LEGALIZE IT - FOR THE ECONOMY'S SAKE

There is very little evidence that Canada's present prohibition on
production and consumption of marijuana is successful in making it
unavailable. If you have any doubt, ask a child whether he or she
knows someone in school from whom they could get some. Nineteen
percent of children between the ages of 12 and 15, and 23% of all
Canadians over the age of 15 have tried it (and presumably inhaled),
and nearly two million are currently using. Those numbers are likely
to increase, as older demographics make up the bulk of non-users. Baby
Boomers are -- or were -- in the vanguard of users, and younger people
use more frequently than older folks.

Marijuana cultivation can be found across Canada, and British Columbia
has been a particular hub. To give some idea of the scale of
operations, 2,800 B.C. grow-operations were "busted" in 2000 -- and
it's safe to say that even the most effective police force would only
able to find and destroy a fraction of the total number.

Based on a little economic theory and modest data, I estimate there
are about 17,000 marijuana grow operations currently in B.C. Since the
average busted operation had 180 plants, and each plant yields about
33 grams of usable marijuana, the province's commercial production is
probably in the range of 400,000 kilograms -- and that's using the
conservative assumption that there are four crops each year.

That's a lot of product, and it's worth a lot of money -- though how
much, exactly, depends partly on the units in which the crop is
measured. A kilogram of marijuana may sell for as much as $5,000
wholesale, meaning the value of the B.C. crop is worth something like
$2-billion at the wholesale level. Naturally, retail would sell for
much more. Marijuana sold at $15 per gram makes a kilogram worth
$15,000, which would put the total crop value closer to $6-billion.

Considering that B.C.'s gross domestic product was roughly
$130-billion in 2000, these numbers tell us that sales of marijuana
amount to somewhere between 1.5% and 4.6% relative to the province's
GDP. And since British Columbians are likely to consume only about
30,000 kilograms themselves, the rest is destined for the rest of
Canada or abroad. That we would continue to crack down on such massive
interprovincial and international trade, rather than capitalizing upon
its potential to spur economic development, seems highly
counterproductive.

Beyond the economic consequences, marijuana prohibition brings other
costs. Resources are used not only finding grow-ops, but also
prosecuting and penalizing offenders. In 2001, 50,000 Canadians were
charged with possession, 11,000 with trafficking and 9,000 with
cultivation.

Legalizing marijuana would carry the risk of increased consumption,
since prices would likely fall. But that could be countered by taxing
it at a rate that kept the current retail price more or less intact.
To the extent that consumers are paying it now, there is no reason to
believe that they would not be willing to pay it then.

Such a policy would benefit government enormously. An estimate of the
retail price of a marijuana cigarette puts it at about $8.50, while
the cost of production is $1.50. This would imply a tax rate close to
$7 per cigarette. If domestic consumption is in the range of 160,000
kilograms and a cigarette is about half a gram, then tax revenue would
total roughly $2-billion.

It would also put a serious dent in crime. At present, the difference
between production costs and the final sales price goes to
distribution costs and profit. In many cases, that means money in the
hands of organized crime, often providing base funding for unsavoury
activities much the same way that alcohol prohibition helped build
gangster empires earlier last century. Were marijuana legal, these
funds would no longer be available for mob use.

There is, of course, the question of how legalization would affect our
relationship with our neighbours. If the United States were to add to
trade frictions by requiring special inspections and the like, the
economic damage would outweigh any benefit from legalization -- and
sensible policy must recognize this. But ironically, legalization and
regulation on this side of the border might do more to reduce the flow
of marijuana to the United States than any policies under the status
quo. If legal producers risked losing their licences for profitable
enterprise through illegal sales, most likely wouldn't take the chance.

As more and more Canadians belong to generations for whom marijuana is
not an unknown commodity, our attitudes and laws should more
faithfully reflect our experiences. Marijuana consumption is
widespread in Canada (and has been for some time), and production
gives every indication of being nearly as prevalent. Consequently, the
broader social question becomes not whether we approve or disapprove
of local production, but rather who shall enjoy the spoils. If we
treat it like any other commodity we can tax it, regulate it, and use
the resources the industry generates rather than continue a war
against consumption and production that has long since been lost.