THE CASE FOR LEGAL POT USE

The San Francisco Board of Supervisors last week approved new rules
to allow most of the city's 33 pot clubs to continue dispensing
medical marijuana.

Earlier this month, Denver became the first major city nationwide to
legalize small amounts of dope (although Colorado state law still
makes marijuana possession illegal).

Meantime, California officials say bigger-than-expected tax receipts
mean the state will likely have a balanced budget next year. But
we'll once again be billions of dollars in the hole by 2007 unless
spending by lawmakers is curbed (yeah, right) or taxes go up.

So I say: Let's connect the dots.

Decriminalize marijuana. And tax the heck out of it.

I've touched on this issue before, but now there's some heavy
artillery to help make the economic case for legalizing pot.

A Harvard University professor of economics, Jeffrey Miron, has
crunched the numbers, and he's determined that legalizing marijuana
would save $7.7 billion annually in money spent on enforcing dope laws.

That breaks down to $5.3 billion in savings for state and local
governments, and $2.4 billion in cost reductions at the federal level.

This is noteworthy because the FBI reported the other day that more
Americans were arrested for pot last year than at any time in U.S.
history. And of the more than 770,000 people cited for dope-related
offenses, nearly 90 percent were charged only with possession.

Those are hundreds of thousands of criminal cases that didn't have to
be taking up the time and resources of our cops and courts.

Meanwhile, Harvard's Miron estimates that tax revenue for legalized
pot would run about $2.4 billion annually if it were taxed like all
other goods.

Yet if marijuana were taxed at rates comparable to the aggressive
levies placed on alcohol and tobacco -- and it should be -- Miron
determined that it would yield $6.2 billion in annual revenue.

"It's kind of small potatoes compared to the ($319 billion) federal
budget deficit," he told me. "But it's not nothing."

For the record, Miron says he isn't a pot smoker. His interest in the
subject comes instead from a desire to address what he sees as a
failed public policy.

"As an economist, I think about policies that are good for people and
for society overall," Miron said. "This strikes me as very bad policy."

And he isn't alone in this conclusion. Prompted by Miron's work, more
than 500 economists have signed an open letter to President Bush and
other public officials calling for "an open and honest debate about
marijuana prohibition."

The letter adds: "We believe such a debate will favor a regime in
which marijuana is legal but taxed and regulated like other goods."

Signatories include a trio of Nobel Prize winners -- Milton Friedman
of Stanford's Hoover Institution, George Akerlof of UC Berkeley and
Vernon Smith of George Mason University.

"It's absolutely disgraceful to think of picking up a 22-year-old for
smoking pot," 93-year-old Friedman has been quoted by Forbes as
saying. "More disgraceful is the denial of marijuana for medical purposes."

In his study, "The Budgetary Implications of Marijuana Prohibition,"
Miron places the illicit U.S. market for marijuana at about $10.5
billion in annual sales. (Figures close to $11 billion seem to be the
consensus among people who guess at such things.)

Decriminalization would result in lower production costs as dope
farming and processing go mainstream. It would also lead to what
Miron believes would be only a modest increase in demand because "the
people who care about it are already consuming it."

Factoring in these two elements, he estimates that marijuana sales in
a legalized marketplace would total about $8 billion a year (as
opposed to $110 billion in annual U.S. sales of alcoholic beverages).

If dope were taxed as heavily as alcohol and cigarettes, Miron
calculates that annual sales would be worth almost $12 billion a
year. Of this total, 80 percent would represent tax revenue.

California would do especially well if marijuana were legalized. As
it stands, pot is already the state's largest cash crop, with annual
sales estimated to be about $4 billion.

Miron figures that decriminalizing marijuana would result in about $1
billion in law-enforcement-related savings for California, plus about
$100 million in additional tax revenue.

"That would certainly put a significant dent in a budget deficit of
$2 billion or $3 billion," he said.

Miron readily acknowledges risks related to marijuana consumption --
just as risks are associated with consumption of alcohol, tobacco and caffeine.

"The vast majority of products in the marketplace have risks," he
observed. "It's up to each individual to decide whether to use them."

For what it's worth, the Lancet, a prestigious British medical
journal, concluded in 1998 that "on the medical evidence available,
moderate indulgence in cannabis has little ill effect on health."

Similarly, the U.S. National Academy of Sciences determined in 1999
that "there is no conclusive evidence that the drug effects of
marijuana are causally linked to the subsequent abuse of other illicit drugs."

As an economist, Miron sees it primarily as a matter of supply and
demand, and recognizes the clear value of regulating and taxing
marijuana sales.

"If everybody wants to eat vanilla ice cream, then they should have a
way to eat vanilla ice cream," he said. "It's no different for marijuana."