What Would Happen if Marijuana Were Decriminalized? A Freakonomics Quorum

Two years ago we ran a quorum debating the pros and cons of decriminalizing marijuana. Since then, a largely theoretical debate has moved quite substantially toward the realm of reality, with a growing number of states and municipalities having changed their laws. The details from place to place vary greatly and are very much a patchwork; the most prominent state to make a move is Massachusetts. The California legislature, meanwhile, is wondering whether marijuana could save its economy — which, as we read just this morning, is badly in need of saving.

Although President Obama doesn’t seem interested, arguments in favor of decriminalization are popping up everywhere, from the Law Enforcement Against Prohibition platform to the senior thesis of a graduating economics major at Brown named Max Chaiken, which finds that “a legally taxed and regulated marijuana market could generate upwards of $200 billion annually in excise tax revenues for the federal government … [which] would be enough to fund Medicaid.”

So we asked a group of people — Paul Armentano, Mike Braun, Joel W. Hay, Jeffrey Miron, and Robert Platshorn — to think about a national decriminalization of marijuana (unlikely, let’s be honest) and answer the following: What would be some of the most powerful economic, social, and criminal-justice effects?

Here are their answers. As you will see, consensus on this issue is now — and will probably always remain — elusive.

Joel W. Hay is professor of Pharmaceutical Economics and Policy in the School of Pharmacy at the University of Southern California.

“It is a fallacy that pot legalization will provide badly needed state and federal revenue through taxation of decriminalized marijuana.”

With all of our current problems, Americans do not need more marijuana. Pot combines mind-altering and judgment-clouding qualities (like alcohol) with carcinogenic, respiratory, and second-hand smoke qualities (like tobacco); it is emphatically not a safe or benign substance. Daily pot smokers have a 30 percent increased risk of accidents, and one study found that more emergency-department trauma admissions were associated with pot use than alcohol. We don’t need hundreds of billions of dollars in new medical-care costs, traffic and other accident costs, reduced worker productivity, and lower educational achievements in an increasingly competitive global marketplace. It is ironic that the public health community, who so vociferously decries the dangers of tobacco with reams of scientific evidence, falls strangely silent when voters in state after state are encouraged by the pot lobby to legalize marijuana specifically as a “medical therapy.” There isn’t a shred of scientific evidence that marijuana is safe and effective for any medical condition. Moreover, THC, the active ingredient of pot, has been approved by the FDA and on the market in capsule form since 1985. As a further irony, while the Obama administration has put $1.1 billion behind scientific comparative effectiveness research to demonstrate whether medical treatments actually work, his Attorney General has decided to downplay federal prosecutions in California of medical marijuana distributors and users, apparently because state voters trump science when it comes to making medical policy for mind-altering substances. It is a fallacy that pot legalization will provide badly needed state and federal revenue through taxation of decriminalized marijuana. A California Assembly decriminalization bill is currently being promoted as a $1 billion pot-tax cure for the state’s fiscal headaches. The problem with this logic, as alcohol and tobacco clearly demonstrate, is that economic costs will increase by amounts far greater than any possible revenue gains. Tobacco taxes only cover about 20 percent of tobacco-related costs, and alcohol taxes only cover about 10 percent of alcohol-related costs. Raising taxes on either tobacco or alcohol enough to merely cover their medical costs and other detrimental effects would create flourishing black markets in these commodities. Raising marijuana taxes high enough to cover medical and other costs associated with legalized pot use will mean both more potheads and continued marijuana narco-trafficking. The final argument against decriminalization is that it would create powerful and legal marijuana business interests who then become entrenched in the system, contributing to politicians, advertising to consumers, and pushing for even more liberal drug laws. Alcohol and tobacco are safe as long as their business interests contribute to pot legalization, and marijuana will be safe after decriminalization as long as their merchants contribute to the inevitable next round of political campaigns to legalize heroin and cocaine.



Robert Platshorn (a.k.a. The Black Tuna) is a former marijuana smuggler and was the leader of one of the largest marijuana-trafficking organizations in the 1970’s.

“For 29 years I lived in 11 prisons, costing you millions, as America’s longest-serving non-violent prisoner of the War on Weed.”

“I’m not against all wars, I’m against dumb wars.” – Barack Obama On May 2, 1979, a New York Times headline read “$300 Million Drug Ring Reported Cracked in Florida.” The “ring” consisted of my two partners and myself. We hadn’t made 10 percent of that, but the government had reasons for turning a couple of small fish into “The Black Tuna Gang.” Those were the early days of the DEA, and they needed to justify their mission and their budget. So for 29 years I lived in 11 prisons, costing you millions, as America’s longest-serving non-violent prisoner of the War on Weed. When Feds kicked in my door, I’d been retired from smuggling for two years. My ice cream and food concessions employed about 50 people. My Miami auto auction, body shop, and barbershop employed another 40. Good jobs and serious tax dollars — all gone in an instant, not to mention my freedom, my wife and children, and the life savings of my parents, who paid for years of fruitless appeals. What was accomplished? The War on Weed that started in the 1970’s discouraged pot smuggling by small timers like me, and filled the void with drug cartels far more interested in the lucrative cocaine trade. Big profits bred violence, enough to make Miami the U.S. murder capital. Today, we see that same prohibition-fueled violence along our Mexican border. Legalizing marijuana would deprive this dangerous black market of profits and relieve a ridiculous burden on taxpayers; it would allow police to focus on serious crime instead of arresting more than 800,000 Americans every year for pot at a cost to taxpayers of at least $14 billion, according to “The Budgetary Effects of Marijuana Prohibition,” which was endorsed by Milton Friedman and more than 500 other economists. One man, Harry Anslinger, was almost singlehandedly responsible for outlawing marijuana. Admitting in private it was harmless, he wanted to create a powerful tool to control “deviant minorities.” Our for-profit prison system continues that work. So, based on lies and distortions, we demonized a plant that’s proven effective in treating chronic pain, glaucoma, MS, arthritis, and the effects of chemotherapy, AIDS-wasting syndrome, and other chronic illnesses. Studies in at least five countries have shown marijuana to slow and often reverse the growth of cancer cells. All this from a plant less toxic than aspirin and less habit-forming than coffee or wine. That’s why I’m working with the NORML and others on a new campaign called Geezers for Medical Weed. I have high hopes that the Obama administration will soon realize that for more than 70 years, the War on Marijuana has indeed been America’s dumbest war.

Jeffrey A. Miron is the director of undergraduate studies at Harvard University’s economics department.

“Marijuana legalization is not a panacea; rather, it is a significant step in the direction of saner drug policy.”

Marijuana legalization would mean repeal of federal and state laws that ban production, distribution, and possession. Legalized marijuana would likely be subject to the kind of regulation and taxation that currently applies to alcohol and tobacco — e.g., sin taxes and age restrictions — but it would otherwise be no different under the law than an espresso at Starbucks. Legalizing marijuana would produce important benefits for the United States. Legalization would allow people who use marijuana, without harm to themselves or others, to do so without fear of arrest or incarceration. This is exactly what occurs now for alcohol and tobacco. Legalization would reduce violence. In underground markets, participants cannot resolve their disputes with lawyers, courts, or advertising, so they employ violence instead. Violence was common in the alcohol industry during alcohol prohibition, but not before or after; in gambling markets before state and federal governments legalized most forms of gambling; and in prostitution markets where prohibition forces these underground. Legalization would also reduce corruption, since producers and consumers would have no reason to bribe police, judges, and politicians. Legalization would allow the medical community to evaluate marijuana’s medicinal effects without interference from law enforcement. Considerable evidence suggests marijuana has important medical uses, but prohibition has made controlled, double-blind studies all but impossible. Legalization would diminish restrictions on civil liberties. Crimes like robbery or assault generate a victim who complains to the police, but neither party to a marijuana transaction wants to alert authorities. Thus police use intrusive tactics like warrantless searches or undercover buys, and the victimless nature of marijuana “crime” encourages racial profiling. Legalization would increase respect for the law. No matter how draconian the penalties and how extensive the enforcement, many people produce and use marijuana. Thus everyone learns that laws are for suckers. Legalization would benefit the public purse. My research indicates that legalization would save federal and state budgets approximately $13 billion in enforcement costs and allow collection of about $7 billion in tax revenues, assuming marijuana were taxed like alcohol and tobacco. One thing legalization would not do is produce a major increase in marijuana use; existing evidence suggests prohibition has only a modest impact. Alcohol consumption declined moderately but not dramatically during alcohol prohibition, for example. A second thing legalization would not do is eliminate the bulk of violence, crime, and corruption induced by drug prohibition, since much of that relates to cocaine, heroin, and methamphetamine. To achieve the full benefits of legalization, policy must legalize all drugs. Marijuana legalization is thus not a panacea; rather, it is a significant step in the direction of saner drug policy.

Paul Armentano is deputy director of the National Organization for the Reform of Marijuana Laws (NORML) and co-author of the forthcoming book Marijuana Is Safer: So Why Are We Driving People to Drink?.

“Our criminal justice policies are alienating millions of otherwise law-abiding citizens while creating widespread disrespect for the rule of law among minorities and young people.”

Last November, U.S. law enforcement made its 20 millionth marijuana arrest since 1965. Yet today, almost 90 percent of teens report that pot is “fairly easy” or “very easy” to obtain, and nearly one out of two graduating high-school seniors admit to having tried it. Clearly it’s time to try another approach. The enforcement of marijuana prohibition is an archaic, overly punitive, and ineffective policy that carries with it a staggering array of social and economic costs. According to the FBI, in 2007 police made a record 873,00 marijuana arrests — 9 out of 10 of them for pot possession, not trafficking, cultivation, or sale. A disproportionate number of those arrested were African Americans and Hispanic males. Some 75 percent of those arrested were under age 30. In short, our criminal justice policies are alienating millions of otherwise law-abiding citizens while creating widespread disrespect for the rule of law among minorities and young people. It’s also costing us money we can no longer afford. According to Harvard University economist Jeffrey Miron, it costs taxpayers at least $7 billion per year to pay for the arrest and prosecution of pot offenders. Taxpayers pay another $1 billion per year to house the estimated 50,000 state and federal inmates serving time for pot, according to data derived from the U.S. Bureau of Justice Statistics. Conversely, a recent George Mason University report estimates that taxing the production and sale of marijuana in a manner similar to alcohol could potentially raise $31 billion in new revenue while reallocating existing police and prosecutorial resources toward more serious crimes. In California alone, data provided by the State Board of Equalization and Taxation — which has endorsed legalizing the adult use of cannabis — estimates that regulating pot would yield over $1.3 billion annually in new state tax revenue. This policy would have the added benefit of removing the production and trafficking of pot out of the hands of drug cartels and other criminal entrepreneurs and placing it under the control of state-licensed establishments — which would operate in accordance to government regulations and community standards. Naturally, critics of this alternative inevitably argue that such a policy would increase Americans’ use of pot — an outcome that they believe negates the social, economic, and criminal justice benefits that would be associated with regulating cannabis like booze. NORML disagrees on both counts. First, the use of pot by adults is objectively safer to the individual, and to society as a whole, than the use of either alcohol or tobacco, whereas the continued criminal prohibition of pot causes innumerable and far greater harms. Further, the great irony of our existing policy is that nearly half of all Americans — including our nation’s three most recently elected U.S. presidents — have used, and many continue to use, pot despite the imposition of prohibition. Would this percentage be even higher if marijuana were legalized? Possibly, but not likely. As noted in the opening paragraph, almost every U.S. teen (or adult for that matter) can already access pot if he or she wants to. Yet despite this practically unfettered access — many surveys now indicate that it’s harder for young people to acquire booze than weed — many Americans choose never to try marijuana, and most are not regular users. Similarly, in the Netherlands, where the sale and use of marijuana is legal to those over age 18, the use of pot by the Dutch is far less common than in America. In short, the use of marijuana is not for everybody — or even most people — and that fact is not going to change, regardless of American pot policy.

Mike Braun recently retired from the U.S. Drug Enforcement Administration (DEA) as the Assistant Administrator and Chief of Operations.

“Is it O.K. with you if the government or corporate America opens a marijuana distribution center in your neighborhood, or should they only establish them in the economically depressed areas of town?”