4/20 might be the right time to consider legalizing marijuana, but tax revenue will be the reason

The Father of Our Country definitely grew hemp, but it's the dollar bill that will likely bring in the legalization of hemp, and marijuana.

A BUZZFLASH NEWS ANALYSIS
by Chad Rubel

You might know today is 4/20 Day, the day to celebrate marijuana and cry out -- similar in vein to the Island of Misfit Toys in "Rudolph the Red-Nosed Reindeer" - that this might be the year marijuana becomes re-legalized. April 20 is the date represented by 420 -- the unofficial code for smoking pot.

But while those who are in favor of the legalization of marijuana are usually thwarted -- just like the toys on that island -- this year might be the time something finally gets done.

Have conservatives finally seen the light of lighting up? No, it's more practical -- as in "how much money can we make to make marijuana legal and tax it, because we need the money."

How much money can we make from legalizing marijuana and then taxing it? The estimates are in the billions.

Legalizing marijuana "won't change the economic climate of America overnight," said Paul Armentano, deputy director of National Organization for the Reform of Marijuana Laws (NORML). "But particularly at the local and state level, it would make a difference."

A June 2005 report by Dr. Jeffrey Miron, visiting professor of economics at Harvard University, cited an increase of $10-14 billion for combined savings and tax revenues. In that model, the system of taxation and regulation of marijuana would be similar to that used for alcoholic beverages.

While this is a conservative estimate, it should be noted that the report is endorsed by more than 530 distinguished economists, including Milton Friedman.

The report does include a reduction in criminal costs, though Armentano points out that law enforcement costs are fixed, and if marijuana were legalized, they would reapportion costs to more serious crime.

George Mason University professor Jon Gettman in 2007 came up with a different figure: $31.1 billion in annual savings. Gettman based this figure on the marijuana market being at $113 billion per year, using Office of Management and Budget standard tax percentages. 

But these are just federal numbers. The difference could lie in state revenue.

Armentano noted that with California's $40 billion debt, a $14 billion increase due to tax revenue from legalized marijuana would make a huge difference. And this is in a state where medical marijuana is already legal.

"There are over 400 retail outlets in California right now," said Armentano. "They pay taxes on sales and payroll taxes."

Even in the City of Oakland, CA that already licenses and regulates four dispensation centers, a proposed tax hike was supposed to bring in an extra $400,000.

Then there is the potential hidden advantages to stimulating the economy: rolling papers, bongs and other glass works, and of course, the manufacturer of brownie mixes and junk food sources.

These numbers sound good, but is there a hidden costs to legalizing marijuana? If alcohol and tobacco use decreases as a result of legalized marijuana, there is an argument that these streams of tax revenue might be reduced.

"I'm less convinced that there would be a spike in marijuana users," said Armentano, though he noted that those who use might use more.

But alcohol and tobacco sales aren't likely to go down because it's not like people who want to smoke marijuana are relying on alcohol and tobacco, since marijuana is pretty easy to get if you want it.

According to investigators at the University of Michigan's Institute for Social Research, the reason for not using or stopping marijuana use cited by the fewest seniors over the 29 years of data was availability (less than 10 percent of seniors).

Those who are still on the fence -- who wave the moral flag -- may not think the costs are worth taking the plunge of legalization. But in studies about the costs of gambling, the cost/benefit ratio is much worse, and somehow, gambling ends up being legalized.

During the Great Depression, alcohol was brought back into the limelight of legitimacy. Perhaps in this depressive recession, the time is right for marijuana -- 4:20 to be exact.

A BUZZFLASH NEWS ANALYSIS

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