California tax officials say a state proposal to tax and regulate marijuana like alcohol would generate nearly $1.4 billion in revenue. A State Board of Equalization report released Wednesday estimates marijuana retail sales would bring $990 million from a $50-per-ounce fee and $392 million in sales taxes. The bill introduced by San Francisco Democratic Assemblyman Tom Ammiano in February would allow adults to legally possess, grow and sell marijuana. Ammiano has promoted the bill as a way to help bridge the state's $26.3 billion budget shortfall. As the bill is written, the state could not begin collecting taxes under the bill until the federal government legalizes marijuana. – AP
Dominant Social Theme: Pragmatism shall rule.
Free-Market Analysis: Because of California's endless budget crisis, state legislators are trying to figure out new sources of revenue. One is very obviously a tax on the sale of non-pharmaceutical drugs such as marijuana. While it is a bit too much to expect local legislatures to debate legalizing cocaine or heroin, marijuana has been around for thousands of years and it is very debatable as to whether its physiological impact is any better or worse than booze.
Nonetheless, the potential legalization of pot is disturbing in a sociopolitical sense. The American war on drugs itself is a spectacular failure and the idea that marijuana will finally have its day only because of a prolonged statewide fiscal crisis is fairly disheartening. One might wish to see marijuana and, yes, cocaine and even drugs legalized simply because of a social recognition that prohibition doesn't work. But that's not the case. The only reason to legalize marijuana after decades of acrimony is because of its potential ... tax revenue.
None of this should come as a surprise. In the age of the Internet, libertarian arguments are making increasing headway. There is an upsurge of understanding about the Federal Reserve and central banks in general (see other article this issue) and alongside this illumination is a movement to support the decriminalization of so-called victimless crimes. Marijuana, of course, is a good start. Let California legalize pot and perhaps the trend will spread. It is doubtful that the Obama administration will oppose the decriminalization as strongly as the previous Bush administration did.
But there is more to be done. Prostitution is another victimless crime. And the encroachment of various licenses and regulations on the usage of guns in America is another one. While we're at it, the whole idea of differentiating between commercial and "normal" speech ought to be revisited. By utilizing precedent, America's legal system is well down the road toward both gun confiscation and frank censorship.
Drugs are a special problem in America and throughout the Western world. But in America especially and its neighbor next door, Mexico, one can see clearly the destabilizing influence of the drug war. By continually criminalizing the marketplace in drugs, civil authorities only manage to drive up the price, which makes the business exceedingly valuable and increasingly violent. Mexico is now being destabilized by narco gangs much as Colombia was in the 1980s and 1990s.
Conclusion: The violence is a direct result of drug prohibition. Just as American Prohibition created the mafia virtually overnight, the continued prohibition of recreational drugs creates escalating violence. The war on drugs will never be won so long as the market is there. Interdict supplies, and profit and violence escalate. Legalize drugs and regulate them and violence will subside along with the "narco states" they nourish.
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