The Cato Institute

Ending the War on Drugs Would Be a Budgetary Boon

Ending the War on Drugs could generate up to $106.7 billion in annual budgetary gains for federal, state, and local governments…

In the past several years, the national movement to end drug prohibition has accelerated. Nine states and Washington, DC, have legalized recreational marijuana, with at least three more states (Connecticut, Michigan, and Ohio) likely to vote on legalization by the end of 2018. Dozens of others have decriminalized the substance or permitted it for medicinal use. Moreover, amid the nation’s ongoing opioid crisis, some advocates and politicians are calling to decriminalize drugs more broadly and rethink our approach to drug enforcement.

Drug legalization affects various social outcomes. In the debate over marijuana legalization, academics and the media tend to focus on how legalization affects public health and criminal justice outcomes. But policymakers and scholars should also consider the fiscal effects of drug liberalization.

Legalization can reduce government spending, which saves resources for other uses, and it generates tax revenue that transfers income from drug producers and consumers to public coffers.

Drawing on the most recent available data, drug legalization could generate up to $106.7 billion in annual budgetary gains for federal, state, and local governments. Those gains would come from two primary sources: decreases in drug enforcement spending and increases in tax revenue. State and local governments spend around $29 billion on drug prohibition annually, while the federal government spends an additional $18 billion. Meanwhile, full drug legalization would yield $19 billion in state and local tax revenue and $39 billion in federal tax revenue.

In addition, the budgetary effects of state marijuana legalizations that have already taken place in Colorado, Oregon, and Washington have been positive. So far, legalization in those states has generated more tax revenue than previously forecast but generated essentially no reductions in criminal justice expenditure. 

At both the federal and state levels, government budgets would benefit enormously from drug legalization policies. 

Learn more…

The Drug War Has Failed. End It Now.

The War on Drugs is not only ineffective, but counterproductive, at achieving the goals of policymakers both domestically and abroad…

While the Eighteenth Amendment, which was passed and subsequently repealed in the early 20th century, is often regarded as the first major prohibition in the United States, it certainly was not the last.

The War on Drugs, begun under President Richard Nixon, continues to rely on prohibition policies as a means of controlling the sale, manufacture, and consumption of certain drugs. 

Supporters of drug prohibition claim that it reduces drug-related crime, decreases drug-related disease and overdose, and is an effective means of disrupting and dismantling organized criminal enterprises. But the data shows that continued prohibition is both ineffective and counterproductive at achieving these goals. 

In their new study, Four Decades and Counting: The Continued Failure of the War on Drugs, Christopher J. Coyne, a professor of economics at George Mason University, and Abigail R. Hall, a research fellow at the Independent Institute, explore the economics of prohibition.

Using tools and insights from economics to analyze data on overdose deaths, crime, and cartels, Coyne and Hall conclude that the War on Drugs is not only ineffective, but counterproductive at achieving the goals of policymakers, both domestically and abroad.

Economically, while prohibition does limit the supply of drugs and raise prices, therefore reducing the demand for drugs, these mandates push the market for drugs into underground black markets and generate unintended consequences that work against prohibition’s goals. Due to the lack of quality control, this market results in tainted, highly potent drugs, increasing the chances of poisoning and overdose.  

Domestically, overdose rates and the spread of drug-related diseases have been climbing since prohibition began. Between 2000 and 2014, more people in the U.S. died from drug overdoses than from car crashes. In addition, the rate of opioid overdoses has more than tripled since 2000, with 61 percent of all overdose deaths in 2014 caused by the more potent drugs. The restrictions prohibition places on buying legal needles and syringes leads users to share used needles, increasing the occurrence of HIV, AIDS, hepatitis C, and hepatitis B.

Prohibitionists claim the drug war reduces drug-related violence, but they ignore the fact that, while drug trafficking isn’t inherently violent, drug prohibition is. It’s true that the black market for drugs relies on cash transactions and violence, drug market violence is a function of the market’s illegality, not of the drugs themselves.

Without a legal system in place to resolve disputes, individuals who are comfortable using violence monopolize illegal drug markets through the use of cartels. The same was true of alcohol distributors under prohibition.  In 1929, if two alcohol distributors had a dispute, they settled it on the street corner with Tommy guns and Molotov cocktails. In 2017 if two alcohol distributors have a dispute, they settle it in court.

While many have examined the effect of prohibition on domestic outcomes, few have asked how these programs impact foreign policy outcomes.

Internationally, prohibition not only fails in its own right, but also actively undermines the goals of the Global War on Terror. America’s prohibitionist policies have failed overseas, with the U.S. government spending millions of taxpayer dollars to combat the import of narcotics. For example, the U.S. imposed its prohibitionist drug policies in Afghanistan in 2004, yet the opium economy is more concentrated in the hands of the Taliban than ever before as a result of cartelization. In Afghanistan, as elsewhere, prohibition led to widespread government corruption, with officials at the highest levels circumventing the law in order to keep up profits from drug production and trafficking.

Policymakers need to consider decriminalization or legalization of drugs in order to achieve the goals the War on Drugs intended to meet. In 2001, Portugal decriminalized possession of all illicit drugs but retained criminal sanctions for activities such as trafficking. As a result, Portugal’s rate of drug use remains below both the European and American average. New HIV and AIDS infections have fallen significantly from 1,575 and 626, respectively, in 2000 to 78 and 74 in 2013.

The U.S. should learn from Portugal’s liberal drug policies in order to reduce drug use, drug-related crime, disease, death and violence. 

Truly effective reform will not only require changes at the state level, but ultimately necessitate critical shifts in U.S. federal policies, both domestically and internationally.

As a candidate, Donald Trump held a relatively moderate line on drug prohibition, often arguing that issues like marijuana legalization should be left to state governments. Unfortunately, as President, his approach has taken a turn for the worse.

The Trump Administration has yet to announce much in the way of concrete policy changes, but the personnel choices and the drug warrior rhetoric coming from the new administration are causes for concern looking forward.

Jeff Sessions, our new Attorney General is a long-time champion of the federal drug war. Since taking over the Justice Department, Sessions has continued to make statements that hint at a return to a much harsher federal approach to drug prohibition.

President Trump is also expected to name Congressman Tom Marino (R-PA) to head the Office of National Drug Control Policy, an office colloquially known as the federal government’s “Drug Czar.” While the Drug Czar has a limited impact on policy, Marino’s expected nomination is another red flag.

Rep. Marino has a long history of taking a hard line on the drug war. He voted against the Rohrabacher-Farr Amendment, which allows state medical marijuana industries to function without the constant fear of federal prosecution, and has also voted to prevent Veterans’ Affairs doctors at facilities in states with legal marijuana from prescribing medical marijuana to their patients.

Four decades of a hardline approach to drug policy in America have failed.

Forty-four states and the District of Columbia allow some form of legal cannabis consumption, including eight states (and D.C.) which have legalized the recreational use of marijuana. The dire predictions of drug warriors in those states have not come true.

It’s time to ditch the failed prohibitionist policies of the drug war. Unfortunately, President Trump appears to be moving in the wrong direction.

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November Could Be a Turning Point for Marijuana Policy

This November’s election could be a decisive turning point in the struggle to end U.S. marijuana prohibition. ​It’s been a long time coming.

As recently as the 90s, every major political faction and almost every significant public intellectual was squarely in favor of prohibition. We libertarians walked a lonely road, patiently pointing out prohibition’s high costs and doubtful benefits. In some ways we’re still alone, because we certainly wouldn’t stop with marijuana. But let’s consider what progress we’ve made.

In November’s election, five states – Arizona, California, Maine, Massachusetts, and Nevada – may each legalize recreational marijuana for adults.

If recent history is any guide, things look good for this November: Of the seven legalization initiatives offered to voters since 2012, five have passed, in Alaska, Colorado, Oregon, Washington, and Washington DC.

These state marijuana legalizations have had minimal effect on marijuana use and related outcomes. The absence of significant adverse consequences is especially striking given the sometimes dire predictions made by legalization opponents.

Yet, despite President Obama’s previous statements indicating that he would allow science, rather than drug war ideology, to determine the legal status of marijuana, earlier this year the Obama Administration rejected the application of a pair of governors who asked the federal government to lower the federal restrictions on marijuana. The administration concluded that marijuana should remain a “Schedule I” controlled substance under federal law, the most restricted category of illicit drugs, which the government considers to have a high potential for abuse and no legitimate value.

As more and more states legalize, that Schedule I classification looks more and more ridiculous.​ 

Under our constitution, criminal law has historically been left to state and local governments, not Congress. That is why, when the misguided government opted to prohibit the manufacture and distribution of alcohol in the 1920s, prohibitionists sought a Constitutional amendment granting the federal government the authority to ban alcohol. Alcohol prohibition ended, after years of corruption and unnecessary bloodshed, when the constitution was amended again to correct the mistake of the earlier amendment.

When the federal government wanted to ban drugs, however, it merely passed a federal law banning drugs, creating an obvious tension between the federal government and the states that have traditionally made their own decisions about what substances to permit or prohibit.

The result is a legal quagmire in which 42 states and the District of Columbia allow either medicinal or recreational use of marijuana, while the federal government insists that a nationwide prohibition remains in effect.

Soon the federal government may have to decide whether to follow the states – and the will of the people – or whether to crack down on legalization. But as time goes on, cracking down looks more and more illegitimate, and inaction looks more and more like a joke.

The long federal experiment in prohibition of marijuana (as well as cocaine, heroin, and other drugs) has given us crime and corruption combined with a manifest failure to stop the use of drugs or reduce their availability to children.

Something’s got to give.

Dig into Cato’s research on the drug war….

Bringing a Dose of Reality to the Debate Over State Marijuana Legalization

The absence of significant adverse consequences is especially striking given the sometimes dire predictions made by legalization opponents.

In November 2012 voters in the states of Colorado and Washington approved ballot initiatives that legalized marijuana for recreational use. Two years later, Alaska and Oregon followed suit.

This November, as many as 11 other states may legalize marijuana, through either ballot initiative or legislative action.

Both supporters and opponents of legalizations initiatives make numerous claims about state-level marijuana legalization.

Advocates think legalization reduces crime, raises tax revenue, lowers criminal justice expenditures, improves public health, bolsters traffic safety, and stimulates the economy. Critics argue that legalization spurs marijuana and other drug or alcohol use, increases crime, diminishes traffic safety, harms public health, and lowers teen educational achievement.

Systematic evaluation of these claims, however, has been largely absent.

A new policy analysis from the Cato Institute on the impact of recent marijuana legalizations in Washington, Colorado, Oregon, and Alaska compares pre- and post-policy-change paths of marijuana, other drug or alcohol use, marijuana prices, crime, traffic accidents, teen educational outcomes, public health, tax revenues, criminal justice expenditures, and economic outcomes.

Through this analysis its authors conclude that state marijuana legalizations have had minimal effect on marijuana use and related outcomes.

While insufficient time has elapsed since the four initial legalizations to allow strong inference, on the basis of available data, there is little support for the stronger claims made by either opponents or advocates of legalization.

Read the paper…

SCOTUS Win for Marijuana Legalization

In 2012, the people of Colorado voted to legalize marijuana through a state constitutional amendment, which went into effect in January of 2014. Two of Colorado’s neighbors, Nebraska and Oklahoma, subsequently filed a lawsuit urging the U.S. Supreme Court to prohibit the state of Colorado from constructing a regulatory regime for the marijuana industry.

On Monday, the Supreme Court declined to take up that lawsuit. The decision was not surprising—the constitutional argument advanced by Nebraska and Oklahoma was weak, and the Obama Administration urged the court to decline the case—but it is significant.

“[Monday’s] action at the Supreme Court amounts to a big boost to the marijuana legalization movement, which continues to gather strength and momentum," write Cato scholars Tim Lynch and Adam Bates.

Learn more….

• ”Supreme Court Rejects Nebraska & Oklahoma Marijuana Suit against Colorado,“ by Tim Lynch and Adam Bates
• ”Colorado Pushes Back against Oklahoma and Nebraska Marijuana Suit,“ by Adam Bates
• ”Marijuana Policy in Colorado,“ by Jeffrey Miron

A New, Futile Front in the War on Drugs

Even as officials devote billions of dollars each year to enforcing laws against marijuana, cocaine, and other drugs, the market for synthetic equivalents or variations has soared.  In a new paper, Cato scholar Ted Galen Carpenter argues that the problems associated with suppressing the use of designer drugs underscores the inherent futility of the broader War on Drugs. 

“Instead of persisting in the failed strategy of drug prohibition,” says Carpenter, “policymakers should examine ways to accommodate legal markets in mind-altering substances while promoting public safety by requiring strict production standards to prevent contamination or mislabeling.”

Read more….

Marijuana Policy Changes In Colorado Generate No Major Impacts To Date

In November 2012, voters in the states of Colorado and Washington approved ballot initiatives that legalized marijuana for recreational purposes. A new working paper from Jeffrey Miron, part of a longer-term project that will monitor state marijuana legalizations, provides a preliminary assessment of marijuana legalization and related policies in Colorado. 

In the working paper, Marijuana Policy in Colorado, Cato’s Director of Economic Studies Jeffrey Miron provides a preliminary assessment of marijuana legalization and related policies in Colorado. Miron’s research determines that changes in Colorado’s marijuana policy have had minimal impacts on substance use, crime, traffic accidents, public health, and teen educational achievement. Colorado has also collected non-trivial tax revenue as a result of marijuana commercialization. However, this amount has been so far less than anticipated by legalization advocates.

On November 4th, voters in Alaska, Oregon, and the District of Columbia will be deciding  on marijuana legalization initiatives similar to Colorado’s Amendment 64. Proponents of these initiatives argue legalization reduces crime, raises revenue, lowers criminal justice expenditure, improves public health, improves traffic safety, and stimulates the economy. Critics, however, contend legalization spurs marijuana use, increases crime, diminishes traffic safety, harms public health, and lowers teen educational achievement.

Miron compares a multitude of data points on issues such as violent crime, fatal car crashes, and high school drop-out rates in the periods before and after commercialization of marijuana in Colorado in 2009. His investigation of the available evidence in Colorado suggests that the state’s marijuana policy changes have had minimal impact and not created new trends for social outcomes.

 The working paper is the first part of Miron’s longer-term project that will monitor state marijuana legalizations in Colorado, Washington, and other states. The project will ultimately compare the path of outcomes from legalization in these states with non-legalizing states.

Read the paper…

Medical Marijuana Does NOT Mean Increased Teen Marijuana Use