It's time to recognize that New York City's misguided war on marijuana has failed.

Instead of spending millions on low-level drug prosecutions that disproportionally affect communities of color, why not regulate the city's $1.65bn marijuana market – and use the tax revenues to cut City University tuition in half? Instead of sending kids to the courthouse, let's send them to college.

A new report by my office (pdf) [of city comptroller] found that regulating marijuana sales would raise $400m annually, plus save another $31m by reallocating resources spent on marijuana-related arrests. Regulating marijuana would also offer relief to those suffering from a wide range of painful medical conditions, and make our streets safer by sapping the dangerous underground market that targets our children.

To be clear: under my proposal, only adults age 21 and over would be allowed to possess up to one ounce of marijuana – which would be grown, processed, and sold by government-licensed businesses for recreational or medicinal purposes. There would be strict prohibitions on driving under the influence and marijuana use in public.

The way it stands now, an arrest for the possession of even a small amount of pot can have serious consequences. Those convicted of a marijuana offense cannot receive federal student loans and may have trouble getting a job or housing. Low-level marijuana arrests have skyrocketed during Mayor Bloomberg's tenure and are directly related to New York City's discriminatory stop-and-frisk police tactic, which unfairly targets blacks and Hispanics and has been ruled unconstitutional.

Since Mayor Bloomberg took office in 2002, there have been almost 460,000 misdemeanor marijuana arrests. And while blacks and Hispanics make up 45% of pot smokers in New York City, they account for 86% of possession arrests. The bottom line is that if you're white and smoke marijuana, you're far less likely to be stopped and arrested for it than if you're a person of color.

Under my plan, we'll invest in young people's futures, instead of ruining them. In our study, we estimate that 830,000 people in the New York City metro area have smoked pot in the past year, amounting to about 5oz per person, at $400 an ounce. Why not tax it?

What's more, marijuana is less addictive than alcohol. So, just as prohibition of alcohol was lifted decades ago, why not now do the same for pot?

Mayor Bloomberg has referred to medical marijuana as one of the "great hoaxes of our time". This, despite the fact that the vast majority of medical professionals – 76% of doctors polled recently by the New England Journal of Medicine – say they would prescribe marijuana for relief from certain cancers. What's more, citizens in 20 states and the District of Columbia have now voted to approve marijuana for medical purposes.

To study issues related to regulation, licensing, and implementation, my office is calling for the creation of an inter-agency taskforce of experts from the New York Police Department, Administration for Children's Services, Department of Education, Department of Health and Mental Hygiene, district attorneys, and Department of Consumer Affairs. The taskforce would work with the New York State senate and assembly to pass legislation authorizing implementation of the plan.

This proposal comes on the heels of US Attorney General Eric Holder's announcement that the Obama administration is overhauling federal sentencing guidelines to eliminate mandatory minimum sentences for nonviolent drug offenders. This is a solid step forward, but it does not do enough to resolve the growing conflict between state and federal laws regarding the over-criminalization of marijuana. It's time to implement a responsible alternative.

Let's legalize and regulate marijuana – and use the tax proceeds to help more kids go to college.