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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 ?

 

Related Posts

 

12 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

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