This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ALCOHOL drinking and driving causes over 25,ooo deaths a year. overall 100,000 deaths occur each year due to the
effects of alcohol.Correction: According to the NHTSA web site (nrd.nhtsa.dot.gov/pdf/nrd30/NCSA/RNotes/2006/810686.pdf), there were 43,443 alcohol related traffic fatalities in 2005 in the
USA. As a comparison, AIDS claimed 18,000 lives in 2003.
How can alcohol be blamed for 100,000 deaths each year?
• 5% of all deaths from diseases of the circulatory system are attributed to alcohol. • 15% of all deaths from diseases of the respiratory system are attributed to alcohol. • 30% of all deaths from accidents caused by fire and flames are attributed to alcohol.
• 30% of all accidental drownings are attributed to alcohol.
• 30% of all suicides are attributed to alcohol. 40% of all deaths due to accidental falls are attributed to alcohol.
45% of all deaths in automobile accidents are attributed to alcohol.
• 60% of all homicides are attributed to alcohol. Immediate Health Risks
Excessive alcohol use has immediate effects that increase the risk of many harmful health conditions.
These immediate effects are most often the result of binge drinking and include the following:
• Unintentional injuries, including traffic injuries, falls, drownings, burns and unintentional firearm
injuries.7 • Violence, including intimate partner violence and child maltreatment. About 35% of victims
report that offenders are under the influence of alcohol.8 Alcohol use is also associated with 2 out
of 3 incidents of intimate partner violence.8 Studies have also shown that alcohol is a leading
factor in child maltreatment and neglect cases, and is the most frequent substance abused among
these parents.9 • Risky sexual behaviors, including unprotected sex, sex with multiple partners, and increased risk
of sexual assault. These behaviors can result in unintended pregnancy or sexually transmitted
diseases.10,11 • Miscarriage and stillbirth among pregnant women, and a combination of physical and mental
birth defects among children that last throughout life.12,13 • Alcohol poisoning, a medical emergency that results from high blood alcohol levels that suppress
the central nervous system and can cause loss of consciousness, low blood pressure and body
temperature, coma, respiratory depression, or death.14 Long-Term Health Risks
Over time, excessive alcohol use can lead to the development of chronic diseases, neurological
impairments and social problems. These include but are not limited to:
• Neurological problems, including dementia, stroke and neuropathy.15,16 • Cardiovascular problems, including myocardial infarction, cardiomyopathy, atrial fibrillation and
hypertension.17 • Psychiatric problems, including depression, anxiety, and suicide.18 • Social problems, including unemployment, lost productivity, and family problems.19,20 • Cancer of the mouth, throat, esophagus, liver, colon, and breast.21 • In general, the risk of cancer increases with increasing amounts of alcohol. • Liver diseases, including:
o Cirrhosis, which is among the 15 leading causes of all deaths in the United States.22 o
• Alcoholic hepatitis.
Among persons with Hepatitis C virus, worsening of liver function and interference with
medications used to treat this condition.23 Other gastrointestinal problems, including pancreatitis and gastritis
TOBACCO Smoking Deaths Cost Nation $92 Billion in Lost Productivity Annually or 443,000 deaths each year
are attributed to smoking
CDC!!! • An estimated, 20.8% of all adults (45.3 million people) smoke cigarettes in the United States.4 • Cigarette smoking estimates by age are as follows: 18–24 years (23.9%), 25–44 years (23.5%),
45–64 years (21.8%), and 65 years or older (10.2%).4 • Cigarette smoking is more common among men (23.9%) than women (18.0%).4 • Prevalence of cigarette smoking is highest among American Indians/Alaska Natives (32.4%),
followed by African Americans (23.0%), whites (21.9%), , Hispanics (15.2%), and Asians
[excluding Native Hawaiians and other Pacific Islanders] (10.4%).4 • Cigarette smoking estimates are highest for adults with a General Education Development (GED)
diploma (46.0%) or 9–11 years of education (35.4%), and lowest for adults with an undergraduate
college degree (9.6%) or a graduate college degree (6.6%).4 • Cigarette smoking is more common among adults who live below the poverty level (30.6%) than
among those living at or above the poverty level (20.4%).4 L An estimated 371 billion cigarettes were consumed in the United States in 2006,1 and cigarettes
account for approximately 91% of expenditures on all tobacco products in this country.2 Total United
States expenditures on tobacco were estimated to be $88.7 billion in 2005,2 of which $82 billion were
spent on cigarettes.2
ð Five cigarette companies accounted for more than 90% of all sales in the United States in 2006. 3 They
were Altria Group Inc. (Philip Morris USA; 49.2%), Reynolds American Inc. (27.8%), Lorillard (9.7%),
Commonwealth Brands (3.7%), and Liggett (2.4%).3 Total reported company revenue for the five largest cigarette companies were as follows: Altria Group
Inc. (parent company of Philip Morris USA), $10.4 billion (2005); Reynolds American Inc., $1.2 billion
(2006); Loews Corporation (parent company of Carolina Group, which owns Lorillard), $2.49 billion
(2006); Houchens Industries (parent company of Commonwealth Brands), $2.36 billion (2005); and
Vector Group Ltd. (parent company of Liggett), $52.4 million (2005).4 Altria Group Inc. was ranked 20th,
Loews 145th, and Reynolds American Inc. 280th on the Fortune 500 list of the largest corporations in the
United States in 2006.4
ð In 2005, cigarette companies spent $13.11 billion on advertising and promotion, down from $15.12
billion in 2003,5 but nearly double what was spent in 1998.5 This amounted to more than $36 million per
day,5 more than $45 for every person in the United States,5,6 and more than $290 for each U.S. adult
C Tobacco is grown in 21 states. The largest tobacco producing states are Kentucky and North Carolina,
accounting for two-thirds of tobacco grown in the United States.8 The number of tobacco-growing farms
declined from 512,000 in 1954 to approximately 57,000 in 2002.9
ð United States Tobacco, Conwood, and Swedish Match are the largest smokeless tobacco companies in
the United States, accounting for nearly 90% of total sales.10 Altadis USA and Swisher International Inc.
are the largest cigar companies, accounting for about 60% of total United States sales of large cigars,
cigarillos, and little cigars.11
- In 2005, consumers in the United States spent $2.61 billion on smokeless tobacco products,12 and more
than $1 billion on cigars each year
ð During 2000–2004, cigarette smoking was estimated to be responsible for $193 billion in annual
health-related economic losses in the United States ($96 billion in direct medical costs and approximately
$97 billion in lost productivity).13
– The total economic costs (direct medical costs and lost productivity) associated with cigarette smoking
are estimated at $10.47 per pack of cigarettes sold in the United States.14
¸ Cigarette smoking results in 5.1 million years of potential life lost in the United States annually
Tobacco Management: Optimizing Profits
Bill Maksymowicz and Gary Palmer Crop enterprise budgets developed by the Agricultural Economics
Department at the University of Kentucky indicate that the cost of producing one acre of tobacco,
including fertilizer, pesticides, equipment, structure maintenance, and labor, can range from
approximately $2,600 to $3,300, depending on tobacco type and labor costs. These production costs can
remain relatively constant over a yield range of 2,000 to 3,000 lb/acre.
T here is no magic involved, just the following:
• planning, • following recommended cultural and chemical practices, and • paying attention to timing. Table 1 shows how, when input requirements are held constant, per pound production costs can vary
depending on yield. The difference in net returns between a 2,200 and 2,600 lb/acre yield at an average
selling price of $1.75/lb would be $700! Planning and timing make the difference. Remember: follow the
helpful tips listed here before you set your next crop.
Table 1. Production Cost (per pound of tobacco produced).
Based on direct costs of $2,586, $2,680, and $3,230/acre for burley, air-cured, and dark-fired tobaccos.
Production Cost ($/lb)
(lb/acre) Burley Air-Cured Fire-Cured 2000 1.29 1.34 1.61 2200 1.17 1.22 1.47 2400 1.08 1.12 1.35 2600 0.99 1.03 1.24 2800 0.92 0.96 1.15 3000 0.86 0.89 1.08 MJ
Cannabis has psychoact ive and physiological effects when consumed. The m inim um amount
of T HC required to have a percept ible psychoact ive effect is about 10 m icrograms per
k ilogram of body weight.  Aside from a subjective change in perception, the most common short-term physical and neurological effects include increased heart rate, lowered blood
p ressure, impairment of psychomotor coordination , concentration, and short-term episodic
and working memory.  Long-term effects are less clear.   Classification
Main article: Effects of cannabis#Psychoactive effects
While many drugs clearly fall into the category of either s timulant , depressant ,
hallucinogen, or antipsychotic, cannabis, containing both T HC and CBD , exhibits a mix of
a ll properties, leaning towards hallucinogen properties due to THC being the primary
constituent.    Health issues The smoking of cannabis is t he most harm ful method of consumpt ion, since the inhalat ion
of smoke f rom organic materials such as cannabis, tobacco, and rolling papers can cause
 various health problems. In comparison, study on cannabis vaporizing found that subjects were "only 40% as likely to
r eport respiratory symptoms as users who do not vaporize, even when age, sex, cigarette
use, and amount of cannabis consumed are controlled."
be "a safe and effective cannabinoid delivery system."  A nother study found vaporizers to   Comparison of physical harm and dependence regarding various drugs (the British medical journal The
A 2007 study by the Canadian government found cannabis smoke contained more toxic
 substances than tobacco smoke. T he study determined that marijuana smoke contained 20 t imes more ammonia , and five t imes more hydrogen cyanide and n it rogen oxides t han
t obacco smoke. In spite of this, recent studies have been unable to demonstrate a direct link
between lung cancer and frequent direct inhalation of marijuana smoke. While many
r esearchers have failed to find a correlation,   some researchers still conclude that
 cannabis smoke poses a higher r isk of lung cancer than tobacco. Some studies have even shown that the non-intoxicating ingredient CBD found in marijuana may be useful in
t reating breast cancer.  Cannabis use has been assessed by several studies to be correlated with the development of
  anxiety, psychosis, and depression, however, no causal mechanism has been proven, and the meaning of the correlation and its direction is a subject of debate that has not been
r esolved in the scientific community. Some studies assess that the causality is more likely to
i nvolve a path from cannabis use to psychotic symptoms rather than a path from psychotic
 symptoms to cannabis use, w hile others assess the opposite direction of the causality, or hold cannabis to only form parts of a "causal constellation", while not inflicting mental
  health problems that would not have occurred in the absence of the cannabis use.
Though cannabis use has at t imes been associated with stroke, there is no fi rmly
established link, and potential mechanisms are unknown.  Similarly, there is no established relationship between cannabis use and heart disease, including exacerbation of
 cases of existing heart disease. T hough some f MRI s tudies have shown changes in neurological function in long term heavy cannabis users, no long term behavioral effects
 a fter abstinence have been linked to these changes.
Gateway drug hypothesis
Further information: Gateway drug theory Some claim that t rying cannabis increases the probability that users will eventually use
harder drugs. This hypothesis has been one of the central pillars of anti-cannabis drug
 policy in the United States,
h ighly debated.  t hough the validity and implications of these hypotheses are S tudies have shown that tobacco smoking is a better predictor of
 concurrent illicit hard drug use than smoking cannabis. No widely accepted study has ever demonstrated a cause-and-effect relationship between
t he use of cannabis and the later use of harder drugs like heroin and cocaine. However, the
p revalence of tobacco cigarette advertising and the practice of mixing tobacco and cannabis
t ogether in a single large joint , common in Europe, are believed to be a factor in promoting
 n icotine dependency among young persons investigating cannabis. A 2005 comprehensive review of the li terature on the cannabis gateway hypothesis found
t hat pre-existing t raits may predispose users to addiction in general, the availability of
m ultiple drugs in a given setting confounds predictive patterns in their usage, and drug
sub-cultures are more influential than cannabis itself. The study called for fur ther research
on "social context, individual characteristics, and drug effects" to discover the actual
 r elationships between cannabis and the use of other drugs. The main variant of the gateway hypothesis is t hat people, upon t ry ing cannabis for the
f irst t ime and not f inding it dangerous, are then tempted to t ry other, harder drugs. In such
a scenario, a new user of cannabis who feels there is a difference between ant i-drug
i nformat ion and their own experiences will apply this dist rust to public informat ion about
[ other, more powerful drugs. citation needed Some studies state that while there is no proof for this
gateway theory, young cannabis users should still be considered as a r isk group for
i ntervention programs.  O ther findings indicate that hard drug users are likely to be "poly-drug" users, and that interventions must address the use of multiple drugs instead of
a single hard drug.  Another gateway hypothesis is that while cannabis is not as harmful or addictive as other
d rugs, a gateway effect may be detected as a result of the "common factors" involved with
using any illegal drug. Because of i ts illegal status, cannabis users are more likely to be in
situations which allow them to become acquainted with people who use and sell other
  i llegal drugs. B y this argument, some studies have shown that alcohol and tobacco may
 be regarded as gateway drugs. However, a more parsimonious explanation could be that cannabis is simply more readily available (and at an earlier age) than illegal hard drugs,
and alcohol/tobacco are in tu rn easier to obtain earlier than cannabis (though the reverse
may be t rue in some areas), thus leading to the "gateway sequence" in those people who are
most likely to experiment with any drug offered.  History The use of cannabis, at least as fiber, has been shown to go back at least 10,000 years in Taiwan. Má
(Pinyin pronunciation), the Chinese expression for hemp, is a pictograph of 2 plants under a shelter.
Evidence of the inhalation of cannabis smoke can be found as far back as the 3 rd
m illennium BC as indicated by charred cannabis seeds found in a r i tual b razier a t an
 ancient burial site in present day Romania . T he most famous users of cannabis were the ancient H indus of I ndia and Nepal . The herb was called ganjika i n Sanskrit (8 ‚ !» ª /8 ‚ !» ª
ganja i n modern I ndic languages).   T he ancient drug soma, mentioned in the Vedas as a sacred intoxicating hallucinogen, was sometimes associated with cannabis.  Cannabis was also known to the ancient Assyrians, who discovered i ts psychoactive
 p roperties through the A ryans. Using i t in some religious ceremonies, they called i t qunubu (meaning "way to produce smoke"), a probable origin of the modern word
'Cannabis'.  Cannabis was also introduced by the Aryans to the Scythians and T hracians/ Dacians, whose shamans ( the k apnobatai —“those who walk on smoke/clouds”) burned
 cannabis f lowers to induce a state of t rance. Members of the cult of D ionysus, believed to have originated in T hrace (Bulgaria , G reece and T urkey), are also thought to have inhaled
cannabis smoke. In 2003, a leather basket filled with cannabis leaf fragments and seeds
was found next to a 2,500- to 2,800-year-old m ummified shaman i n the northwestern
  X injiang U ygur Autonomous Region of China . Cannabis sativa from Vienna Dioscurides, 512 A.D.
Cannabis has an ancient history of r i tual use and is found in p harmacological cults a round
t he world. Hemp seeds discovered by archaeologists at Pazyryk suggest early ceremonial
p ractices like eating by the Scythians occurred during the 5th to 2nd century BCE,
confi rming previous historical reports by Herodotus.  O ne wri ter has claimed that
 cannabis was used as a religious sacrament by ancient Jews and early Ch r ist ians d ue to t he similarity between the Hebrew word qannabbos (cannabis) and the Hebrew phrase qené bósem (aromat ic cane). It was used by M uslims i n various Sufi orders as early as the
M am luk period, for example by the Qalandars.  Cannabis became illegal in the USA in 1937 due to M arihuana Tax Act of 1937 . Several
t heories t ry to explain why it is illegal in most Western societies. Jack Herer , a cannabis
legalization activist and wri ter, argues that the economic interests of the paper and
chemical industry were a driving force to make it illegal.    A nother explanation is that beneficial effects of hemp would lower the profit of pharmaceutical companies which
t herefore have a vital interest to keep cannabis illegal.  T hose economic theories were c riticized for not taking social aspect into account. The illegalization was rather a result of
r acism d irected to associate American immigrants of Mexican and African descent with
 cannabis abuse. Today, recreational use in the Western world d rives a sizable demand for the drug.
Cannabis is the largest cash crop i n the United States, generating an estimated $36 billion
m arket.  M ost of the money is spent not on growing and producing but on smuggling the supply to buyers.
The E uropean Monitoring Centre for Drugs and Drug Addiction reports that typical retail
p rices in Europe for cannabis varies from 2€ to 14€ per gram, with a majority of European
 count ries reporting prices in the range 4–10€. T he U nited Nations Office on Drugs and C rime claims in its 2008 World Drug Report that typical US retail prices are 15 dollars per
g ram (approximately $430 per ounce).  Demographics
Further information: Adult lifetime cannabis use by country, Annual cannabis use by country
This section requires expansion. New breeding and cultivation techniques Cannabis plant
Main article: Cannabis (drug) cultivation
It is often claimed by growers and breeders of herbal cannabis that advances in breeding
and cult ivat ion techniques have increased the potency of cannabis since the late 1960s and
early '70s, when Δ -tetrahydrocannabinol was discovered and understood. However, potent
9 seedless marijuana such as " Thai st icks" were already available at that t ime. In fact, the
sinsemilla t echnique of producing high-potency cannabis has been pract iced in India for
[ centuries. citation needed Sinsemilla (Spanish for "without seed") is the dried, seedless
i n florescences of female cannabis plants. Because T HC p roduction drops off once
pollination occurs, the male plants (which produce lit t le THC themselves) are eliminated
before they shed pollen to prevent pollination. Advanced cultivation techniques such as
hydroponics, cloning, h igh-intensity artificial lighting, and t he sea of green method a re
f requently employed as a response (in part) to prohibition enforcement efforts that make
outdoor cultivation more r isky. These intensive horticultural techniques have made it
possible to grow strains with fewer seeds and higher potency. I t is often cited that the
average levels of THC in cannabis sold in United States rose dramatically between the
1970s and 2000, but such statements are likely skewed because of undue weight given to
 m uch more expensive and potent, but less prevalent samples. " Skunk" cannabis is a potent st rain of cannabis, grown through select ive breeding and
u sually hydroponics, that is a cross-breed of Cannabis sativa and C. indica. Skunk cannabis
potency ranges usually from 6% to 15% and rarely as high as 20%. The average THC level
 i n coffeehouses i n t he Netherlands i s about 18–19%. In revisions to cannabis rescheduling i n the UK, the government has rescheduled cannabis
back from C to B. One of the purported reasons is the high-potency cannabis.  A Dutch double-blind, randomized, placebo-controlled, cross-over study examining male
volunteers aged 18–45 years with a self-reported history of regular cannabis use concluded
t hat smoking of cannabis with high THC levels (marijuana with 9–23% THC), as currently
sold in coffee shops in the Netherlands, may lead to higher THC blood-serum
concentrations. This is reflected by an increase of the occurrence of impaired psychomotor
skills, particularly among younger or inexperienced cannabis smokers, who do not adapt
t heir smoking-style to the higher THC content.  H igh THC concentrations in cannabis was associated with a dose-related increase of physical effects (such as increase of heart rate,
and decrease of blood pressure) and psychomotor effects (such as reacting more slowly,
being less concentrated, making more mistakes during performance testing, having less
motor control, and experiencing drowsiness). I t was also observed during the study that the
effects from a single joint a t times lasted for more than eight hours. Reaction times
r emained impaired five hours after smoking, when the THC serum concentrations were
significantly reduced, but still present. The researchers suggested that THC may
accumulate in blood-serum when cannabis is smoked several times per day.
Another study showed that consumption of 15 mg of Δ -THC resulted in no learning
9 w hatsoever occurring over a three-t r ial selective reminding task after two hours. In several
t asks, Δ -THC increased both speed and error rates, reflecting “riskier” speed–accuracy
9  t rade-offs. Various strains of cannabis
Further information: Cannabis strains
There are hundreds of named strains of Cannabis, but their origins (particularly the drug
varieties) are often shrouded in mystery. The names of many legendary strains, such as
Panama Red and Purple Haze, are ubiquitous in the pop-culture, but the origins of some of
t hese infamous strains, such as G-13, are acknowledged to be u rban legends, and some
 people even doubt their existence. St rains of Cannabis:
• Acapulco gold • BC Bud • Cinderella 99 • Chocolate Thai • Panama Red • G-13 • Kush • Northern Lights • Purple Haze • Quebec Gold • White Widow T he names of some strains have become embedded in the mass culture. For example,
 Chocolate Thai ,  w hich was popular in the early 1990s due to its supposed high potency, was adopted as the stage name of a jazz performer whose album T he Real McCoy was
r eleased in 2006.  I t should be noted, however, that because there is no state control over t he production or sale of Cannabis, many "strains" may in fact be just marketing b rands
adopted by d rug dealers t o increase sales.
Main article: Legality of cannabis
See also: Drug prohibition and Drug liberalization 1935 propaganda sheet
Since the beginning of the 20th century, most count ries have enacted laws against the
cultivation, possession, or t ransfer of cannabis for recreational use. These laws have impacted adversely on the cannabis plant's cult ivat ion for non-recreat ional purposes, but
t here are many regions where, under certain circumstances, handling of cannabis is legal or
l icensed. Many jur isdict ions have lessened the penalt ies for possession of small quant it ies of
cannabis, so t hat it is punished by confiscat ion or a f ine, rather t han imprisonment ,
focusing more on those who t raffic t he drug on t he black market.
In some areas where cannabis use has been historically tolerated, some new rest r ict ions
have been put in place, such as t he closing of cannabis coffee shop near the borders of the
 Netherlands, closing of coffee shops near secondary schools in the Netherlands and crackdowns on "Pusher Street" in Christiania , Copenhagen i n 2004.   Some jurisdictions use free voluntary t reatment programs and/or mandatory t reatment
p rograms for frequent known users. Simple possession can carry long p rison t erms in some
count ries, particularly in East Asia , where the sale of cannabis may lead to a sentence of
l ife in prison or even execution.
Cannabis was used as a t ruth serum by the O ffice of Strategic Services (OSS), a US
government i ntelligence agency formed during World War I I. In the early 1940s, it was the
most effective t ruth drug developed at the OSS labs at S t. Elizabeths Hospital ; i t caused a
subject "to be loquacious and free in his impartation of information."  In May 1943, Major George Hunter White, head of OSS counter-intelligence operations in
t he US, arranged a meeting with Augusto Del Gracio, an enforcer for gangster L ucky
L uciano. Del Gracio was given cigarettes spiked with T HC concentrate from cannabis, and
subsequently talked openly about Luciano's heroin operation. On a second occasion the
dosage was increased such that Del Gracio passed out for two hours.  Adulterants
Adulterants in cannabis are less common than in other drugs of abuse. Chalk ( in the
Netherlands) and glass particles (in the UK) have been used at t imes to make cannabis
appear to be higher quality.    I ncreasing the weight of hashish p roducts in Germany w ith lead caused lead intoxication i n at least 29 users.  I n the Netherlands two chemical analogs of Sildenafil (Viagra ) were found in adulterated marihuana.
Wiki  In 2007 the Department of Justice reported that there were 1,841,182 drug arrests in the United States; the
report also stated that there were more drug abuse arrests than any other category of offenses.
Marijuana arrests accounted for 47.4% of the drug abuse arrests. This allows us to estimate that about
872,720 persons were arrested for marijuana offenses. Eighty-nine percent of these arrests were for
possession. The 2007 arrest data is even worse than 2006 when 829,627 people were arrested for
marijuana (a Project Censored’s top 25 story in 2008). In 2005 there were 786,545 marijuana arrests,
meaning that the number of arrests increased by 86K in just two years. Clearly, marijuana is an intense
focus of police interest and activity; far more, apparently, than the less important crimes occurring at the
same time on Wall Street.
The website of theMarijuana Policy Project notes that: “Federal government figures indicate there are
more than 41,000 Americans in state or federal prison on marijuana charges right now, not including
those in county jails. That’s more than the number imprisoned on all charges combined in eight
individual European Union countries.
he Budgetary Implications of Marijuana Prohibition
J une 2005
J effrey A. Miron
Visiting Professor of Economics
Cambridge, MA 02138
The Marijuana Policy Project provided funding for the research discussed in this report.
Daniel Egan provided excellent research assistance. Executive Summary
• Government prohibition of marijuana is the subject of ongoing debate. • One issue in this debate is the effect of marijuana prohibition on government budgets. Prohibition
entails direct enforcement costs and prevents taxation of marijuana production and sale. • This report examines the budgetary implications of legalizing marijuana – taxing and regulating it
like other goods – in all fifty states and at the federal level. • The report estimates that legalizing marijuana would save $7.7 billion per year in government
expenditure on enforcement of prohibition. $5.3 billion of this savings would accrue to state and
local governments, while $2.4 billion would accrue to the federal government. • The report also estimates that marijuana legalization would yield tax revenue of $2.4 billion
annually if marijuana were taxed like all other goods and $6.2 billion annually if marijuana were
taxed at rates comparable to those on alcohol and tobacco. • Whether marijuana legalization is a desirable policy depends on many factors other than the
budgetary impacts discussed here. But these impacts should be included in a rational debate about
marijuana policy. I. Introduction
Government prohibition of marijuana is the subject of ongoing debate. Advocates believe
prohibition reduces marijuana trafficking and use, thereby discouraging crime, improving
productivity and increasing health. Critics believe prohibition has only modest effects on
trafficking and use while causing many problems typically attributed to marijuana itself.
One issue in this debate is the effect of marijuana prohibition on government budgets.
P rohibition entails direct enforcement costs, and prohibition prevents taxation of marijuana
production and sale. If marijuana were legal, enforcement costs would be negligible and
governments could levy taxes on the production and sale of marijuana. Thus, government
expenditure would decline and tax revenue would increase.
This report estimates the savings in government expenditure and the gains in tax revenue
that would result from replacing marijuana prohibition with a regime in which marijuana
is legal but taxed and regulated like other goods. The report is not an overall evaluation of
marijuana prohibition; the magnitude of any budgetary impact does not by itself determine
the wisdom of prohibition. But the costs required to enforce prohibition, and the transfers
that occur because income in a prohibited sector is not taxed, are relevant to rational
discussion of this policy.
The policy change considered in this report, marijuana legalization, is more substantial
than marijuana decriminalization, which means repealing criminal penalties against
possession but retaining them against trafficking. The budgetary implications of legalization exceed those of decriminalization for three reasons. F irst, legalization
eliminates arrests for trafficking in addition to eliminating arrests for possession. Second,
legalization saves prosecutorial, judicial, and incarceration expenses; these savings are
minimal in the case of decriminalization. Third, legalization allows taxation of marijuana
production and sale.
This report concludes that marijuana legalization would reduce government expenditure by
$7.7 billion annually. Marijuana legalization would also generate tax revenue of $2.4 billion
annually if marijuana were taxed like all other goods and $6.2 billion annually if marijuana
were taxed at rates comparable to those on alcohol and tobacco. These budgetary impacts
rely on a range of assumptions, but these probably bias the estimated expenditure
reductions and tax revenues downward.
The remainder of the report proceeds as follows. Section I I estimates state and local
expenditure on marijuana prohibition. Section I I I estimates federal expenditure on
marijuana prohibition. Section IV estimates the tax revenue that would accrue from
legalized marijuana. Section V discusses caveats and implications. II. State and Local Expenditure for Drug Prohibition Enforcement
The savings in state and local government expenditure that would result from marijuana
legalization consists of three main components: the reduction in police resources from
elimination of marijuana arrests; the reduction in prosecutorial and judicial resources from
elimination of marijuana prosecutions; and the reduction in correctional resources from
elimination of marijuana incarcerations. There are other possible savings in government
expenditure from legalization, but these are minor or difficult to estimate with existing
data. The omission of these items biases the estimated savings downward.
To estimate the state savings in criminal justice resources, this report uses the following
procedure. It estimates the percentage of arrests in a state for marijuana violations and
multiplies this by the budget for police. It estimates the percentage of prosecutions in a
state for marijuana violations and multiplies this by the budget for prosecutors and judges.
I t estimates the percentage of incarcerations in a state for marijuana violations and
multiplies this by the budget for prisons. It then sums these components to estimate the
overall reduction in government expenditure. Under plausible assumptions, this procedure
yields a reasonable estimate of the cost savings from marijuana legalization. The Police Budget Due to Marijuana Prohibition
The first cost of marijuana prohibition is the portion of state police budgets devoted to
Table 1 calculates the fraction of arrests in each state due to marijuana prohibition.
Column 1 gives the total number of arrests for the year 2000. Column 2 gives the number
of arrests for marijuana possession violations. Column 3 gives the number of arrests for
marijuana sale/manufacturing violations. Columns 4 and 5 give the ratio of Column 2 to
Column 1 and Column 3 to Column 1, respectively; these are the percentages of arrests for
possession and sale/manufacture of marijuana, respectively.
The information in Columns 4 and 5 is what is required in the subsequent calculations,
subject to one modification. Some arrests for marijuana violations, especially those for
possession, occur because the arrestee is under suspicion for a non-drug crime but
possesses marijuana that is discovered by police during a routine search. This means an
arrest for marijuana possession is recorded, along with, or instead of, an arrest on the other
charge. If marijuana possession were not a criminal offense, the suspects in such cases
would still be arrested on the charge that led to the search, and police resources would be
used to approximately the same extent as when marijuana possession is criminal.
In determining which arrests represents a cost of marijuana prohibition, therefore, it is
appropriate to count only those that are “stand-alone,” meaning those in which a marijuana
violation rather than some other charge is the reason for the arrest. This issue arises
mainly for possession rather than for trafficking. There are few hard data on the fraction of
“stand-alone” possession arrests, but the information in Miron (2002) and Reuter,
H irschfield and Davies (2001) suggests it is between 33% and 85%. To err on the
conservative side, this report assumes that 50% of possession arrests are due solely to
marijuana possession rather than being incidental to some other crime. Thus, the resources
utilized in making these arrests would be available for other purposes if marijuana
possession were legal. Column 6 of Table 1 therefore indicates the fraction of possession
arrests attributable to marijuana prohibition, taking this adjustment into account.
The first portion of Table 2 uses this information to calculate the police budget due to
marijuana prohibition in each state. Column 1 gives the total expenditure in 2000 on police,
by state. Column 2 gives the product of Column 1 with the sum of Columns 5 and 6 from
Table 1. This is the amount spent on arrests for marijuana violations. For 2000, the amount
is $1.71 billion. The Judicial and Legal Budget Due to Marijuana Prohibition
The second main cost of marijuana prohibition is the portion of the prosecutorial and
judicial budget devoted to marijuana prosecutions. A reasonable indicator of this percentage
is the fraction of felony convictions in state courts for marijuana offenses. Data on this
percentage are not available on a state-by-state basis, so this report uses the national
percentage. Data on the percentage of possession convictions attributable to marijuana are
also not available, so this report assumes it equals the percentage for trafficking
In 2000 the percent of felony convictions in state courts due to any type of trafficking
violation was 22.0%. Of this total, 2.7% was due to marijuana, 5.9% was due to other
drugs, and 13.4% was unspecified. This report assumes that the fraction of marijuana
convictions in the unspecified category equals the fraction for those in which a specific drug
is given, or 31.4% [=2.7%/(2.7%+5.9%)]. The report also assumes that the percentage of
possession convictions due to marijuana equals this same fraction. These assumptions
jointly imply that the percentage of felony convictions due to marijuana equals the fraction
of felony convictions due to any drug offense (34.6%) multiplied by the percentage of
trafficking violations due to marijuana (31.4%). This yields 10.9% (=34.6%*31.4%).
The second portion of Table 2 uses this information to calculate the judicial and legal
budget due to marijuana prohibition. Column 3 gives the judicial and legal budget, by state.
Column 4 gives the product of Column 3 and 10.9%, the percentage of felony convictions due
to marijuana violations. This is the judicial and legal budget due to marijuana prosecutions.
For 2000, the amount is $2.94 billion.
The Corrections Budget Due to Marijuana Prohibition
The third main cost of marijuana prohibition is the portion of the corrections budget
devoted to incarcerating marijuana prisoners. A reasonable indicator of this portion is the
fraction of prisoners incarcerated for marijuana offenses.
As with the percentage of prosecutions due to marijuana, state-by-state information on the
percentage of prisoners incarcerated for marijuana offenses is not available. Appropriate
data do exist for a few states, however, and this percentage is likely to be similar across
states. This report therefore computes a population-weighted average based on the few
states for which data exist; it then imposes this percentage on all states. This percentage is
1.0%, as documented in Appendix A. The t hird port ion of Table 2 calculates the correct ions budget due to marijuana prohibit ion.
 Colum n 5 gives the overall correct ions budget, by state. Colum n 6 gives the product of
Colum n 5 and 1.0%, the est imated fract ion of prisoners incarcerated on marijuana charges.
Th is is the correct ions budget devoted to marijuana prisoners. For 2000, the amount is $484
Overall State and Local Expenditure for Enforcement of Marijuana Prohibition
As shown at the bottom of Table 2, total state and local government expenditure for
enforcement of marijuana prohibit ion was $5.1 billion for 2000. This is an overstatement of
t he savings in government expenditure that would result from legalizat ion, however, for two
reasons. Fi rst, under prohibit ion the police sometimes seize assets from those arrested for
m arijuana violat ions (financial accounts, cars, boats, land, houses, and the like), with the
p roceeds used to fund police and prosecutors. Second, under prohibit ion some
m arijuana offenders pay fines, which part ially offsets t he expendit ure required to arrest,
convict and incarcerate t hese offenders. The calculat ions in Appendix B, however, show that
t his offsett ing revenue has been at most $100 m illion per year in recent years at the state
and local level. Th is implies a net savings of crim inal just ice resources from marijuana
legalizat ion of $5.0 billion in 2000. Adjust ing for in f lat ion implies savings of $5.3 billion in
2003.   III. Federal Expenditure for Marijuana Prohibition Enforcement
This section estimates federal expenditure on marijuana prohibition enforcement. There are
no data available on expenditure for marijuana interdiction per se; existing data report
expenditure on interdiction of all drugs, without separately identifying expenditure aimed
a t marijuana versus other drugs. I t is nevertheless possible to estimate the portion due to
m arijuana prohibition using the following procedure:
1. Estimate federal expenditure for all drug interdiction;
2. Estimate the fraction of this expenditure due to marijuana interdiction based on the fraction of
federal prosecutions for marijuana;
3. Multiply the first estimate by the second estimate.
This provides a reasonable estimate of federal expenditure for marijuana interdiction so
long as this expenditure is roughly proportional to the variable being used to determine the
f raction of total interdiction devoted to marijuana. Table 3 displays federal expenditure for drug interdiction. This was $13.6 billion in 2002
(Miron 2003b), and it is the figure that applies for all drugs.   To determine
expenditure for marijuana interdiction, it is necessary to adjust for the fraction of federal
expenditure devoted to marijuana as opposed to other drugs.
Table 3 next shows possible indicators of the relative magnitude of marijuana interdiction
as compared to other-drug interdiction. These indicators include use rates, arrest rates, and
felony convictions for marijuana versus other drugs. For the purposes here, the most
appropriate indicator is the percentage of DEA arrests or convictions for marijuana as
opposed to other drugs.
The data therefore indicate that $2.6 billion is a reasonable estimate of the federal
government expenditure to enforce marijuana prohibition in 2002.
As with state and local revenue, this figure must be adjusted downward by the revenue
from seizures and fines. Appendix B indicates that this amount has been at most $214.2
million in recent years, implying a net savings of about $2.39 million. Adjusting for inflation
implies federal expenditure for enforcement of marijuana prohibition of $2.4 billion in 2003.
 IV. The Tax Revenue from Legalized Marijuana
In addition to reducing government expenditure, marijuana legalization would produce tax
revenue from the legal production and sale of marijuana. To estimate this revenue, this
report employs the following procedure. First, it estimates current expenditure on
marijuana at the national level. Second, it estimates the expenditure likely to occur under
legalization. Third, it estimates the tax revenue that would result from this expenditure
based on assumptions about the kinds of taxes that would apply to legalized marijuana.
Fourth, it provides illustrative calculations of the portion of the revenue that would accrue
to each state.
Expenditure on Marijuana under Current Prohibition
The first step in determining the tax revenue under legalization is to estimate current
expenditure on marijuana. ONDCP (2001a, Table 1, p.3) estimates that in 2000 U.S.
residents spent $10.5 billion on marijuana. This estimate relies on a range of assumptions
about the marijuana market, and modification of these assumptions might produce a higher
or lower estimate. There is no obvious reason, however, why alternative assumptions would
imply a dramatically different estimate of current expenditure on marijuana. This report therefore uses the $10.5 billion figure as the starting point for the revenue estimates
Expenditure on Marijuana under Legalization
The second step in estimating the tax revenue that would occur under legalization is to
determine how expenditure on marijuana would change as the result of legalization. A
simple framework in which to consider various assumptions is the standard supply and
demand model. To use this model to assess legalization’s impact on marijuana expenditure,
i t is necessary to state what effect legalization would have on the demand and supply
curves for marijuana.
This report assumes there would be no change in the demand for marijuana. Th is
assumpt ion likely errs in t he direct ion of understat ing t he tax revenue from legalized
m arijuana, since the penalt ies for possession potent ially deter some persons from
consum ing. But any increase in demand from legalizat ion would plausibly come from casual
u sers, whose marijuana use would likely be modest. Any increase in use m ight also come
f rom decreased consumpt ion of alcohol, tobacco or other goods, so increased tax revenue
f rom legal marijuana would be part ially offset by decreased tax revenue from other goods.
And there m ight be a forbidden fruit effect from prohibit ion t hat tends to offset the demand
decreasing effects of penalt ies for possession. Thus, the assumpt ion of no change in demand
i s plausible, and it likely biases t he est imated tax revenue downward.
Under t he assumpt ion that demand does not shift due to legalizat ion, any change in the
quant ity and price would result from changes in supply condit ions. There are two main
effects that would operate (Miron 2003a). On the one hand, marijuana suppliers in a legal
m arket would not incur the costs imposed by prohibit ion, such as the threat of arrest,
i ncarcerat ion, fines, asset seizure, and the like. Th is means, other t hings equal, that costs
and t herefore prices would be lower under legalizat ion. On the other hand, marijuana
suppliers in a legal market would bear the costs of tax and regulatory policies that apply to
legal goods but t hat black market suppliers normally avoid. Th is implies an offset to the
cost reduct ions result ing from legalizat ion. Fu r t her, changes in compet it ion and advert ising
u nder legalizat ion can potent ially yield higher prices than under prohibit ion.
It is thus an empirical quest ion as to how prices under legalizat ion would compare to prices
u nder current prohibit ion. The best evidence available on this quest ion comes from
comparisons of marijuana prices between the U.S. and the Netherlands. Alt hough m arijuana is st ill technically illegal in the Netherlands, the degree of enforcement is
substant ially below that in t he U.S., and t he sale of marijuana in coffee shops is officially
t olerated. The regime thus approximates de facto legalization. Existing data suggest that
retail prices in the Netherlands are roughly 50-100 percent of U.S. prices. [ 25]
The effect of any price decline that occurs due to legalizat ion depends on the elast icity of
demand for marijuana. Ev idence on t his elast icity is lim ited because appropriate data on
m arijuana price and consumpt ion are not readily available. Ex ist ing est imates, however,
suggest an elast icity of at least -0.5 and plausibly more t han -1.0 (Nisbet and Vak il 1972).
 [ 27]
If the price decline under legalizat ion is m inimal, t hen expenditure will not change
regardless of the demand elast icit y. If the price decline is not iceable but the demand
elast icity is greater than or equal to 1.0 in absolute value, then expenditure will remain
constant or increase. If the price decline is not iceable and the demand elast icity is less t han
one, then expenditure will decline. Since t he decline in price is unlikely to exceed 50% and
t he demand elast icity is likely at least -0.5, t he plausible decline in expenditure is
approximately 25%. Given t he est imate of $10.5 billion in expendit ure on marijuana under
current prohibit ion, this implies expenditure under legalizat ion of about $7.9 billion.
Tax Revenue from Legalized Marijuana
To estimate the tax revenue that would result from marijuana legalization, i t is necessary
t o assume a particular tax rate. This report considers two assumptions that plausibly
b racket the range of reasonable possibilities.
The first assumption is that tax policy t reats legalized marijuana identically to other goods.
I n that case tax revenue as a fraction of expenditure would be approximately 30%, implying
t ax revenue from legalized marijuana of $2.4 billion. T he amount of revenue would be
lower if substantial home production occurred under legalization. T he evidence
suggests, however, that the magnitude of such production would be minimal. In particular,
a lcohol production switched mostly from the black market to the licit market after repeal of
A lcohol Prohibition in 1933.
The second assumption is that tax policy t reats legalized marijuana similarly to alcohol or
t obacco, imposing a “sin tax” in excess of any tax applicable to other goods. I mposing a
h igh sin tax can force a market underground, thereby reducing rather than increasing tax revenue. Existing evidence, however, suggests that relatively high rates of sin taxation are
possible without generating a black market. For example, cigarette taxes in many European
countries account for 75–85 percent of the price (US Department of Health and Human
One benchmark, therefore, is to assume that an excise tax on legalized marijuana doubles
the price. If general taxation accounts for 30% of the price, this additional tax would then
make tax revenue account for 80% of the price. This doubling of the price, given an
elasticity of -0.5, would cause roughly a 50% increase in expenditure, implying total
expenditure on marijuana would be $11.85 billion (=$7.9 x 1.5). Tax revenue would equal
80% of this total, or $9.5 billion. This includes any standard taxation applied to marijuana
income as well as the sin tax on marijuana sales.
The $9.5 billion figure is not necessarily attainable given the characteristics of marijuana
production, however. Small scale, efficient production is possible and occurs widely now, so
the imposition of a substantial tax wedge might encourage a substantial fraction of the
market to remain underground. The assumption of a constant demand elasticity in response
to a price change of this magnitude is also debatable; more plausibly, the elasticity would
increase as the price rose, implying a larger decline in consumption and thus less revenue
from excise taxation. The $9.5 figure should therefore be considered an upper bound.
These calculations nevertheless indicate the potential for substantial revenue from
marijuana taxation. A more modest excise tax, such as one that raises the price 50%, would
produce revenue on legalized marijuana of $6.2 billion per year.
Distribution of the Marijuana Tax Revenue
The estimates of tax revenue discussed so far indicate the total amount that could be
collected summing over all levels of government. In practice this total would be divided
between state and federal governments. It is therefore useful to estimate how much revenue
would accrue to each state, and to state governments versus the federal government, under
Table 4a indicates the tax revenue that would accrue to each state and to the federal
government under the assumption that each state collected revenue equal to 10% of the
income generated by legalized marijuana and the federal government collected income
equal to 20%. This is approximately what occurs now for the economy overall, except that
the ratio of tax revenues to income varies across states from the 10% figure assumed here. The table indicates that under these assumptions, the federal government would collect
$1.6 billion in additional revenue while on average each state would collect $16 million in
additional tax revenue.
These calculations ignore the fact that marijuana use rates differ across states, so
application of identical policies would yield different amounts of revenue per capita. Wright
(2002, Table A.4, p.82), for example, indicates that the percent of those 12 and over
reporting marijuana use in the past month ranged in 1999-2000 from a low of 2.79% in Iowa
to a high of 9.03% in Massachusetts. Table 4b therefore shows the breakdown of revenue by
state under the assumption that tax revenue is proportional to state marijuana use rates. A
third possibility, which cannot easily be examined with existing data, is that revenue by
state differs depending on the distribution of marijuana production. V. Summary
This report has estimated the budgetary implications of legalizing marijuana and taxing
and regulating it like other goods. According to the calculations here, legalization would
reduce government expenditure by $5.3 billion at the state and local level and by $2.4
billion at the federal level. In addition, marijuana legalization would generate tax revenue
of $2.4 billion annually if marijuana were taxed like all other goods and $6.2 billion
annually if marijuana were taxed at rates comparable to those on alcohol and tobacco.
Table 1: Percentage of Arrests Due to Marijuana Prohibition Total Arrests
Poss % /2
* Quoting http://fisher.lib.virginia.edu/collections/stats/crime/2000cb.pdf : “(3) No arrest data were
provided for Washington, DC, and Florida. Limited arrest data were available for Illinois and Kentucky.”
Source: FBI Uniform Crime Reports accessed at http://fisher.lib.virginia.edu/collections/stats/crime/.
Table 2: Expenditures Attributable to Marijuana Prohibition ($ in millions) Police Budget
5,133 Arrest Data: http://fisher.lib.virginia.edu/collections/stats/crime/
Judicial Percent: Pastore and Maguire (2003), Table 5.42, p.444
Budget Data: http://www.census.gov/govs/www/state00.html
Incarceration Percent: Pastore and Maguire (2003), Table 6.30, p.499 Table 3: Federal Expenditure on Marijuana Prohibition, 2002
Prohibition Enforcement, All Drugs $13.6 billion 2.
Marijuana Use Rate, Past Year, 2002 11.0%
Any Illicit Drug Use Rate, Past Year, 2002
Ratio × Line 1
$10.0 billion 6.
Percent of All Drug Arrests for MJ, 2001
Line 6 × Line 1
$6.3 billion 8.
Percent of All Trafficking Arrests for MJ, 2001
Line 8 × Line 1
$3.6 billion 10.
Percent of DEA Drug Arrests for MJ, 2002
Line 10 × Line 1
$2.5 billion 12.
Percent of DEA Drug Convictions for MJ, 2002
Line 12 × Line 1
Line 1: Miron (2003b, p.10).
Lines 2-3: SAMHSA, Office of Applied Statistics, National Survey on Drug Use and Health, 2002, http://
Lines 6 and 8: Sourcebook of Criminal Justice Statistics Online, http://www.albany.edu/sourcebook/1995/
Line 10: Sourcebook of Criminal Justice Statistics Online,
Line 12: Sourcebook of Criminal Justice Statistics Online,
Table 4a: State Marijuana Tax Revenue – Population Method Population
Dist. Columbia 572,059
State Populations: http://www.census.gov/popest/states/NST-EST2003-ann-est.html
Table 4b: State Marijuana Tax Revenue – Consumption Method Use Rate†
†Marijuana Use Rates: http://oas.samhsa.gov/2k2State/html/appA.htm#taba.1
Appendix A: Percentage of Corrections Population Incarcerated on Marijuana Charges
State-by-state data on the fraction of prisoners incarcerated on marijuana charges are not available, but
data for a few states provide reasonable estimates of this fraction. This appendix displays the available
Appendix Table A1
Year % Incarcerated for MJ Violation
0.012 Weighted Average
New Hampshire: http://www.state.nh.us/doc/population.html.
Massachusetts: Miron (2002, pp.4-5).
Appendix B: Revenue Under Prohibition from Seizures and Fines
State-by-state data on fines and seizures are not available. There is sufficient information, however, to
estimate an upper bound on the revenue from fines and seizures. There are also data on federal fines and
The two main sources of federal seizure revenue are the Drug Enforcement Administration (DEA) and the
U.S. Customs Service. In 2002, the DEA made seizures totaling $438 million. In 2001, the U.S.
Customs Service seized property valued at $592 million. These figures overstate revenue since some
defendants recovered their seized property. The Customs seizures overstate revenue related to drugs
because the figure includes seizures for all reasons, such as violation of gun laws, intellectual property
laws, and the like. There may also be double-counting between the DEA seizures and the U.S. Customs
Summing together the two components yields $1,030 million (= $438+$592 million) as the seizure
revenue that results from enforcement of drug laws. This figure must be adjusted downward, however, to
separate out the portion due to violation of marijuana laws as opposed to other drug laws. As shown in
Table 3, approximately 20% of the federal drug enforcement budget is attributable to marijuana, so it is
reasonable to assume approximately 20% of the fines and seizures correspond to enforcement of
marijuana laws. Thus, seizure revenue at the federal level due to marijuana prosecutions is roughly $206.0 million
State and local data on forfeiture revenue are not readily available for all states Baicker and Jacobson
(2004), however, estimate using a sample of states that state forfeiture revenue per capita was roughly
$1.14 during the 1994-2001 period. This implies aggregate state forfeiture revenue of $342 million.
Deflating by 26%, the fraction of all drug trafficking arrests due to marijuana, implies that marijuana
seizures yield $89 million to state governments.
Fines: In 2001, the total quantity of fines and restitutions ordered for drug offense cases in U.S. District
Courts was just under $41 million. Adjusting this by the 20% figure implies $8.2 million from
marijuana cases. Assuming the ratio of state/local to federal fine revenue is similar to ratio of state/local
to federal seizure revenue implies that state and local fines/restitution from marijuana cases is about $3.5
million. PROFESSOR OF ECONOMICS HARVARD
Baicker, Katherine and Mireille Jacobson (2004), “Finders Keepers: Forfeiture Laws, Policing Incentives,
and Local Budgets,” manuscript, Department of Economics, Dartmouth College http://www.ers.usda.gov/amberwaves/september03/features/ustobaccoindustry.htm
View Full Document
This note was uploaded on 06/20/2011 for the course COM 282 taught by Professor ? during the Spring '11 term at Sam Houston State University.
- Spring '11