Tom Coale: Cut Waste, Increase Revenue, Legalize Marijuana

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By: Tom Coale

Regardless of what cuts Governor Hogan and the legislature agree to this year, inertia and lack of political courage are likely to protect one obvious instance of waste: the remnants of Maryland’s war on weed.  This is despite the fact that marijuana is a drug that most Americans, and most Marylanders, believe should be legal.  While enforcing prohibition, black markets have flourished, lives have been ruined, and Maryland has fostered a “criminal class” of unemployable workers who often cycle back into the drug trade due to a lack of alternatives.  Our unenthusiastic war on drugs works as a dull tool to fight crime, in the most ambiguous understanding of the word, and costs Marylanders more than they may be willing to pay considering the minimal benefits received.

We are putting far too many people in jail, and spending far too much money, for criminal laws that do far too little for public safety.  We’re warehousing the poor and uneducated in the name of “criminal justice” when neither word applies to the underlying acts. Nearly half a million Americans are in prison across the country for drug crimes.  The United States spends approximately $15 billion a year on drug law enforcement with localities estimated to pay an additional $25 billion. If any one of us was asked why we imprison the average drug offender, our only answer would be the rather empty “because it’s against the law.”  But why is that so?

And that question is all the more puzzling when it comes to marijuana.  A 2010 article in the medical journal Lancet reported that marijuana is objectively less harmful than alcohol on just about any measure of comparison.  The most dangerous aspects of drug use relate more to the black market it enables and the criminal element attached thereto.  By continuing the structure of prohibition, Maryland pays for enforcement and incarceration, and yet has nothing to show for it but a thriving black market of untaxed and unregulated sales.  More importantly, while foreign to the privileged classes who affect government policy, we have mothers visiting their sons behind bars, for years at a time, simply because we think marijuana is something we would be better off not consuming.

Public opinion is breaking strongly in favor of legalization and the change has been drastic.  A Gallup poll from 2004 showed only 34% of Americans supporting legalization, which has since increased to 51% in 2014 (after topping out at 58% in 2013).  A March 2014 Goucher poll shows that 50% of Marylanders support full legalization with only 34% opposing.

Maryland lawmakers seem to sense the change in attitudes, but don’t appear ready to make a full switch.  In 2014, Maryland became the 18th state to decriminalize the possession of small amounts of marijuana with bipartisan support in the state House and Senate.  While this was an important step towards curtailing the friendly-fire “war on drugs”, it left far too many unkempt strings: possession remains a civil offense, anything over 10 grams still prompts jail time, and the now decriminalized substance still flows through unregulated criminal syndicates to get from plant to consumer.  And marijuana use is still a prompt for police-citizen confrontation, which should be minimized as a matter of public policy regardless of fault.

This discussion needs to focus on good policy instead of good behavior.  Governing in absolutes, such as outright prohibition, heightens the stakes of the underlying act, even when the decision to use is a matter of personal discretion. At the end of the day, that behavior is of little concern to the state.  We impose punitive taxes on tobacco, but are ambiguous about the choice to smoke.  We take away the licenses of drunk drivers, but leave the decision of adults to drink untouched until they get behind the wheel.  We don't prohibit either activity outright and then enforce them in racial biased ways. We should treat marijuana in the same way: a vice, perhaps, but one to be regulated, not banned.  Let's not give Al Capone an empire anymore.

Maryland has much more to gain than lose in bringing this trade into the light, regulating it as a legitimate business, and putting tax revenue towards building a better state.  As Colorado and Washington have found, there is a very high tolerance for taxation on marijuana.  Colorado imposes a 15% excise tax on wholesale marijuana, a 10% state tax on retail sales, a regular state sales tax of 2.9%, and local sales taxes, for a combined total effective tax rate of 30%.  Washington collects a 25% tax on sales from farm to processor, another 25% from processor to retail, another 25% from retailer to consumer, a regular gross receipts tax of 6.5%, and local sales taxes for a combined total effective tax rate of 44%.

Through October, Colorado has received over $45 million in tax revenue across both medical and recreational use.  Since legalizing this summer, Washington state has raised over $20 million.  Maryland’s projected revenue would depend on the tax structure, but estimates have ranged between $40 million and $140 million annually.

While Maryland lawmakers stand pat, the rest of the state is moving towards acceptance of the full legalization, taxation, and regulation of marijuana.  Anne Arundel Community College has begun offering a course on emerging markets that includes a review of the marijuana trade from harvest to sale. The domain www.marylandmarijuana.com has already been purchased and is being offered for sale at $2,500.  By the time licensing is available, a full infrastructure for production and sale may already be in place.

Oh and if you’re interested, www.mdmarijuana.com is currently unclaimed.

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