Can Marijuana Save the Economy?

By February 10, 2010articles

According to The Economist, the US spends some $40 billion each year on trying to eliminate the supply of drugs.  It also arrests 1.5m of its citizens each year for drug offences, locking up half a million of them.  One in five black American men spend some time behind bars charged with drug offences.

While this opening paragraph could be the jumping off point for a whole variety of arguments in favor of a more relaxed attitude to drugs, the focus of this piece is the monetary cost of regulation.  In his ground-breaking marijuana study, economist Stephen T. Easton estimated that in 2004 the average price of 0.5 grams of marijuana was 8.60 Canadian dollars on the street, while its cost of production was only 1.70 Canadian dollars.  Most of that hefty profit is seen by the underground suppliers as ‘danger money’ – paying them for the risks they take in supplying an illegal substance.  Easton argues that if marijuana was legalized, we could transfer these excess profits caused by the risk-premium from these grow operations to the government.

In California, weed is the biggest cash crop, bringing in roughly twice that earned by milk and cream, the state’s second largest agricultural commodity.  California tax collectors estimate that legalizing cannabis would bring in around $1.3 million in review and get the state’s finances out of ‘the toilet’ some experts claim they are in.  In fact, cannabis is the USA’s largest cash crop, with a production value of $35,803,591 back in 2006.

Opponents, of course, are claiming that the increase in revenue would be at the cost of the state’s society; an legalization of the evil weed, they argue, would see a surge in ‘bad outcomes for both the people who use it and for the people who are in their way at work or other activities.’

We’ll leave the last word to retired Orange County Superior Court Judge James Gray, a long-time proponent of  cannabis legalization.

Judge Gray estimates that legalizing pot and thus ceasing to arrest, prosecute and imprison non-violent offenders could save the state $1 billion a year. “We couldn’t make this drug any more available if we tried,” he says. “Not only do we have those problems, along with glamorizing it by making it illegal, but we also have the crime and corruption that go along with it.”

He goes on to say, “Unfortunately, every society in the history of mankind has had some form of mind-altering, sometimes addictive substances to use, to misuse, abuse or get addicted to. Get used to it. They’re here to stay. So let’s try to reduce those harms, and right now we couldn’t do it worse if we tried.”


Author Dianne Morgan

More posts by Dianne Morgan

Join the discussion 9 Comments

  • Petyer says:

    Any notion that marijuana legalization can help the economy – outside to ending this stupid & costly “War on Drugs” is incredibly naive and mis-guided.

    The whole stupid war started over a mis-guided attempt to oppress minorities (Hispanics) that used the drug.

    Since then it has been overwhelmingly proven to be a total failure by a mis-guided Government.

    In their defeat as handed to them by the People – to step in now and propose a legalized crop “Sin” tax under a betterment of society is unconscionable. To provide more “funds” to this failed & corrupted Beast would be the end of all stupidities.

    Cannibis sativa belongs to no industry or government. Just as Tea (Camellia sinensis & C. assamica) it arrived into its place in history by its own properties and no person or agency should claim exclusive ownership or privilege over it. It should be as free as We should be.

    The only sin in this tax would be the tax itself.


  • ross hopkins says:

    I’m a high as a kite.

    But it really just came to me that legalizing and taxing pot can kill 2 birds with 1 stone. Marijuana can without a doubt be a major cash crop; in any state. Also, I’m willing to bet that a good percentage of the people in jail (that our tax dollars go to; it differs in different areas) are there for having something to do with marijuana. 2birds1stone. Makes sense to me.

  • Ron Warner says:

    Legalized marijuana may not save the nations economy, but it sure could make a big dent in it as well as creat a ton of new jobs. Read my article at and look at the facts about the economics of legalized marijuana.

  • Judy Stanfield says:

    Decriminalize, yes, legalize and regulate and tax, no, no and no! Get the government out of what I choose to smoke or grow in my backyard! I’ve never noticed that taxing something is good-will the money go to teachers or schools? Or will it go to fund the next war? What do they mean by regulation?

    Regulate it how? I’ve always thought the least government involvement the best. The young smokers today who think this is the answer need to think again. Do you want the big medical companies to be the ones with the rights to grow and issue your smoke, just like the cigarette companies or Merck or Abbots labs? Who knows what poisons they have in mind to kill the pests or mildews that sometimes infest the plants?

    I don’t like it, it makes me nervous to think of the government controlling what I smoke and taxing it, when all I want it my small ammount of medical marijuana to ease my aches and pains and help me sleep. What was the old 60’s battles cry? Power to the People!
    Sorry, I just had to give my 2 cents worth.

  • ashley says:

    How can one get the same petition going to have all penalties removed for possession, cultivation, and sale of marijuana in your own state??? It is crazy that you can be a heroin addict, alcoholic, and cocaine addict…but you can loose your children if you step outside and smoke a bowl of herb at the end of your day every now and then????WTF????

  • ashley says:

    How do you get such a petition up to remove penalties for possession, cultivation, and sales of marijuana in your state???
    It is rediculous that you can be a heroin addict, alcoholic, and cocaine addict…but can have your children taken away from you if you step outside and smoke a bowl of herb at the end or your day.

  • catnip farmer says:

    Marijuana can save a whole lot more than the economy. It can heal us of probably 90% of what ails us. It’s a completely natural, completely sustainable source of food, medicine, oil, fabric and I’m pretty convinced the cure for cancer is in there somewhere. It is renewing, anyone can do it, it makes people much more self-reliant than waiting for government handout. It can be used for barter.

    And that’s why the government (past and present administrations) don’t want marijuana legalized.

    PS: Dizzle, I signed your petition. This is all of our fight.

  • Dizzle says:

    Please, support I-1068 to remove all penalties for possession, cultivation, and sale of marijuana in Washington State. We need 241,153 valid voter signatures by July 2, 2010

    Sensible Washington

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