COULD LEGAL POT ERASE GOVERNMENT RED INK?

The Global Commission on Drug Policy minced no words last June when it
released its report on the war on drugs.

"The global war on drugs has failed, with devastating consequences for
individuals and societies around the world," the report concluded.
"... Forty years after President (Richard) Nixon launched the U.S.
government's war on drugs, fundamental reforms in national and global
drug-control policies are urgently needed."

Chief among the commission's recommendations: Decriminalize and even
legalize some drugs, like marijuana.

"This recommendation applies especially to cannabis, but we also
encourage other experiments in decriminalization and legal
regulation," the report urged.

While Michigan and other states grapple with the issue of medical
marijuana, laws like the one approved by Michigan voters in 2008 have
fueled a larger debate over marijuana legalization.

And an economy still struggling to emerge from a long-term recession
has given legalization proponents more ammunition. If marijuana is
legalized and taxed, they argue, the additional money would go a long
way toward easing burdens on ever-decreasing state and federal budgets.

Jon B. Gettman, a marijuana reform advocate, is former head of the
National Organization for the Reform of Marijuana Laws. He holds a
doctorate in public policy and regional economic development from
George Mason University.

In a 2007 report titled, "Lost Taxes and Other Costs of Marijuana
Laws," Gettman examined the potential economic impact of marijuana
legalization.

"It's obvious to most Americans that marijuana is not taxed, and that
therefore there would be additional revenue for government if it were
legal and taxed like other commodities," Gettman wrote. "What is less
apparent to most Americans is that the large, illicit market in
marijuana costs government considerable revenue through its diversion
of capital from the legal economy into the illicit economy.

"The primary budgetary impact of illegal marijuana sales is not the
loss of potential tax revenue on marijuana, but the loss of actual tax
revenue from the diversion of capital to the untaxed legal market."

How much capital? Using the U.S. government's own statistics,
Gettman's report estimated "the overall retail value of the illicit
marijuana market at $113 billion."

"Government reports indicate that the nation's marijuana laws cost
taxpayers $41.8 billion annually," Gettman concluded. "The Office of
Management and Budget reports that ... the diversion of $113 billion
from the taxable economy into the illicit economy deprives taxpayers
of $31.1 billion annually. Marijuana arrests cost taxpayers $10.7
billion annually."

Gettman isn't alone in his assessment. Stephen Easton, a professor of
economics at Simon Fraser University, said marijuana legalization
could pump as much as $100 billion annually in new tax revenue into
state and federal coffers. Moreover, he said, the government's gain
would be organized crime's loss.

"Government would simply be transferring revenue from organized crime
to the public purse," Easton wrote in a 2009 argument in Bloomberg
BusinessWeek magazine. "It's a proven technology. We did it in 1933
when Prohibition ended."

And yet another 2005 report by Harvard University economics professor
Jeffrey Miron estimated the state of Michigan spends about $158
million annually on enforcement of marijuana laws, which includes
police, court and corrections departments. The state also could
realize about $30 million annually from new tax revenue.

But decreased law enforcement costs and increased tax revenue don't
tell the whole story, legalization opponents argue. In fact, they're
fool's gold, said Michigan Attorney General Bill Schuette.

Schuette is leading the charge to shut down dispensaries and revise
Michigan's 2008 medical marijuana law. Marijuana is a "gateway drug"
that leads to abuse of other more addictive narcotics, the attorney
general argued. The state should want no part of any laws that make
access to drugs easier, especially for minors.

"I think it's wrong to legalize drugs, to legalize marijuana," said
Schuette, a former state appeals court judge. "People didn't vote for
this proposal to have pot shops within spitting distance of churches
and schools."

Bob Stutman is a former 25-year veteran of the Drug Enforcement Agency
and outspoken opponent of legalization. The revenue arguments fail to
take into account the costs of medical treatment for the increased
number of drug addicts that will result if marijuana is legalized.

In advance of Proposition 19, a California ballot proposal that would
have legalized marijuana for personal use, Stutman wrote in
BusinessWeek magazine: "If we need revenue that badly, why not
legalize gambling and prostitution in California? My guess is those
would raise more revenue than marijuana. How about a really radical
idea - don't legalize marijuana, prostitution, or gambling, and try
spending less!"

In the debate leading up to the November vote, California's
Legislative Analyst's Office estimated passage of Proposition 19 would
save annually "potentially up to several tens of millions of dollars"
in incarceration costs and generate $1.4 billion in new tax revenue.

But voters weren't buying. Proposition 19 was defeated, 54 to 46
percent.

The debate over marijuana legalization isn't going to cease anytime
soon. But neither is the fallout from the failed war on drugs,
according to the Global Commission on Drug Policy.

"There is a temptation to avoid the issue," the commission wrote.
"This is an abdication of policy responsibility ... Getting drug
policy right is not a matter for theoretical or intellectual debate.
It is one of the key policy challenges of our time."