Show me the money: Taxing pot
Chopping costs is only part of the equation, though. Harvard's Miron also estimates that state, local and federal governments could collect about $8.7 billion annually in revenue if marijuana was "taxed at rates comparable to those on alcohol and tobacco." (Miron's study, "The Budgetary Impact of Ending Drug Prohibition," was co-authored by Katherine Waldock.)
After Miron's first estimate appeared a few years before, the Marijuana Policy Project, an advocacy group, pointed out that just one year's savings could pay the $7.3 billion tab for all port security measures required by the Maritime Transportation Security Act of 2002 at 3,150 port facilities around the nation. More than 300 economists, including several Nobel laureates, signed a letter to then-President George W. Bush calling for an open debate about ending marijuana prohibition in favor of a legalized, regulated market.
A combined $17.4 billion a year in revenue and savings from enforcement sounds like a lot. But it's actually fairly modest, once it's split among 50 states and the federal government, says Miron, who cautions that his figures are "ballpark estimates." "It's hardly a solution to the world's fiscal woes," he says.
Consider Oakland's reefer experience. The Bay Area city, like many cities nationwide, has been struggling. "We've had to cut down on things," says David McPherson, Oakland's chief administrator for revenue. Roads aren't getting repaved as often. Municipal computers aren't getting replaced. City worker unions not long ago had to contribute $40 million to $50 million in givebacks in furloughs and other sacrifices.
But medical marijuana has been one bright spot. Over eight years, the city's tax on marijuana -- today it's $50 on every $1,000 sold -- has brought in "just shy of $3.4 million" over eight years, says McPherson.
"Our general fund revenue is about $420 million, so when you look at the big picture, it's not a lot," he says. But that money each year "keeps a library open a little longer; it picks up trash in a park." In other words, in this day and age, every little bit helps.
And there are indirect benefits, too, McPherson says: "The industry is also employing accountants, security guards, lawyers, renting buildings -- and we have a tax rate on commercial landlords, so there's the benefits of that." Not long ago, the Oakland City Council agreed to double the number of dispensaries it licenses, to eight.
(In 2010, the council decided against a plan to create several large marijuana-growing operations in the city -- but not until state and federal authorities warned that the private ventures would run afoul of California and U.S. laws.)
Some proponents imagine legalization creating a host of spinoff companies and associated businesses that would also boost the economy. In a 2009 study, Dale Gieringer, the director of advocacy group California NORML, who has studied the impacts of legalization, wrote: "A legal market would generate additional benefits in the form of tourism and spinoff industries, such as coffee shops, paraphernalia and industrial hemp. A comparable example would be California's wine industry, which generates $51.8 billion in economic activity, according to the Wine Institute."
Some states might encourage marijuana tourism. "You could have pot resorts, bed and breakfasts," Gieringer said in an interview. Call them wake 'n' bakes.
But Miron is dubious that legalization would create a huge surge of jobs and businesses. After all, "the people who work in the pot economy currently have jobs," he says -- they're just not aboveboard. As for Amsterdam-like coffee shops? Miron doubts that thousands would flourish across the land. Or if they do, "it's just going to replace Starbucks."
