economics blog

Should Government Legalise and Tax Cannabis? | Economics Blog

Should Government Legalise and Tax Cannabis?


Discuss Arguments for and against the legalization of Cannabis and the taxation of the good by the Government.

Legalising cannabis and placing a tax on the good has several advantages

1. The Government can raise revenue from the tax.
Because demand is likely to be inelastic the tax revenue could be quite high. The tax revenues could be used to help finance health care and treat lung cancer (things associated with dope smoking

2. It would reduce size of black economy
. If cannabis was legalised it would reduce criminal activity. It would also free up police time to investigate more serious crimes and drug use.

3. Taxing Cannabis should prevent ‘Over Use’ Although cannabis might be legalised it is advisable to still discourage consumption through taxation. Cannabis can be considered a demerit good because

  1. people underestimate dangers of smoking (long term memory loss, increased risk of psychosis)
  2. Smoking has negative externalities. Dope smokers are less productive when stoned. Increased risk of accidents if driving when stoned.

Therefore we make people pay the social cost of cannabis by taxing the good. This can achieve social efficiency and should reduce the overconsumption of cannabis.

However,

Arguments Against legalisation of Cannabis / Dope

  • If tax is too high people may still consume on the black market. Therefore there will be tax evasion, the government will not get the money and criminal activity will continue. (It is already a real problem for cigarrettes)
  • May encourage the dope tourist – they will spend money but is it the kind of tourist we want to encourage.
  • Legalisation may encourage more people to consume a demerit good, because it is now considered to be acceptable.

Also referred to as: Cannabis / marijuana / hemp / weed / dope / grass

See also:

Decriminalisation of Cannabis 

Should drugs be legalised ?

 

26 comments ↓

#1 sean on 03.12.08 at 4:03 pm

look cannabis if controlled by the government would not be as brain numbing as it is now the govern coud easeliy control strains of marrjuanna hitting the shelves ensuring the stronger stuff is left over seas and more hash and grass is sold comercially there would be no association between cannbis and paranoia would there yeh mate legallise cannabis cos im right
byeeeeeeeeeeeeeeee xxx

#2 Marijuana on 03.22.08 at 10:26 pm

Lets just legalise like Amsterdam, I mean it becomes a small issue when openly available but a big issue when it is illegal.

I say may it legal and therefore have less resources combatting herb use and put more effort into fighting class A drugs.

Regards

Tony Montana

#3 bob on 03.25.08 at 11:27 am

legalise the gear son!

#4 Mauwie Wauwie on 06.17.08 at 12:46 am

Just to update this page for those who are not aware, the UK government under the power of Gordon Brown has now changed the status of Cannabis from class C bacl to class B so you can forget about any talks of legalisation now!

#5 Cannabis on 06.26.08 at 1:06 am

The UK is now visiting the Netherlands in order to see how they are tackeling prostitution over there, may be on their visit they will also notice how they are dealing with marijuana and then change their minds and change it back to class C again.

Fingers crossed!

#6 carl on 06.30.08 at 1:16 pm

i love drugs

#7 David Walters on 09.22.08 at 2:27 am

Cannabis has completely ruined my mental health, I have learnt the hard way that it can be very dangerous, however most of the problem in my opinion is the new high strength herbal skunk ,which I was smoking allot of. I often think that if I smoked the weaker strains instead, I would not have done as much damage to my brain, so maybe they should legalise marijuana that is below 2% THC, in the hope it would divert people away from the really dangerous high THC skunk. I now help run a forum to help people who consider they have a problem with cannabis.

http://www.forummatters.com/forums/forumdisplay.php?f=16

#8 MJ on 10.13.08 at 9:32 am

Yes it is true that with the modern sophisticated technique that MJ is now grown very potently and it not the same thing that you smoked 10 years ago!

#9 jes on 10.21.08 at 9:15 pm

COMING FROM A 15 YEAR OLD HERE… WHT DONT WE LEGALIZE IT?? I MEAN AMSTERDAM IS FINE.. MAKING SOMETHING ILLEGAL MAKES PEOPLE WANT TO DO IT MORE.. ITS LIKE TELLING A CHILD NOT TO TOUCH A PRECIOUS ART CRAFT..TELLING THEM NOT TO MAKES THEM WANT TO TOUCH IT.. SO THEY DO.. N WEED DOES MAKE PEOPLE HAPPY.. UNLIKE CIGARETTES.. ITS LIKE SMOKING UR LIFE AWAY W CIGARETTES…WEED ON THE OTHER HAND MAKES YOU JOLLY AND FEEL MORE ALIVE.. WHY WOULD YOU BAND A PLANT???????

#10 spliffy joe on 11.07.08 at 11:06 am

i think wedd is awsome
it should be sold for 1p per 10000000000 kg
yo
respect the weed

#11 ganja boy on 11.07.08 at 11:35 am

i agree wiv spliffy joe

RESPECT THE WEED

#12 spliffy joe on 11.14.08 at 12:24 pm

just to say all you none weeders are stupid

RESPECT THE WEED
YO

#13 Cannabis on 12.05.08 at 2:40 pm

Oh dear – what on Earth are theUK government doing…. now they also want to increase the penalty charge for those cuaght in possession of MJ?

#14 Let’s Do Drugs | Mike Rouse on 04.23.09 at 5:46 pm

[...] Economics Help has more arguments for and against… [...]

#15 alex on 05.12.09 at 9:54 am

it,s natural but it can screw up your mind

#16 ricky colebrook on 05.20.09 at 3:37 pm

i loooooooooooooooooooooooooooovvvvvvvvvvvvvvvvvvvvvvvvvvvvvvvveeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee
weed its the best thing thats happend in my life so make it so i can have it in the street and talk to the pigs to

#17 rasta man on 06.05.09 at 11:08 am

i spent 3 years in holland working,i must say that they have a more relaxed way of living and there country is better than ours at the moment..LEGALISE THE HERB.herbs are good for you,i will not stop growing just because of our pompus goverment…….

#18 scotty on 09.12.09 at 11:00 pm

we are in hard times with the trade market i smoked since i was like 16 on and off and it s like having a pint wen i smoke a joint and i was in the army for 4 yrs came off all drugs neva drank was in afganistan with afgan army dudes smokin round me and i was neva tempted too smoke so its not addictive .

like the 15 yr old says u make it more tempting by making it illegil they need too get rid of the posion herion rather worrie aboot sum stoner wee the muchies

sorry for spelling but im relly high :P

#19 Tay on 09.14.09 at 3:41 am

Ha! This is EXACTLY why legislation of this nature will never see the light of day. Nobody with two brain cells can be bothered to put together an intelligent argument for or against the subject.

“just to say all you none weeders are stupid” – come on man, did it take you all day to come up with that argument? srsly

There are many economic reasons as to why legalizing marijuana would be helpful, especially in today’s struggling economy. The problem is do those reasons, as numerous as they may be, outweigh the dumbass factor that seems to be present among the majority of it’s consumers? Discussions such as this one really leave me with doubt…

#20 Ollie, Troy, Len, Sam, Joel and everyone I know on 10.08.09 at 8:37 pm

Legalise weed its good and there would be alot less crime rates.

#21 Alexandra and lauren on 10.09.09 at 9:54 am

I LOVEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE CANNABIS :D :D LOADS AND LOADS AND LOADS AND LOADS , IM HIGH BABY !!

ME AND LAUREN ARE GETTING HIGHHHH BABY WOOOOHOOOOOOO !!! AND WERE ONLY 10 :D

#22 lauren on 10.09.09 at 9:55 am

alex your lieing your 8 x

#23 mummy on 10.16.09 at 9:23 am

i love weed i smoke it everyday i get up on the microphone and hit it with the deejay ;)
i love ittt
im telling you i just love it cant get over it i loveeee ittt im telling you its amazing i mean sitting on your own and ripping a bong its amazing im telling you !!!
i justtttttt love ittttttt
when i grow up i want to be a weed plant i love it that much :)

#24 mummy on 10.16.09 at 9:23 am

i love weed i smoke it everyday i get up on the microphone and hit it with the deejay ;)
i love ittt
im telling you i just love it cant get over it i loveeee ittt im telling you its amazing i mean sitting on your own and ripping a bong its amazing im telling you !!!
i justtttttt love ittttttt !!!!!!!!!!!!!!11
when i grow up i want to be a weed plant i love it that much :)

#25 Ash.... on 11.01.09 at 11:31 pm

Why would we be worried about a tourist crossing our shores for a spliff on his 3 day trip abroad?? We dont seem to worry about letting people who want to blow us all up live here !!
The moneys raised could go straight into fighting disease and more addictive drugs.
I dont know if anyone agrees??
But im thinking if you went to Tesco to buy a 10 bag, the cashier wouldnt try blagging me into buying a few pills and a gram of coke !!
But where we all buy our weed from we are instantly put in direct contact with the option of buying Coke and Pills… ( most cases the one man can get it all )
This has more to do with 1 drug leading to another in my eyes.. AVAILABILITY!!
When i was 13 and i had a spliff or 2 i didnt think.. Oh i need to try coke now!!
But when i was 13 i was buying off a guy who only had skunk for sale.. as most of you were!! As you got older , you were buying off a guy who had other things available, because he got older and got more contacts.. Suddenly the conversation after i bought the 10 bag went something like,, oh ive got nice coke too if you want to try it !
Yes the social circle plays a massive part and there are so many different scenarios..
But i cant see how legalising it cant help!
The rise in users would be minimal if any.. the police time free’d up would be Big if not Massive!!
Unfortunately tho im thinking it wont be legalised..
Its more likely that Cigs and Alcohol will be made illegal.. :(

#26 Ruaidri on 11.26.09 at 11:19 am

carl: i love drugs

^what an extremely intelligent post.

Upside: If THC based products became legal then the government would be able to spend their resources battling drugs that are a lot more dangerous than cannabis, I mean cigarettes are legal but they are extremely dangerous for your health and they put so much strain onto the health system.

Downside: Ridiculous amount of tax.

Leave a Comment