The Benefits of Legalizing Marijuana
By Robert Tanner
On November 6, 2012, Colorado passed Amendment 64, which outlined a statewide drug policy for cannabis. This popular initiative ballot measure was an electoral first not only for America but for the world, and is now enacted as Article 18, section 16 of the state constitution. The law approves “personal use and regulation of marijuana” for adults 21 and over, and effectively regulates the drug in a manner similar to alcohol (Amendment 64). Since Amendment 64 was enacted in 2012, the financial and legal benefits of legalization have become apparent, strengthening the argument for regulation of the drug across the nation. This new legislature has proven the legitimacy of marijuana as a source of revenue for both the state and federal government. The enactment has been another example of the inefficiency of prohibition at the national level. Colorado took over a year after passing Amendment 64 to set the rules governing how marijuana will be grown, sold, and taxed. With the whole world watching, they were finally able to decide on the detailed rules, which were implemented January 1st, 2014. Sam Kamin, a professor at the University of Denver who advised Colorado on its regulations, says finding the “sweet spot” for taxation is key. Too low of a tax will result in minimal revenues generated for the government, but pricing too high risks a black market comeback. Kamin is hopeful that the evidence that comes out of Colorado will be able to help California devise its own plan for a regulated marijuana market by 2016. “We’ll have good data on what happens in Colorado by then,” he says (New Laws Chart… TIME). There’s no doubt that other states, as well as the federal government, will be paying close attention to the legislation in Colorado and the effects on the economy. Amendment 64 gave Colorado residents the opportunity to legally purchase marijuana for recreational use, and also gave their government the opportunity to tax the sale of the drug. The state imposed a few different types of taxes, the first being a 10% state sales tax on retail marijuana and marijuana products. There is also a 2.9% existing sales tax, and in Denver there are special taxes which can push the total tax rate up to 21.2%. In addition to sales tax, Colorado legislators put a 15% “retail marijuana excise tax” in place which is assessed on the first sale from a cultivation facility, so not directly charged to the consumer. Despite the varying levels of tax, sales were consistent state wide, totaling to $14.02 million in the first month. Colorado was able to generate $2 million in revenues from sales related to recreational marijuana, $3.5 million including medicinal sales (Erb, Forbes). Considering there are 119.3 million US citizens that have admitted to trying the drug at least once and an estimated 25 million regular users, this could be a huge new source of revenue for the federal government (In US… Gallup). Research shows that approximately $8.7 billion in revenue could be generated annually if marijuana was legalized (Berman, Huffington Post). In 2013, Colorado voters approved a law that requires the first $40 million in revenues to be devoted to school construction (Erb, Forbes). After that threshold is met, the money can be used to benefit housing, transportation, health, law enforcement, or even more support for the educational system. The federal government could even put revenues towards national defense.
Why were the laws against marijuana and other drugs formed? To combat the spread of drugs, the government tried to restrict their influence by making them totally illegal. Our leaders launched a “War on Drugs,” with the noble goal of eliminating these unwanted substances. Although people have become more open-minded about drug legalization, it is worth remembering the climate that existed in the United States in the “Just Say No” days of the late 1980s, when families, communities,...
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