Regulating Cannabis Sales Could Yield Over $17 Billion In Annual Savings And Revenue, New Study Says

Treating marijuana as a legally regulated commodity would yield some $17.4 billion dollars annually in cost savings and new tax revenue, according to an economic report published yesterday by the CATO Institute think tank in Washington, DC.

The report, entitled “The Budgetary Impact of Ending Drug Prohibition,” estimates that taxing the commercial sale of marijuana in a manner similar to alcohol would generate some $8.7 billion in annual revenue. The report further estimates that abolishing marijuana prohibition would additionally yield approximately $9 billion in annual law enforcement savings. Full text of the entire report is available for download here.

A previous 2005 study commissioned by NORML estimated that marijuana law enforcement cost taxpayers some $7.6 billion per year.

A separate California statewide analysis published in 2009 by the state Board of Equalization and Taxation estimated that imposing retail taxes on the commercial sale of cannabis in California would yield approximately $1.4 billion in yearly revenue.

An op/ed in favor of legalization by the CATO study’s co-author, Jeffrey Miron of Harvard University, appears in today’s Los Angeles Times here.

28 thoughts


    When will we push the sales pitch of hemp, it should be a larger argument then all the others. If we dont we can never get the allowance for huge yields of land for hemp production. Thus lowering the cost of raw materials through fuel and building material prices. Good by oil, good by plastic

  2. medical users dont necessarily want full control of how much we use in the hands of the government that has never really respected marijuana as a form of medicine to begin with.

    [Editor’s note: Ummm….the government already ‘controls’ cannabis by prohibiting it, creating the economics of prohibition where a lowly ounce of dried vegetable matter can fetch $250-$500, whether it is ‘medical’ or ‘recreational’.

    The passage of binding voter initiatives that legalize cannabis does not diminish patient access, it enhances consumer choices and patient autonomy from a prohibition-retarded distribution system.]

  3. Pass prop19 and watch california’s enemployment rate go down.No one is even talking about all the jobs the industrial cannabis market will create.

  4. Just more proof that legal cannabis is better for everyone. It’s almost ridiculous their are people that disagree with prop 19. I haven’t heard one good reason to keep it illegal!!!!!!!!!!!!!!

  5. It’s About Time. That People realized that, in the first to third year of revenue sales, that Cali’s debt would be paid off. And that because of this, we are going to see a dramatic turn in the opinions of our congressmen and woman.

  6. Yet another reason why we should end this ridiculous war on “drugs”. Stupid old men in power so set in their ways, unable to admit they have been wrong about pot all these years. What a bummer we have to have these idiots in control of things that affect our daily lives.

  7. Come on Cali All Eyez On You Come Nov.4th Help America get back to America n pave the way for the rest of U.S.

  8. I would hold my nose and vote for prop 19, but it is far from perfect. Taxing any persons right to practice self ownership and to grow a plant is insane. However it is important to get it “legalized” so the dominos can start to fall in other states.

    Justifications for the tax AND for the prohibition both rely on the premise that somebody else owns your body or your wallet, or both. The government’s business model is to intitiate force. Always has been.

    [Editor’s note: In 1996 many cannabis consumers and activists held their nose as they voted for Prop. 215 because of all of the many imperfections (ie, the proposition did not necessarily allow for retail sales and SB 420 had to be passed years later by the legislature to allow for such).

    Prop 215, despite its initial problems and the immense local/state/federal litigation it spawned has worked out fairly well, Prop 19 should be no different in that it truly advances reforms further and faster than the California legislature will proceed.

    If Californians pass Prop 19, and at this juncture it looks like that is likely, the positive effect around the country for cannabis law reform can’t be understated.]

  9. I guess the way to really crack this wall of lies the government built is to give them money and fill their greedy hearts and they will forget the Constructive Fraud placed upon us.
    I say give those unjust greedy wayward employees their money and once we have our liberty restored we can come upon them like those folks in Bell CA.
    We are not stopping this cause until we can grow whatever one of God’s plants we choose. Government has over stepped it boundary and I for one want to see them back in the pen and or back on a chain waitng on us. We will grow Cannabis / Hemp because we have the God given right to do so.
    Look at it this way, the most useful and powerful plant on the planet, given by God and outlawed by foolish humans. Which one stand more of a chance of winning, God or Fools? I’ll go with God and leave the fools to themselves.
    Just Vote Yes to Prop 19 and tear down those walls of injustice, Mr President!

  10. Not only Cannabis can yield $17.4 billion dollars annually, just think how more you can yield with industrial Hemp. Just curious Paul Armentano, once Cannabis do become legalized, how far is it for industrial hemp to also become legalized?

  11. Sorry fellow heads…It’s not enough to replace all the money the privatized penal system, lawyers, judges, law enforcement, rehab clinics, and prison gaurds that true legalization would put out of work…save your seeds, hide your weed.

    [Russ adds: Or as my favorite Clinton, George, once sang on a Hempilation album:

    “There’s more profit in pretending we’re stopping it than selling it.”]

  12. It will be fascinating to watch this play out after Prop 19 passes. Will dispensaries go out of business? Will there be a boom in home growing? Will industrial hemp be automatically legal as well? Will the proposed sales tax still keep legal pot so expensive that a black market will be able to undercut legal prices and still thrive? Will the Feds step in and raid retail outlets or sue the state to keep the law from going into effect?

    Should be fun.

  13. It’s refreshing to see so many comments on the article not only in favor of prop 19, but outright calling the prohibitionist comments. Each probhib comment has multiple replies debunking the standard myths and fear mongering with facts and common sense. I just hope they vote the same way!

  14. “Pass prop19 and watch california’s enemployment rate go down.No one is even talking about all the jobs the industrial cannabis market will create.”

    Passing Prop 19 will have a bigger impact on the California economy then anyone is even recognizing now. It will be far, far more than marijuana sales.

    For the most part, there is no place in the world(!) yet were marijuana is legal, especially with the engine of the CA economy and the huge size of the state. Holland is way too small and expensive; and marijuana is still not really legal there. So if CA legalizes, it suddenly can service the demand from around the world quite affordable to people. If Prop 19 passes you will see people moving and visiting California by the droves. This will not only stabilize California real estate prices, but would most likely create a boost. California would have to build more power plants to keep up with increased demand. Jobs all around would improve due to the increase in population around the state. So we are talking much more than pot sales; so everyone from the banker, to the grocers, to the ‘Wal-Marts,’ to the gas stations, and on and on has more business.

    Entire countries like Mexico are awaiting the outcome of Prop 19 to determine a direction on drug reform. Prop 19 is this huge; and then you got a few seemingly ‘stoner’ patients like “sigh” and “Mike Z” who think they know better.

    Vote Yes on Prop 19!

  15. the US gov and its’ workers, has been, for years, the biggest pusher of legal and illegal drugs on the planet and will continue todo so!

  16. 11. If Cannabis became legal, here are just a few things that would be legal, create jobs, energy and income. Hemp farming would be legal, therefore,turning hemp into fuel, making upholstery, fabrics, insulation in homes, clothing, accessories and most of all Hemp Oil shall be made to cure cancer. Experiments in rats shows that it un-mutates genes that causes cancer. I am a donor, In that case, I am making it known that after I die, I want my body to be donated to Cannabis Science only. Wanna join me?

  17. @15 Jeedi, You’re exactly right about Mexico. Also, Oregon is waiting to see the results as is many other states.

  18. the problem here is the goverment. the goverment can’t see the trees through the forest. pot should be legalized in a heart beat, but why make money when you have tax payers paying high taxes expecailly the poor. makes know sense to me. the people have to get out and vote these bumbs out.

  19. How is it all going to go down?

    Well! proboly like one would buy a pack or carton of cigarettes.

    The tobacco companies, despite their opposition, will grow and package it [like cigarettes], then transport it [like cigarettes] to their distributors, who will sell it like cigarettes. Packaging will be the big deal. Advertising will be as big a deal. Transportation [by the teamsters] will be a big deal. Taxation will be the biggest deal. In the end, we will probobly walk into a liquor store -pick up a pack of cannabis, a 6 pack of beer, and a bag of chips for our munchies. Yeah!!!

    Did anyone think that tobacco and alcohol would allow exclusion from this market? I don’t think so!

  20. My friend and I go to Montana to fly fish each fall. If prop 19 passes this November, we are going to California next year to fish and elevate our consciousness. We both think it would be so cool to be able to purchase quality cannabis and go to the mountains to fish. I think the estimates of the revenue generated by legal weed sales is far understated. I believe a lot of other people will choose California for vacation for the same reason as us.

  21. Keep it illegal , otherwise overnight all the drug dealers inventory will be worthless.

    Where will all the drug dealers work?

    Who will fill the now empty prisons?

    Will we get our freedoms back that were taken to fight the war on drugs?

    I’ve never met an honest person that thinks our current system is working, yet some people do oppose this measure, like lawyers, police and of course hard core drug dealers.

    I would say if you follow the money the biggest opposition is state controlled, weird.

  22. The first step to freedom for mankind, just as our founding fathers put it “Hemp for Victory” this will be the first step towards freeing people from the lust and greed we have created and get us back to what some of our greatest leaders who have been killed fighting for what they know is right! Our own independence, the government doesn’t want you to be able to live on your own (they need us) thats why they made hemp illegal, think of hemp and cannabis as books. Knowledge is Power. Our Government is acting just like Hitler if they can take away something that will give us all we need then they hold the power. They know we can use this for our Medicine, Clothes, Gas, Nutrition, Paper, and Houses.This is not just about creating revenue, this is about creating our own independence. People talk about free or cheap healthcare well here it is. FREE THE WORLD, FREE MANKIND (It’s a Start)

    That is why, We the American People [employers of politicians], are cleaning our house and firing our dirty employees [traitors to our country and our Constitution], especially those embezzlers of our freedom(s).

  24. Read 23 and 24 together [then] read all the other posts with the same message. If one believes it’s a message. If two believe it’s a message. If that number is increased to infinity it’s a message. We hope that these prohibitionists get the message.

    That message is – “stay the fuck out of our private business – and – take your little act down the road – because – no matter where you are at, or how politically incorrect this mandate may be – bullshit walks.”

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