Federal Marijuana Enforcement Costs Several Billion Dollars Per Year
The criminalization of marijuana is not just a social injustice, but a costly one. It costs several billion dollars each year in enforcement costs and social equity programs. It also impacts tax revenues. Let’s take a look at how these laws have affected people of color. In particular, we will look at the costs of enforcement. The costs of enforcement will continue to increase, and social equity programs will suffer the most.
Criminalization of marijuana affects people of color
While attitudes toward cannabis use are increasingly more permissive, the partisan gridlock in Congress virtually ensures that decriminalization legislation will not pass in the U.S. Senate. However, the House of Representatives passed the Marijuana Opportunity Reinvestment and Expungement Act (MORE) earlier this month. It requires federal courts to expunge marijuana-related convictions, allows for resentence in federal cases, and includes funding for social equity programs in communities affected by harsh drug laws.
In addition to disparate arrest rates, many communities of color have been disproportionately affected by the criminalization of marijuana use. This is not a reflection of an increase in drug use in these communities, but the disproportionate presence of law enforcement in communities of color and low-income neighborhoods. While black and Native Americans have disproportionately higher arrest rates for marijuana possession, their rates have actually decreased in states that have legalized marijuana.
As more states legalize marijuana, the disparity in arrests for marijuana possession is particularly striking among communities of color. According to a 2010 study, Black people were arrested at nearly three times the rate of whites for the same offense. In addition, disproportionately more Latinx people were arrested than whites for marijuana-related crimes, and the disparity is even greater in the most repressive states. In Colorado, for example, the rate of arrests for marijuana possession is nearly three times higher than among white people. In South Dakota, marijuana arrests are almost three times higher among Native Americans, and they make up almost a third of the prison population in the state.
While black and white people use marijuana at similar rates, these laws still have disproportionately impacted people of color. However, a few states have taken steps to mitigate the disparity. Nine states have legalized recreational marijuana and 29 have legalized some form of medical cannabis. Meanwhile, Seattle and San Francisco have opted to drop thousands of marijuana-related convictions. Even though the new laws on marijuana are much more liberal than the federal law, they still continue to penalize communities of color disproportionately.
Costs of enforcement
The cost of the prohibition of marijuana has been well documented. Between 2001 and 2010, police made 8.2 million arrests involving marijuana possession. The cost per arrest was $4,390, and law enforcement spent $73,170 on every felony conviction. The additional costs of enforcing the laws on marijuana are often opaque. According to the ACLU, these costs amount to more than $17 billion annually. And that’s before we even consider the restitution costs incurred by individuals arrested on possession charges.
Estimates for the federal cost of marijuana production vary widely. Colorado estimates that it will raise more than $70 million in tax revenue per year, while Washington estimates that it will generate over $140 million in revenue in calendar year 2016. Meanwhile, Washington estimates that it will raise between $270 million and $5 billion per year in sales taxes. And if we were to add up all the revenue from the state and local marijuana industry, the federal cost of enforcement would reach $5.6 billion annually.
Tax revenues from legalized marijuana in California, Washington, and Connecticut would fall from over $28 billion to just over $22 billion. This is because the federal government would enact an excise tax similar to that on cigarettes. The reduced tax revenue comes from lower profits for businesses and increased production of the drug. In other words, the government would make less money, but that’s a trade off. The cost of marijuana enforcement is significant, and there’s no question it will take many years to reverse.
The new law is largely aimed at punishing people who use marijuana for personal use. Despite its sweeping effects on society, it is still a controversial issue. However, the federal government has repeatedly acknowledged that marijuana possession is a dangerous and addictive drug. It has led to more than 600,000 arrests every year, and disproportionately affects people of color. Furthermore, it is a significant cause of deportation, and was the fourth most common reason for removal for drug law violations.
Many states have legalized marijuana for medicinal purposes and have decriminalized the possession of small amounts of pot. The CSA also makes it illegal for a landlord or tenant to rent or lease property to a marijuana business. This can lead to criminal fines and even federal asset forfeiture. And even if legalization does eventually occur, the costs to law enforcement will continue to increase. In some states, such as California, marijuana is legal for medicinal purposes. The federal government is generating millions of dollars every year from marijuana enforcement.
Social equity programs
The recent passage of federal legislation prohibiting the sale of marijuana will result in millions of dollars in new revenue for social equity programs. Among other things, the bill will provide funding to help fund programs that provide access to affordable housing and other social services. In addition, it will create a new account for the “social equity and innovation account” in the General Fund that will be used for specific purposes. The moneys in the account will go towards paying the Social Equity Council’s costs and administering RERACA programs to provide business access and technical assistance, community development, and economic opportunity. In addition, reinvestment grants will fund legal services for individuals with prior marijuana convictions.
Despite the benefits of legalization, racial disparity still persists. The legal marijuana market is dominated by white distributors, with 81% of businesses owned by white people. In some states, barriers to entry remain high, including the requirement for felony convictions and expensive application fees. This exacerbates the racial injustice and criminalization of people of color. The new law also requires the R3 Board to have eight members from the community, and allows marijuana dispensaries that have been early-approved for adult-use to relocate within the same medical district.
SEL funding is provided through the Department of Revenue’s Social Equity Council. Under the program, cannabis businesses may be granted low-interest loans through the SEL program. The terms and conditions of these loans will vary, but generally, repayment term will be five years. In addition, marijuana establishments must be licensed, and the applicants must meet certain criteria for social equity. Priority will be given to applicants whose circumstances have been adversely impacted by the failed war on drugs. Applicants who are given conditional acceptance will be referred to lender partners for an in-depth review.
The legislation also requires states to invest in programs that address social equity issues and repair harms caused by the prohibition of marijuana. In Illinois, for example, twenty percent of the adult-use cannabis tax revenue will be directed toward mental health programs and 25 percent will go to the Recover, Reinvest, and Renew Program, which helps local organizations develop programs for underserved communities. Similarly, in Maine, adult-use cannabis sales will begin on October 9, 2020. Maine’s government will divide the money among public health initiatives, law enforcement training, and marijuana-related programs.
Legalizing marijuana nationwide would generate $132 billion in annual tax revenues for the United States, while creating more than one million new jobs. According to a study conducted by New Frontier Data, the marijuana industry could create a new tax revenue stream for the government, including sales tax and payroll deductions. The revenue generated from legalizing marijuana is a logical place for the government to find money. But it remains unclear whether or not legalization will increase federal spending.
While federal revenue from marijuana enforcement could grow over the next few decades, it is unlikely to reach that amount in the near term. In the short term, the federal government should not try to levy a higher excise tax than it currently has. It should first consider what other options are available to it. The federal government could impose a 25 percent excise tax on marijuana products, as it does on cigarettes, which would raise around $50 million a year. Higher tax rates would raise much more money.
The study also considers the tax impact on the black market. In other words, marijuana is less sensitive to price changes than other products, so the tax revenues are not reflected in black market prices. Furthermore, black market marijuana businesses lose significant amounts of tax revenue to the federal government. These include business taxes, wage income and payroll taxes, and licensing fees. Further, black market marijuana businesses also face the risk of being shut down, which costs the government millions of dollars every year.
Legalization of marijuana has created new challenges for policymakers. Despite a bipartisan push for legalization, marijuana remains illegal in federal law. While states have been moving toward legalization, Attorney General Jeff Sessions has gone after the marijuana industry. However, these policies have resulted in legalization efforts resulting in a new tax revenue stream. It is important to remember that marijuana businesses can not use banking resources to accept credit card payments and cannot take advantage of many federal tax deductions. Legalizing marijuana would make it easier for marijuana businesses to sell goods and would mean a smaller deficit.
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