Reality Check: Marijuana won’t boost economy

Reality Check: Marijuana won’t boost economy
22 comments, 01/03/2009, by , in Opinion
Intro

First and foremost, let me say that I would love to see marijuana legalized in the United States. As a user, with some growing experience, I believe it will be the best thing in the long run for this nation. Let’s continue…Now that I am down from the high – that is, the high I got from hearing that California may legalize marijuana outright and NJ’s attempt at medical marijuana – I realize or at least believe that marijuana will not be that great of a boost to the economy. In fact, I’ll go so far as to say that it’s the worst idea yet regardless of what side your on – for the economy or for legalization. In fact, I believe, if anything, it may be a boost to anti-marijuana groups in the long term when it does NOT work to boost the economy as many expect.

Problem One: Fallacy of Worth

Today, marijuana is the number one cash crop valued at about $40 Billion in the United States alone. No one argues that figure. California alone expects to reap in $1 Billion of that in tax revenues if they are successful at legalizing it. But, anyone with any business acumen, if they think about it carefully, knows that is not true. When gauging the worth of a product, we take in all factors – costs, supply vs demand, taxes, profit margin, etc.

Cost
If we discuss the costs, all one needs to remember is the very reason marijuana is such a high value cash crop is due to prohibition. The fact that it’s illegal drives up the price considerably. Take away the prohibition and the prices plummet from cultivation to trafficking to the final point of sale. No prohibition = no risk = lower operational costs.

Supply vs Demand
Also, it’s a given that growers will not only grow more marijuana but will be less likely to lose crops to DEA/police raids and theft. Factor in the long term potential that marijuana may have foreign suppliers from all over the world. All of this leads to a greater supply and much lower costs of cultivation along with the competition from many different suppliers from around world. Any kid, after a high school economics class, will tell you all about that supply vs demand chart. Granted, once prohibition is lifted, demand will increase but it will be wrong to imagine that competition alone won’t drive down the prices especially if US growers are competing with South Africa or Zimbabwe where you can get damn good landrace sativas for around $20 USD per pound.

Taxes
Califorina Assemblyman Tom Ammiano proposed a fixed tax of $50 per ounce of marijuana. How feasible is this when marijuana prices hit rock bottom? You get more than an ounce of tobacco in a carton of cigarettes which you can buy online for $10-$20. Imagine paying another $50 for marijuana that not only costs considerably less but probably isn’t even rolled for you.

When NY started to increase the taxes on a pack of cigarettes, it opened up a black market. I recently gassed my car at a Hess station off the University Heights bridge and there was a sign stating $7.56 for a pack of cigarettes, “lowest price allowed by law.” You can get the same pack on the street for $4. While I believe in taxation, we need to be equitable and reasonable in taxing policy, something the United States has not done very well intelligently.

All one needs to do is look up information on the 1920 and 1930’s era of alcohol prohibition to understand the TRUE value of marijuana as a cash crop [Wiki].

When [the] repeal of Prohibition occurred in 1933, organized crime lost nearly all of its black market alcohol profits in most states (states still had the right to enforce their own laws concerning alcohol consumption), because of competition with low-priced alcohol sales at legal liquor stores.

We’ve been here before. Let’s not act “new to the game”.

Problem Two: Smoker Beware

As a person with growing experience, I know what it takes to plant, care for, and process marijuana properly. One thing we don’t do as growers is use chemicals in the drying and curing process of marijuana. While I expect that to continue in the short term, in the long term, we WILL have companies like Altria (Phililp Morris/Marlboro) who infest their tobacco products with all kinds of manmade chemicals. This is to be expected if marijuana is actually legalized.

Also, let’s mention the idea that when the regulations hit, the potency will be controlled. As a user and grower, I will NOT be purchasing marijuana when they begin this practice especially when I can grow my own more potent marjuana and it should be legal for me to do so if they’re legalizing marijuana. Or, maybe I’d just get my product direct from the grower. That’s how everyone does it now, technically.

Problem Three: What about hemp?

We’re talking about legalizing marijuana but where’s the conversation about hemp and all of its benefits. It seems as though these politicians are counting on the potheads to rescue the economy without making any mention of the use of hemp as a cash crop. I’d like to assume that if the consumption of marijuana is made legal then also hemp itself, a very low-thc version of marijuana which can be used to produce food, clothing, and a million other things. I just hope my assumption isn’t far from reality.

Problem Four: Greed is always a bad idea

Legalizing marijuana because you think it will be a boost to the economy isn’t a smart reason; it’s a greedy reason. People who are greedy don’t think carefully about the actions they take. While I do believe it will be a boost in the short term as demand will increase faster than supply, in the long term, legalized marijuana will be a huge disappointment.

Legalize marijuana because it’s the right thing to do to repair the backward drug policy that does more harm to the United States than good. Even if people believe marijuana is dangerous, prohibition is a great deal more harmful to society than the substance itself. And I think with the fact that no one has ever died from marijuana use, we can safely assume that it just might be safer than drinking too much water [Water Poisoning].

Anti-marijuana ammo
In forgetting about the safety and benefits of marijuana and ignoring anti-marijuana groups’ concern for the love of money, we may give these fringe groups all the ammo they need to recriminalize marijuana in the future. Why should it be legal if it doesn’t boost the economy? It’s a pitiful backdoor attempt at legalizing marijuana, much like the people who have the audacity to piggy back onto medical marijuana efforts. I am NOT for it. NOT THIS WAY!

One Benefit: Lower Law Enforcement Costs

The greatest benefit of legalizing marijuana is the cost savings associated with the paring down of law enforcement expenditures. I’ve written about this recently [Budget cuts? Police first!]. I’d rather the United States, or California, make the smart decision to legalize marijuana instead of thinking it will be a major boon to the economy.

Perhaps, the short term boost is all this economy requires. But, then what?

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  • Anthony NYC

    The United States has a higher consumption rate than The Netherlands where pot has been legal (or at least tolerated as legal) for years.

  • I think that’s a great point. Naturally, demand and usage would indeed increase. However, with the current tax levy proposal, the question turns to who will supply them – legal stores or black market? It all comes down to competition.

    The fact that it is, or would be, legal puts it all into a sort of limbo because now you can get your marijuana illegally but you can’t penalized. So, it’ll actually be easier, cheaper (potentially), AND safer to buy direct from the grower or dealer. No police officer can get in your face about your usage or bother you about where it came from. It would completely parallel the black market cigarette operation in NYC.

  • Anonymous

    Very interesting debate. I just want to throw this thought in. If the average use is 1 oz./month of marijuana, might that only hold true while debating it as an illegal drug? If it becomes legal, wouldn’t more people feel comfortable using, therefore changing the consumption rate?

    I can’t speak for others, but as an average (mostly) law abiding citizen I don’t use marijuana frequently (at least not since college) in large part because it is illegal and it’s not in my best interests to risk my job, and good standing etc for it.

    I’m sure it was probably similar during prohibition, many upstanding folks probably abstained -most of the time, but with a change in law, those same people probably enjoy a glass of wine with dinner or a beer while watching the game.

    I have a feeling that many more people fall into this category and the number/frequency of usage would increase signifcantly if there was no risk involved.