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Dollars and Sense

A Harvard professor crunches the numbers of pot prohibition

By Paul Rogers

Most of us are already aware that America’s marijuana prohibition is expensive to enforce—but




A Harvard professor crunches the numbers of pot prohibition

By Paul Rogers

Most of us are already aware that America’s marijuana prohibition is expensive to enforce—but we would struggle to quantify this. It’s clear that all those pot busts incur vast police, judicial and correctional costs, and that prohibition also blocks a potential cannabis tax bonanza, but just what are the financial realities? Dr. Jeffrey A. Miron, Visiting Professor of Economics at Harvard University, aimed to find out with his 2005 paper The Budgetary Implications of Marijuana Prohibition (commissioned by the Marijuana Policy Project) and forthcoming Cato Institute report The Budgetary Implications of Legalizing Drugs (co-authored with NYU’s Katherine Waldock).

Miron’s findings include state-by-state breakdowns of marijuana prohibition arrests and related costs; federal expenditure on prohibition; and potential marijuana tax revenues. His more recent report indicates that legalizing pot would save $8.7 billion per year in government expenditure (state and federal) and yield tax revenue of $8.7 billion annually (assuming marijuana was taxed at rates comparable to those of alcohol and tobacco).

In short, America could be over $17 billion better off each year if the herb was legal.

And these are just the fiscal downsides of prohibition, according to Miron, an outspoken libertarian who regularly appears on TV news and discussion shows. “[There’s] a whole set of ancillary costs from prohibition that include corruption, violence (because disputes in underground markets get resolved with violence) and a sort of changing attitude towards medicinal use because federal authorities are very concerned that medicinal use might lead to casual use . . . So people who use marijuana for medicinal purposes do not have the same access and we don’t have the same quality of research that we’d have if marijuana was legal.”

Miron’s reports point out that the budgetary implications of legalization exceed those of decriminalization, because legalization eliminates arrests for trafficking (which result in the bulk of prosecutorial/judicial/incarceration expenses) rather than just those for possession, and further it allows for the taxation of pot production and sale. So he welcomes California-style marijuana medicalization (which many view as de facto decriminalization), but only as a step on the road to full legalization.

“[Medicalizing] certainly allows some of the market to come above ground; it allows some of the people who want to use marijuana to do so with reduced or little fear of being arrested . . . but it’s a somewhat murky thing; it’s kind of a partial message.

In effect, there’s a tacit truce between governments that decriminalize pot and the many different opinions amongst the voters they aim to appease. “From a political perspective . . . decrim[inalization] as practiced in places like the Netherlands and Portugal might be the sensible compromise, because it allows people to believe it’s still illegal, even though in practice it’s pretty close to being legal,” says Miron.

“I think what happens when places decriminalize, de facto, they actually also move in the direction of fully legalizing. They don’t impose the penalties for production and distribution with the same vigor; they kind of engage in some benign neglect —and so decrim is kind of a kinder, gentler word for de facto legalization. If you say ‘legalization’ a lot of people get really upset.”

Miron acknowledges that revenue from pot prohibition fines and seizures would disappear with legalization (though he estimates this to be in the hundreds of millions of dollars and, therefore, far from offsetting the costs), but he dismisses the idea that lifting prohibition could result in Americans becoming less productive and thus negatively impacting the economy.

“If those views were accurate, we would have seen that sort of thing happen in the Netherlands, we’d have seen it in Portugal. We basically would have seen it happen in California, where certainly almost anyone who has any desire to sit around and smoke pot all day can usually get access to it . . . I just don’t think there’s any evidence to support that and also common sense doesn’t support that. If the species was that easily deviated from being productive, human beings would have died out long ago, because the stuff has been available for millennia!”

For more on Miron’s findings, go to