TAX NEWS - 2010

US Tax: Drug Legalization Would Reduce Tax Revenue, Increase Consumption

The Daily Caller reports a new study by the Rand Corporation finds the legalization of recreational marijuana use in California could sharply reduce prices for the drug…and the tax revenues touted by proponents of drug legalization.

The report, aptly titled "Altered State? Assessing How Marijuana Legalization Could Influence Marijuana Consumption and Public Budgets," found that prices for legal pot could drop as much as 80%, from $375 per ounce today to $38 an ounce. That would drastically undercut the theoretical tax revenue drug legalization proponents are using to seduce Californians. Even with a fixed-rate-per-ounce tax, the study found this could result in production of smaller quantities of high-potency marijuana…which would still bring in less revenue than the rosy pro-drug projections.

At best, this is likely to result in what was seen in South Dakota with the legalization of gambling. Gambling was supposed to be a huge cash cow that would leave South Dakota rolling in money. The reality, which was found by a study done by a Colorado group several years ago, was that legalized gambling was a wash, financially speaking: when you considered the additional cost of gambling addiction treatment, legal costs of dealing with the increased crime perpetrated to feed gambling habits, etc., the state was no better off. We did have a lot more wrecked homes and families due to parents struggling with gambling addictions, though.

The study found another wonderful (if you think being stoned is wonderful) result of legalizing marijuana: more stoned people, perhaps stoned more of the time.

From the Rand release:

Past research provides solid evidence that marijuana consumption goes up when prices go down, but the magnitude of the consumption increase cannot be predicted because prices will fall to levels below those ever studied, researchers say. Consumption also might rise because of non-price effects such as advertising or a reduction in stigma, researchers say.

The study found that even under a scenario with high taxes and a moderate rate of tax evasion (gasp – that drug dealers and users might evade paying their taxes? The horror!), there could be consumption rate increases of 50% to 100%…or even more.

Having more intoxicated people intoxicated more of the time would just make society such a much better place, wouldn't it?

Even with only legalization of marijuana for "medical" use, California has found that, despite the claims of pro-drug advocates, crime has not disappeared. They have new robberies and murders to deal with. They also have school children getting pot–even though the drug is only supposed to be available to "medicinal" users. And let's not forget the wholesome "pot prize" events which really elevate quality of life in the community.

With firebombings, murders, robberies and massive prescription fraud, Montana is learning a similar lesson about legalizing marijuana, even for "medicinal" use.

The mental health issues and other health problems that come with drug use, as well as the prevalence of intoxication with crime rates, and South Dakota's existing problem with youth drug use, we simply don't need more of that in our state. Let's hope the voters realize that in the November election.