In recent years, there has been pressure on state legislatures throughout the United States to decriminalize or legalize possession and use of cannabis. This has also been in relation to passing laws that permit smoking of the cannabis plant also known as weed, reefers, Mary Jane, joint, pot, ganja, grass and marijuana for prescribed medical purposes known as medical marijuana. An analytical aspect of marijuana legalization is on its effect on the supply and demand. Prohibition imposes a risk on marijuana consumption and production. Legalization minimises this risk. As more growers switch to the crop, jobs will be created and demand and supply is predicted to surge. However, the government can regulate increase in supply by imposing a sizable tax on production, which would increase production cost and control demand.
Jeffrey Miron (2005) study indicated that, more than 500 economists, led by Nobel laureates Vernon Smith, George Akerlof and Milton Friedman support the legalization of marijuana. They agree that, like tobacco and alcohol, the legalization of marijuana can create considerable public savings and generate substantial tax revenues for the local, state and federal governments. Miron (2005), shows that the government can create revenues from switching prohibition with a system in which marijuana is legal, but regulated and taxed like other goods. He estimates that legalization can generate $6.2 billion annually if taxed like tobacco and alcohol. Adjusting this amount for inflation, the annual tax revenues distends to $8.9 billion.
Miron also argues, that prohibition involves direct enforcement costs. If marijuana were legal, government spending would decline in law enforcement and imprisonment sectors, including judicial, legal and police protection systems and corrections. He estimates that the legalization of marijuana would save up to $7.7 billion per year in government spending to enforce prohibition. Adjusting this amount for inflation, public savings expands to $11.1 billion annually. This benefit is allocated as follows; $7.7 billion (69.3%) for legal and judicial systems, $813 million (7.3%) for corrections and $2.6 billion (23.4%) for police protection. Of the total public savings of $11.1 billion, $7.6 billion (68.5%) can be accredited to local and state governments and $3.5 billion (31.5%) go to the federal government.
Legalization of marijuana would therefore be an impeccable addition to the stabilization of the economy, creation of jobs and reducing the strain on law enforcers.
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