Marijuana is known as one of the most popular and widespread drugs in the world. Historical records suggest that cannabis was used in prehistoric societies for religious ceremonies, as well as for meditation and relaxation. Nowadays, most governments prohibit the recreational use of marijuana; however, in most states of the U. S., it is legal to use cannabis for medical purposes and in some of the states – for recreational ones. The focus of this paper will be on the impact of the legalization of the U.S. economy with possible positive and negative sides of the matter.
The History of Marijuana Criminalization and Legalization
Marijuana was outlawed in the USA in the 1930s when the Marijuana Tax Act was issued. After the law was issued, several states decriminalized possession in small amounts, and some of them legalized medicinal marijuana. In 2009, as it appeared in a poll conducted by the authorities, the citizens were concerned about the strict drug laws, and several new policies, including, for instance, the Ogden memo, have been adopted ever since (Zambiasi and Stillman 2). The first states that legalized recreational marijuana were Washington and Colorado in 2012 (Zambiasi and Stillman 1-2), and currently, it is legal in nine states and the District of Columbia.
Pros and Cons of Legalization
Marijuana legalization may lead to substantial profits for the government. However, new profits often come with additional expenditures. There are positive as well as negative sides of the legalization, regarding the economy. First, marijuana legalization significantly reduces black market production and distribution, allowing businesses to operate legally, leading to a less burdened judicial system. The government will potentially need fewer detention facilities and forces, thus spending less money. According to Saaty, “of the $48.7 billion spent by states and the federal government in 2008, $13.8 billion was strictly used for marijuana enforcement” (1).
Since legalization brings down the costs of production and distribution, the government can impose a tax on marijuana, generating additional revenue. However, establishing a universal way to tax marijuana may be challenging; Colorado and Washington already tax marijuana based on its value, while other states plan to take the weight as a point of reference (Kilmer, “The “10 Ps” of Marijuana Legalization” 56). Moreover, if the tax is too high, it may stimulate the black market.
Marijuana legalization naturally increases its use with all its health risks, entailing significant healthcare expenditures. The government will be forced to establish new testing programs, awareness messaging, and control institutions. According to Kilmer, “from mid-2012 through Fall 2014, the Washington State Liquor and Cannabis Board spent about $9 million to develop the proposed regulations” (Marijuana Legalization 5). In addition to tourists, drug legalization also attracts migrants. As of 2015, for instance, the number of citizens in Colorado had increased by roughly 3% since marijuana was legalized for recreational use (Zambiasi and Stillman 10). Such population growth, if uncontrolled, inevitably leads to a shortage of job positions, housing, etc.
At the beginning of 2018, federal authorities rescinded the Cole Memorandum that weakened strict prohibition enforcement in states where marijuana was legal. Although this may potentially help regulate the market, the local laws still differentiate from state to state, ruining the overall macroeconomic balance. Considering that, it might be beneficial for the government to enforce similar laws throughout the country to control the market more effectively.
In conclusion, marijuana legalization has its pros and cons that can greatly affect the economy. It may entail not only financial profits but also losses on federal and local levels. It appears that a uniform drug policy throughout the nation might be a solution to some of the problems. It is crucial for the government to find the middle ground in laws and regulations regarding the matter to counterbalance the financial problems.
Kilmer, Beau. Marijuana Legalization, Government Revenues, and Public Budgets. RAND Corporation, 2016.
—. “The “10 Ps” of Marijuana Legalization.” Ideas, vol. 54, 2015, pp. 52–57.
Saaty, Thomas L. “A Marijuana Legalization Model Using Benefits, Opportunities, Costs, and Risks (BOCR) Analysis.” International Journal of Strategic Decision Sciences (IJSDS), vol. 6, no. 2, 2015, pp. 1–11.
Zambiasi, Diego, and Steven Stillman. “The Pot Rush: Is Legalized Marijuana a Positive Local Amenity?” The IZA Institute of Labor Economics Papers, vol. 1, 2018, pp. 1–24.