POT TAX GOOD FOR GOV'T: REPORT

Legalizing Marijuana Would Add $2 Billion to Feds' Bottom Line

OTTAWA -- Marijuana should be legalized and then taxed like any
another other product, says a study by an economic think-tank.

The Fraser Institute estimates that such a move would easily generate
more than $2 billion a year in additional tax revenues.

All that would really change is that governments, rather than
criminals, would enjoy the spoils, argues the study being released
today by the Vancouver-based institute.

The potential tax revenue is based on the study's estimate that in
British Columbia alone, the annual marijuana crop, if valued at retail
street prices and sold by the cigarette, is worth more than $7 billion.

"Using conservative assumptions about Canadian consumption, this could
translate into potential revenues for the government of over $2
billion," states the study.

"In British Columbia -- as in other provinces, notably Quebec and
Ontario, it is a significant crop that fuels organized crime."

Study author Stephen Easton, professor of economics at Simon Fraser
University and a senior fellow at the institute, estimates that there
are as many as 17,500 marijuana grow operations in B.C. alone.

Marijuana is widely produced and about one quarter of Canadians admit
to having used it, the study says. As such, the broader social
question has become not whether to approve or disapprove of
production, but rather who should enjoy the spoils.

"If we treat marijuana 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," said Easton. "It is apparent that we are reliving the
experience of alcohol prohibition of the early years of the last century."

In British Columbia, indoor marijuana cultivation and consumption
appears to be higher than in the rest of Canada, it notes. The most
striking difference is that only 13 per cent of offenders in the
province are actually charged while that number climbs to 60 per cent
for the rest of Canada.

In addition, the penalties for conviction in B.C. are low, it said.
Fifty-five per cent of those convicted receive no jail time.

While police resources are spent to destroy nearly 3,000 marijuana
grow operations a year in B.C., the consequences are relatively minor
for those convicted, it says. The industry is simply too profitable to
prevent new people moving into production and old producers from rebuilding.

A modest grow-operation of 100 plants generates $80,000 a year in
gross revenues, and with production costs of about $25,000, the
potential return on invested money is a high 55 per cent, it says. It
currently costs $1.50 to produce a marijuana cigarette, which sells
for $8.60.

"Unless we wish to continue the transfer of these billions from this
lucrative endeavour to organized crime, the current policy on
prohibition should be changed," it says. "Not only would we deprive
some very unsavoury groups of a profound source of easy money, but
also resources currently spent on marijuana enforcement would be
available for other activities."