Green Party's View On The Economics Of Legal Marijuana

Two states (Colorado and Washington) have now legalized the sale and possession of marijuana to adults for recreational use, and undoubtably more states will soon follow in the next few years. While this takes the marijuana business in these legal states off the black market (and out of the hands of the drug cartels), it does bring up other questions. Who is now profiting from marijuana sales in legal states -- and what is being done with the tax money received from the sale of marijuana? How large should those profits be, and how should the tax money be used? The Green Party has some views on this, and this is what Green Party Shadow Cabinet member Clifford Thornton wrote on February 3rd:

Activists have fought for drug policy reform for many years. The ideal was based in justice. I wrote an article called “Legalization Without Indemnification is Totally Irresponsible” in 2011. It is painful to begin to see the predictions unfolding and feeling powerless to influence their outcome. There are always winners and losers in life, but with legal cannabis, it appears the winners may be the 1% (including drug warriors) and the losers are minorities, the sick and poor whites. This would continue the economic harms of prohibition.

“Those of us that fought this battle for years are left out in the cold. I can't afford to shop in the stores I helped legalize nor work as the grower I spent the last 25 years learning to be,” wrote Richard Scott Taylor recently in Facebook.  These are people who developed the popular strains of product being sold now for millions. People who are ill cannot afford to purchase the prescription permit or the cannabis itself.

Evan Eisenberg of Students for a Sensible Drug Policy, wrote recently, “The legal cannabis industry is nasty, but what do you expect? I think that legalization came to Colorado (and Washington) due to conservative, libertarian values rather than liberal values rooted in social justice. I think people voted in favor of A64 because they don't see a problem with smoking a joint, not because young black men are being absurdly over-represented in the criminal justice system due to introduction through minor marijuana offenses.

The excitement about inevitable expansion of legal marijuana legalization markets is reminiscent of the California Gold Rush that began in 1848. Of course, the desire of people to enjoy cannabis legally is understandable, but the economic harbingers are disturbing.  At a time when jobs are hard to find, many young activists are excited and see the professional cannabis industry as the opportunity of their lifetimes. It is overwhelming their vision and distorting their political opinions, making Grover Norquist a hero in their eyes.  Licenses for dispensaries are absurdly expensive, putting it out of the reach of most entrepreneurs.  People who have been struggling see a road to prosperity.  But the opportunities are, we fear, already corrupted. An economic disaster could result if this is not carefully considered.

The tax and regulate policies are proving to be irresponsible.  No one is considering how to develop a paradigm to assist the communities that have been damaged by prohibition.  They will be further affected by new laws. Opportunists are euphoric and carelessly seeking ground floor advantage. Even southern “red” states are considering changing these laws, seeing the money involved. They have not pulled back efforts to make marijuana arrests, however.

There are two sides to the economic story: taxation and profit. Use of the tax windfalls must be pragmatic and profits must be dictated by markets, with subsidies for older and ill people.  But, thoughtful people in Colorado are seeing the potential for disastrous consequences - not from the effects of cannabis, but from the massive tax revenue. Is there anything preventing Colorado from using that money to build new prisons (for instance)?

The drug war house of cards is collapsing as far as cannabis is concerned, state-by-state.  I predict that other prohibited drugs will also be legalized for medical purposes before too long.  Awareness is finally coming in regard to the costs of removing potential taxpayers from the economy and tax base to keep them in prison. 

We have taken countless young people out of their communities on drug charges and wonder why they and their contemporaries no longer have faith in our criminal justice system. Society will pay for this perception of injustice for decades to come.

The police chiefs of Camden, Newark, Philadelphia, and Los Angeles (and others) have agreed that parts or most of their cities would collapse financially without the illegal drug trade. It has become the primary source of income.

Drug prohibition reform efforts, while motivated by the massive harms caused by prohibition, are incomplete remedies if limited to criminal justice reform.  What is missing is economic relief for prohibition's victims. Children have lost one or both parents and are left in inadequate family situations.  As this has happened, school community budgets have been cut when they would be more important than ever.  And, as so often happens, the victims are blamed for the dysfunction of their lives.

For example, I live in a residential town with approximately 33,000 people in Connecticut.  We spend over $1.3 million annually to combat illegal drugs.  A town could practically eliminate poverty that exists (hidden) in the town and lower property taxes for struggling middle class people.  Our capital city, Hartford, with a population of over 120,000 spends $174 million to combat what is estimated to be a $41 million illegal drug market.  Imagine the development and tax relief that could be accomplished with that.  With great reductions to our prison system and taxes gained from legal cannabis and hemp, we could balance the budget and fight a true war on poverty with an estimated billion dollars and revolutionize our education system.

Money previously in the black market is now beginning flow into the economy as well as the money being saved in law enforcement.  People who profited from drug prohibition and quickly changing their tune in order to find ways to profit from the legal market. 

We need to avoid a money grab that would line the wrong pockets. People and communities that have been devastated by the war deserve some indemnification for policies that deliberately and negatively targeted them for decades.

Colorado has written into their law that the taxes derived from the legal sale of cannabis be diverted to public education.  That is a noble gesture, but does not go far enough. Also included should be affordable housing and business opportunities for those areas where the only business for decades has been the illegal drug trade.  The war on drugs caused this distorted economic situation and reform policies must correct it.

The only way to direct these funds away from greedy hands of opportunists to the projects needed by our people is to educate the public of the issues. This is a perfect opportunity to develop a plan to reverse poverty and income inequality. With these great savings, we can lower property taxes for the middle class, provide job training, improve education at all levels, provide affordable housing and develop a better health care system.

When discussing the profits from hemp, the story grows even more complicated.  This is changing rapidly.  The media focus on problems of the cannabis use, but the economic issue must be brought under control to benefit the general economy.