Economics of Cannabis Legalization (1994) Detailed Analysis of the Benefits of Ending Cannabis Prohibition
by Dale Gieringer, Ph.D.
Coordinator, California NORML
The Case For Legalization
As drug war hysteria subsides it becomes increasingly certain that there must be a serious re-examination of the laws prohibiting marijuana. The decriminalization of soft drugs has now emerged as an active political issue in Germany, Italy, Switzerland, France and Australia. The policies being considered range from "decriminalization," or repeal of criminal penalties for private use and cultivation of cannabis, to full "legalization," in which cannabis is commercially sold like alcohol, tobacco and other commodities.
Decriminalization has enjoyed impressive support from a succession of official panels, including the Presidential Commission on Marijuana (1973), the California Research Advisory Panel (1990), the National Academy of Sciences (1982), and the Canadian Le Dain Commission (1970). Decriminalization was also officially the policy of the state of Alaska from 1976 through 1990, when it was narrowly overturned in a referendum. The basic appeal of decriminalization is to reduce the harm of criminal punishment and respect personal freedom and privacy, while avoiding offensive commercialization. The basic flaw in decriminalization is that it does not make allowance for pot users who cannot or will not grow their own. The result is to create an illicit black market for cannabis that is neither regulated nor taxed, leaving many of the same basic enforcement problems as prohibition.
These problems can be avoided by legalization, under which cannabis could be legally sold, taxed and regulated like alcohol or tobacco. (It should be noted that legalization need not involve the evils of commercialization, given suitable restrictions on advertising.) The world presently has no example of a completely legalized cannabis market, since this is forbidden by the Single Convention Treaty on Narcotics. The nearest approximation may be seen in the Netherlands, which officially tolerates the possession and sale of up to 30 grams of hashish or marijuana in coffeehouses, although distribution and manufacture are technically illegal and large-scale traffickers are punished. The apparent success of the Dutch in controlling hard drug abuse without a major hashish abuse epidemic has led a league of 15 European cities to endorse the principle of legalized cannabis in the so-called Frankfurt Resolution. An important advantage of legalization is to open the door to taxation of marijuana - a potentially valuable source of public revenue - while eliminating the need for an illegal market.
In the following, we will examine more closely the economics of a legalized cannabis market.