Marijuana Legalization 2012: Cost and Future implications

In one of our previous articles, we wondered whether Marijuana legalization was losing popularity. Well, after the voting results from November 6th, it’s pretty obvious that it’s not. And especially not in Washington or Colorado.

This year, over one third (eighteen states) of the states of America legalized the use of medical marijuana, and two states legalized recreational use of pot.

So legalized recreational pot–what exactly does that mean? What are the economic implications? (i.e. How much money will the government make out of this?) What does it mean for California? And most importantly, what comes next?

What does legalized marijuana in Colorado and Washington mean?

Colorado and amendment 64

Amendment 64 allows allows adults 21 and older to purchase up to one ounce of marijuana from specialty marijuana dispensaries and grow up to 6 marijuana plants in their homes with a licence. It also allows marijuana to be taxed and regulated similar to alcohol and tobacco and gives state and local governments the ability to control and tax the sale of small amounts of marijuana to adults age 21 and older.

Washington and I-502

I-502 allows for state-licensed marijuana growers, processors and retail stores, where adults over 21 can buy up to an ounce of pot. Customers could buy up to an ounce of dried marijuana; one pound of marijuana-infused product in solid form, such as brownies; or 72 ounces of marijuana-infused liquids. The act also sets a limit on the THC blood levels for driving, but bans growing for personal, non-medical use.

Higher and Richer

America may be a lot higher with legalized marijuana, but she’s probably going to be richer too. Although this may not seem like the ideal way to reduce the state deficit, to some, there’s no doubt that marijuana legalization is expected to bring in millions of dollars. After all, the illegal marijuana industry itself is worth $36 billion a year. See California drug statistic infographic

  • The U.S. would save 13.7 billion a year on prohibition enforcement costs.
  • In Colorado, state analysts estimate marijuana will bring in 5 to 22 million a year, and one economist projects a $60 million boost by 2017.
  • Washington state analysts expect a $2 billion profit from tax revenue over 5 years.

Although this amount is nothing compared to the $1.5 trillion dollar federal deficit, the economic benefits aren’t too small to be ignored. 

What does Marijuana Legalization mean for California?

Although no legalization measures reached California’s ballots this year, you can be certain that legalization efforts will return with full force. Buoyed by the two wins in California and Washington D.C., Ellen Komp, direction of California NORML (National Organization for the Reform of Marijuana Laws), told SF weekly that it’s only a matter of time before legalization reaches California.

But perhaps she spoke too soon. . .

Will the Feds Intervene?

Marijuana is still classified as a Schedule I drug by the Drug Enforcement Administration, which means its still considered illegal. Although November 6th was a huge victory for legalization advocates, the federal-state impasse over marijuana regulation is turning the victory song into a prelude of tension and apprehension. With the power to “make it or break it,” the expected response from the federal government makes all the difference in the world.

So if the federal government decides to step in and make exactly the same number of arrests as the state has been making before, the effect on marijuana prices or use may not change much. And so far, the President is not in favor of legalization, as evidenced by the failure of Proposition 19 in California. However, the justice department has remained suspiciously silent on this issue thus far.

So what’s going to happen? Despite rumors and guesses and vehement opinions, nobody knows for sure. Marijuana advocates (and non-advocates) are holding their breaths awaiting the federal government to respond.

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