Marijuana: the victimless crime that costs New York State $15 billion a year

Kristin Davis Former New York Gubernatorial Candidate
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Because I’m such a strong advocate of the legalization and taxation of marijuana, people are always surprised to find out that I’m not — nor ever have been — a user. My advocacy comes from an economic perspective and a deep belief in personal freedom.

There is one fact that Americans, and New Yorkers, must face (as it slaps us in the face): Prohibition hasn’t stopped the use and domestic production of marijuana. Marijuana is currently used by over 25 million Americans annually and cannabis is the largest cash crop in the United States. In fact, the only thing prohibition has done for the people of New York is cost them a huge amount of money — somewhere in the ballpark of $10-15 billion a year.

Revenue from Taxing Marijuana: $1.08 Billion

According to the 2007 National Survey on Drug Use and Health, roughly 6% of New Yorkers have used marijuana in the last month — that’s 1.2 million people. Daily users constitute 20% of this population, or about 240,000 New Yorkers. Assuming that there are 200,000-300,000 “regular users” in New York, and that they consume, on average, 2 grams per day (1 joint), this group consumes 400,000 to 600,000 grams of marijuana per day. If the remaining 1 million monthly users average one joint per week, this adds another 285,000 grams each day. Total marijuana consumption by New Yorkers may therefore be reasonably estimated at 685,000 to 885,000 million grams per day, or about 551,000 to 712,000 pounds per year.

Assuming that New Yorkers consume 631,000 pounds of marijuana per year (the halfway point between 551,000 and 712,000 pounds), a $50 per ounce ($800 per pound) excise tax on marijuana would generate $504 million in annual excise tax revenue for New York State. A sales tax of the same size would bring in another $504 million, putting the total at $1.08 billion.

In comparison, the study shows that 1.95 million Californians use marijuana daily. I believe the number for New York is low since we don’t have the same liberal attitude towards marijuana or easy accessibility of medicinal marijuana.

The taxes I propose are significantly cheaper than the current tax on cigarettes of $4.35 statewide and $5.65 within Manhattan. In 2009, New York brought in $1.3 billion in tax revenue from cigarettes, which is along the lines of what we can expect from marijuana.

Reduction in Law Enforcement Expenses: $390 Million

New York City is the marijuana arrest capital of the world. In 2009, over 46,000 people were arrested in New York City for marijuana possession in public view (MPV) even though New York decriminalized marijuana possession (under 25 grams) in 1977. Arrests for marijuana possession account for 10% of all arrests in New York City.

It is safe to assume that about 10% of our annual law enforcement budget is spent on marijuana enforcement — a sum of $390 million per year. While I understand this number is probably high, it’s the best estimate available. There is little to no data on how much it is costing us to house inmates jailed for marijuana possession.

Spinoff Industries with Total Impact of $13 Billion

The economic benefits of legalizing marijuana are not limited to tax revenues — spinoff industries such as coffee shops, retail stores and industrial hemp will provide jobs and economic opportunities for New Yorkers.

It is hard to estimate what New York can expect in terms of spin-off industries. However, we can make some assessments based on the figures from California’s wine industry, which generates $51.8 billion in economic activity, $12.3 billion in retail sales, 309,000 jobs, $10.1 billion in wages, and $2 billion in tourist expenditures.

Assuming that New York’s legal marijuana industry would be 25% as large as California’s wine industry, it would generate 75,000 jobs, $3 billion in retail sales, and $2.5 billion in legal wages, which would mean more income and tax revenue for the state — a total economic impact for New York of $13 billion.

De-Bunking The Myths About Marijuana

It’s imperative to understand marijuana in order to fight prohibition. For the purposes of this article, I’ve focused on the economic benefit of legalization; however, I understand that many still believe myths about marijuana that prevent them from supporting its legalization.

For most of human history, marijuana has been completely legal. America’s first marijuana law “ordering” farmers to grow Indian hempseed was enacted at Jamestown Colony, Virginia, in 1619. In fact, cannabis hemp was legal tender in most of the Americas from 1631 until the early 1800s. You could even pay your taxes with cannabis hemp for over 200 years.

Henry Anslinger, working on behalf of businessmen who wanted to destroy the burgeoning hemp industry (since it competed with their investments in cotton), successfully lobbied congress to pass The Marijuana Tax Act of 1937, which made marijuana illegal on a federal level. Prior to this, marijuana was an acceptable part of society and had been around for hundreds of years.

There has been much debate that marijuana is a gateway drug and that marijuana is addictive and leads to death. None of these things are true. There are no studies indicating that marijuana is a gateway drug. A recent report by the CDC shows that zero deaths related to marijuana occurred in 2009. The same study attributes 440,000 deaths per year to smoking. Yet smoking is legal.

New York has just closed a $15 billion budget shortfall through a combination of new taxes, higher taxes and one-shot fiscal gimmicks. Clearly the legalization, regulation and taxation of marijuana in the Empire State would allow for tax relief for all New Yorkers.

Kristin Davis is a former Manhattan Madam who went to jail for supplying Governor Eliot Spitzer with call girls. She is currently running for governor of New York under the Anti-Prohibition Party (APP) line to end the prohibition on marijuana, legalize gay marriage and decriminalize prostitution.