want to. This, I tell you from personal experience.
Clearly, the reasons for continuing marijuana prohibition are completely economic. Without the massive taxpayer subsidies involved in prohibition, the marijuana black-market would collapse, eliminating a multi-billion dollar industry. Governments would reallocate tax revenue away from law enforcement, and prisons, eliminating thousands of high-paying jobs in those fields. While, no one really likes black-market drug dealers or narco-cops, or would miss them if they learned to do something productive with their lives, they form a significant part of our national economy.
The pharmaceutical industry would soon feel the pinch as well. 100 years ago, half of all medicines sold in the US contained marijuana. Plenty of evidence shows that cannabis, or marijuana still works better than many prescription and over-the-counter medications for a host of conditions ranging from glaucoma and chronic pain, to epilepsy, asthma and nausea, especially nausea associated with cancer chemotherapy. Some estimate that legal cannabis, or marijuana, could immediately replace 20-40% of all prescription drugs, working as effectively, with fewer side-effects, than the drugs it would replace.
Since marijuana, or cannabis, is a natural plant, it cannot be patented. Because cannabis cannot be patented, patients who need it, would get it from farmers, not pharmaceutical companies. This would cut deeply into the profits of pharmaceutical companies, but drastically reduce health-care costs for patients. Farmers wouldn’t complain either.
Further, recent medical research suggests that humans have had a very long, and symbiotic relationship with the cannabis plant. The presence of “cannabinoid receptors” in the human nervous system seem to indicate that the cannabis plant played a role in human evolution, and that our ancestors have ingested cannabis for millions of years.
While it remains unclear exactly how these cannabinoid receptors contribute to human health, they clearly play an important role. Many, now common, ailments may stem from a lack of cannabis in our modern diet. Currently, doctors prescribe prescription drugs to treat these maladies, but the addition of a few green cannabis leaves into the diet, as other doctors recommend, might eliminate these diseases completely.
Beyond that, hemp, a high-fiber, non psychoactive, but also prohibited, species of cannabis, has a whole range of industrial uses from textiles and cordage to paper, plastics and building materials. Hemp, an agricultural commodity widely grown in the US before prohibition, could spawn a whole new hemp products industry. This new hemp industry might generate tens of thousands of new jobs in the long run.
New industrial hemp products would replace or reduce the need for synthetic fiber and forest products, thus eliminating the toxic pollution from manufacturing synthetics, and the habitat destruction that results from deforestation. While this potential new industry could create thousands of new jobs and spur growth in the economy, it also threatens the profits of some well established, and very influential corporations.
You can see that marijuana prohibition has much more to do with controlling “the economy”, than it does with dissuading people from smoking pot. If we could end marijuana prohibition today, black-market drug dealers, narco-cops, prison guards, pharmaceutical companies, chemical companies and forest products companies would all lose revenue. However, the rest of us would enjoy less expensive marijuana, better medicine, lower health-care costs, nicer clothes, cheaper paper and lower taxes, with less pollution or habitat loss. In other words, it would dramatically improve our quality of life. As Freewheelin’ Franklin of Gilbert Shelton’s Fabulous Furry Freak Brothers famously said, “Dope will get you through times of no money better than money will get you through times of no dope.”