Regulating Cannabis Sales Could Yield Over $17 Billion In Annual Savings And Revenue, New Study Says

  • by Paul Armentano, NORML Deputy Director September 29, 2010

    Treating marijuana as a legally regulated commodity would yield some $17.4 billion dollars annually in cost savings and new tax revenue, according to an economic report published yesterday by the CATO Institute think tank in Washington, DC.

    The report, entitled “The Budgetary Impact of Ending Drug Prohibition,” estimates that taxing the commercial sale of marijuana in a manner similar to alcohol would generate some $8.7 billion in annual revenue. The report further estimates that abolishing marijuana prohibition would additionally yield approximately $9 billion in annual law enforcement savings. Full text of the entire report is available for download here.

    A previous 2005 study commissioned by NORML estimated that marijuana law enforcement cost taxpayers some $7.6 billion per year.

    A separate California statewide analysis published in 2009 by the state Board of Equalization and Taxation estimated that imposing retail taxes on the commercial sale of cannabis in California would yield approximately $1.4 billion in yearly revenue.

    An op/ed in favor of legalization by the CATO study’s co-author, Jeffrey Miron of Harvard University, appears in today’s Los Angeles Times here.

    28 responses to “Regulating Cannabis Sales Could Yield Over $17 Billion In Annual Savings And Revenue, New Study Says”

    1. Steve says:


      When will we push the sales pitch of hemp, it should be a larger argument then all the others. If we dont we can never get the allowance for huge yields of land for hemp production. Thus lowering the cost of raw materials through fuel and building material prices. Good by oil, good by plastic

    2. Millard Trammell says:

      and this from the right wing Cato Institute might have a chance

    3. sigh says:

      medical users dont necessarily want full control of how much we use in the hands of the government that has never really respected marijuana as a form of medicine to begin with.

      [Editor’s note: Ummm….the government already ‘controls’ cannabis by prohibiting it, creating the economics of prohibition where a lowly ounce of dried vegetable matter can fetch $250-$500, whether it is ‘medical’ or ‘recreational’.

      The passage of binding voter initiatives that legalize cannabis does not diminish patient access, it enhances consumer choices and patient autonomy from a prohibition-retarded distribution system.]

    4. Ron Combs says:

      Pass prop19 and watch california’s enemployment rate go down.No one is even talking about all the jobs the industrial cannabis market will create.

    5. Rachel says:

      Just more proof that legal cannabis is better for everyone. It’s almost ridiculous their are people that disagree with prop 19. I haven’t heard one good reason to keep it illegal!!!!!!!!!!!!!!

    6. It's About Time says:

      It’s About Time. That People realized that, in the first to third year of revenue sales, that Cali’s debt would be paid off. And that because of this, we are going to see a dramatic turn in the opinions of our congressmen and woman.

    7. Jeff says:

      Yet another reason why we should end this ridiculous war on “drugs”. Stupid old men in power so set in their ways, unable to admit they have been wrong about pot all these years. What a bummer we have to have these idiots in control of things that affect our daily lives.

    8. ck30 says:

      Come on Cali All Eyez On You Come Nov.4th Help America get back to America n pave the way for the rest of U.S.

    9. I would hold my nose and vote for prop 19, but it is far from perfect. Taxing any persons right to practice self ownership and to grow a plant is insane. However it is important to get it “legalized” so the dominos can start to fall in other states.

      Justifications for the tax AND for the prohibition both rely on the premise that somebody else owns your body or your wallet, or both. The government’s business model is to intitiate force. Always has been.

      [Editor’s note: In 1996 many cannabis consumers and activists held their nose as they voted for Prop. 215 because of all of the many imperfections (ie, the proposition did not necessarily allow for retail sales and SB 420 had to be passed years later by the legislature to allow for such).

      Prop 215, despite its initial problems and the immense local/state/federal litigation it spawned has worked out fairly well, Prop 19 should be no different in that it truly advances reforms further and faster than the California legislature will proceed.

      If Californians pass Prop 19, and at this juncture it looks like that is likely, the positive effect around the country for cannabis law reform can’t be understated.]

    10. stompedonmyrights says:

      I guess the way to really crack this wall of lies the government built is to give them money and fill their greedy hearts and they will forget the Constructive Fraud placed upon us.
      I say give those unjust greedy wayward employees their money and once we have our liberty restored we can come upon them like those folks in Bell CA.
      We are not stopping this cause until we can grow whatever one of God’s plants we choose. Government has over stepped it boundary and I for one want to see them back in the pen and or back on a chain waitng on us. We will grow Cannabis / Hemp because we have the God given right to do so.
      Look at it this way, the most useful and powerful plant on the planet, given by God and outlawed by foolish humans. Which one stand more of a chance of winning, God or Fools? I’ll go with God and leave the fools to themselves.
      Just Vote Yes to Prop 19 and tear down those walls of injustice, Mr President!