Tax the weed?

In his report at MSN Money, reporter John Dyer interviews everyone from marijuana sellers to Harvard economists who point out the potential economic benefits of legalizing and taxing marijuana.

David Stein grows marijuana in California as a supplier to the medical marijuana industry. He claims sales of around $1 million annually, and pays about $80,000 in taxes to California, but none the feds.  California collects around $18 million in sales taxes a year from $200 million worth of medical-marijuana purchases, according to data supplied by California’s State Board of Equalization.

According to the FBI’s most recent data, approximately 870,000 people nationwide were arrested on marijuana violations in 2007. Nearly 15 million Americans use marijuana on a monthly basis, according to the latest National Survey on Drug Use and Health. The same study found that more than 100 million Americans had tried marijuana at least once in their lives.

Dyer’s story is replete with interesting pro and con points of the debate. Those include:

PROS
• As more people begin to see the merits in Stein’s logic, that bad rap is changing. While legalization, decriminalization and the medical use of marijuana continue to be debated in terms of public health, lawmakers and policy analysts are increasingly touting the economic benefits of regulating and taxing weed, which the Office of National Drug Control Policy says is the most popular illegal drug in the U.S.

• “In the early 1930s, one of the reasons that alcohol was brought back was because government revenue was plummeting,” Harvard economist Jeff Miron said. “There are some parallels to that now.”

• Miron offers more-conservative numbers, estimating that federal and state treasuries would gain more than $6 billion annually if marijuana were taxed like alcohol or tobacco. At the same time, relaxing laws against use of marijuana would save nearly $8 billion in legal costs, he says.

• In a 2007 study, Jon Gettman, a senior fellow at George Mason University’s School of Public Policy, valued the American marijuana trade at $113 billion annually. Between drug enforcement and potential taxes, the federal government and the states were losing almost $42 billion a year by keeping marijuana illegal, the study indicated.

CONS
• “The argument wholly ignores the issue of the connection between marijuana and criminal activity and also the larger picture of substance abuse,” said David Capeless, the district attorney of Berkshire County in Massachusetts and the president of the state’s district attorneys association. “It simply sends a bad message to kids about substance abuse in general, which is a wrong message, that it’s not a big deal.”

• A 2004 report by the drug policy office said drugs cost Americans more than $180 billion related to health care, lost productivity and crime in 2002. That study lumped the effects of marijuana in with more-dangerous drugs, such as cocaine and heroin.

• Calvina Fay, the executive director of the Drug Free America Foundation, says Gettman, Miron and others fail to account for marijuana’s adverse side effects, from lethargy to impaired driving to tendencies among weed smokers to try more-serious drugs. “Those who are using drugs are less productive than those who aren’t,” Fay said.