For a few years now Americans have disputed on the legalization of cannabis, which is also known as marijuana. As of today, there are twenty-nine states and the District of Columbia currently have laws broadly legalizing marijuana in some form – either for medical or recreational use (State Marijuana Laws in 2017 Map). However, there are only 5 states including the District of Columbia that legalized marijuana for recreational use and this is less than a third of the total states in the U.S. Although some states who haven’t legalized marijuana do provide limited access for marijuana under certain circumstances, federal law still prohibits doctors from prescribing it (State Marijuana Laws in 2017 Map). This just means there are still limited access of marijuana for consumers, especially the ones who needed it for their health, because doctors can only make suggestions to them but not prescriptions.
There are no doubts that legalization of marijuana gives benefits and costs to the society, but I believe that there are more benefits in legalizing marijuana than prohibiting them. If we look back at the history of alcohol prohibition, the law only led to an increase of power for El Capone and his gang members to gain more profits as they are the main supplier of alcohol (Montgomery, 2010). The reduction in supply increased demand so high and they were able to gain profits as a monopoly in the business. When the repeal of alcohol prohibition happened, El Capone did not have the sole power over the market anymore, so there are lower barrier to entry and more competition in the alcohol industry. In a world where substances like alcohol and tobacco remain legal, I believe that it should be legal for marijuana use too, either for recreational or medical use especially when the Drug Policy Alliance (DPA) believes marijuana should be removed from the criminal justice system and regulated like alcohol and tobacco (Marijuana Legalization and Regulation). In this paper, I will argue that the legalization of marijuana gives more benefits to the society as it curbs price gouging, gives more options to people to exercise rationality and creates more jobs for the population.
In most states in the U.S, consumers who needed marijuana for recreational purposes can only buy it on the black market. Apart from consumers who want to buy marijuana for recreational use, patients will sought for buying marijuana in the black market too as they cannot get it at the dispensaries for medical purposes in states that did not legalize marijuana for medical purposes. This is especially dangerous, as it poses a serious threat for patients as they have limited access to buy their medicinal needs. From this lack of access for consumers, it is only reasonable that the black market existed as there are laws that lead us to inefficient outcomes – there are no markets that can cater to the demand of marijuana so consumers resort to black market.
As a result, sellers in the black market are in control of the marijuana market in states that do not legalize it. This only mean that black markets have unlimited power on the pricing of the product. They can abuse the pricing power by making it really high for consumers than what is considered reasonable – this is called price gouging. As supply is limited and hard to grow as seller's operations are illegal, and are always open to the possibility of being caught by the police, they have more reason to increase the price for consumers and this will only reduce consumer surplus. To curb this issue, we need a nationwide legalization of marijuana, because as long as the black market persists, the price will remain higher for the consumers. We need a change in the federal law or statutes in other states especially, as the price will remain higher for states where pot remains illegal, and smugglers can just move to these other states and charge premium prices as more demand shifted in those states.
With legalization of marijuana, the price of legal marijuana will be competitive with the price on the black market, therefore people buying marijuana illegally will resort to the easily-accessible dispensaries throughout the state ( Hutmacher, 2014). While it is important to note that the price of legal marijuana is higher than the ones consumers can buy at the street at the moment, mainly because of the taxes, we can see that states like Colorado, Washington, and Oregon are taking the necessary steps to lower the tax. This will make the price in regulated market to be more attractive for consumers than the ones at the black market (Hutmatcher, 2014). For example, Denver dispensaries are currently charging medical customers around $10 per gram, and higher for recreational customers, but often less than $15 after taxes (Sullum, 2014). These prices have fallen 33.5% for the first quarter in 2017 compared to last year (Borchardt, 2017). Meanwhile in Washington, Seattle dispensaries catering to patients charge $8 to $15 per gram and these prices are down 15.4% for the same period (Borchardt, 2017). These prices are lowered and becoming more competitive than that of the street’s. If this is done across all states in the country, we can see the domino effect of price between both black market and regulated market to become very competitive.
Eventually this will drive down demand from the black market, and consumers will only resort to buying marijuana from the dispensaries. If the consumer takes into account buying marijuana at the black market with the risks of his or her safety that might be in jeopardy (consumers can be caught by the police or involved in a deal-gone-wrong as the black market is a risky, unregulated market in which violence and intimidation are used to settle disputes), it might just be more costly to buy marijuana at the black market than at the dispensaries, even if the price at the black market is cheaper.
It is only fair to include the discussion of attempts on price gouging even after legalization of marijuana, which recently happened in the state of Washington and Nevada, if we want to really curb price gouging. Now if we look at the state of Washington, price gouging still happens in the black market because of the slow state licensing process and difficulty in obtaining local approval for grow operations. This eventually lead to a shortage in supply in the regulated marijuana market in Washington. We can see that The Washington State Liquor Control Board (LCB) has awarded only 62 marijuana production licenses but more than 2,500 applications from would-be growers are still pending (Sullum, 2014). These allow for shortages in the supply of marijuana to happen, causing the supply curve of the regulated market to shift inward and demand to be really high. When this happened, the black market has the upperhand as the main supplier with more supplies because they don’t need to have license and approval for grow operations. Consumers have no option but to go back to the black market to get their supply. This means that the black market still has the power to price gouge.
Nevada also faced the same issue, whereby last-minute distribution issues and larger than expected sales have caused the regulated marijuana market couldn't keep up with the demand (Borchardt, 2017). If we allow this to happen, price gouging can still happen as the sellers in the black market have the power in gaining consumers because of the rising demand. Regardless of how high the price they would charge the consumers for, they will still receive demand. In an attempt to avoid black market that has the power to price gouge the consumers, states that have legalized marijuana should give out licenses faster to local dispensaries and lessen restrictions in approving marijuana-growing operations.
Legalization of marijuana also gives the users and the law enforcements more options to exercise rationality. When we allow users to use marijuana either for recreational or medical use, they are given a safer option to buy it from the dispensaries and not to risk their safety to buy it from a dealer in a market that is not regulated. A rational human economicus would only choose the best option for him or her, and legalization gives the safest option to the users of marijuana. When they are purchasing marijuana they are also given better options of the products as they are purchasing products grown under controlled conditions with labels that convey THC content and other important information (Fox, 2014). This is especially so when marijuana product testing is becoming a standard requirement for legalized marijuana markets (Marijuana Legalization and Regulation). Hence, consumers are better informed about the marijuana they use and they are able to make better decisions. With the regulation, the consumer's transaction cost in searching information about the product is zero, and this will indefinitely maximized the consumer surplus and make it easier for consumers to exercise rationality.
It is now not only safer for users to buy marijuana, but also when they use it. Before legalization, many users of marijuana were caught by the police even when they possessed very little amount of marijuana. With the legalization, users are now free of fear from being caught by the police and they are free to use it anywhere they want. They do not have the constraint to only smoke it in hiding and this really benefits the consumers and increase their surpluses. Now, they have better options to use marijuana anywhere they please. This is especially important for people who were arrested for marijuana possession, because they were turned down by many employers for their marijuana convictions and mostly when the marijuana is only for their personal use. These resulted to people having more difficult time finding work because of the history of their arrests (Williams, 2016). With the legalization, not only they are free to use marijuana, but are also free from this unfair treatment from the convictions and are given more options for employments and equal opportunities for work benefits.
Legalization of marijuana also allows the law enforcer to have more options to exercise rationality. With the legalization of marijuana, police do not have to focus on arrests of small possessions of marijuana anymore, but instead on more important crimes, especially the ones that are more violent and dangerous. Last year, law enforcements agencies made 574, 641 arrests for small quantities of marijuana intended for personal use, which is 13.6% more than the 505,681 arrests made for all violent crimes, including murder, rape and serious assault (Williams, 2016). This a huge issue for the law enforcements agencies, as it is only reasonable that they exercise arrests in such number in making sure tight security for public safety and not in policing marijuana possession, that we know is completely harmless to the public. With the legalization of marijuana, law enforcement agencies have no responsibility to police small possessions of marijuana, and they have better option to focus their work, especially on real crimes pose serious threat to the public.
Not only law enforcer can focus on other important crimes, but the government can reduce so much cost that was used in enforcing law on marijuana. According to ACLU, in 2010 alone, states spent $3.6 billion enforcing the laws on marijuana every year. Had we legalized marijuana, we were able to use the money, and our already limited resources to stop other crimes that pose more dangerous threats to the society. Law enforcement agencies are given options that are better than before, as we can use the costs we used to spend on marijuana arrests for other beneficial programs like drugs education and treatments which would only benefit the consumers.
This is especially important as the country spend more than $51 billion on the war on drugs, and we have highest incarceration rate in the world (Marijuana Legalization and Regulation). However, the number of states that have decriminalized or removed the threat of jail time for simple possession of small amounts of marijuana is only 22 (Marijuana Legalization and Regulation). The last thing we want to do is to incarcerate more people into the prison just because they have small possessions of marijuana. It is only better that we reduce the rate of marijuana incarceration by legalizing the use of marijuana and allow people who needed help from addiction of the drugs to receive education and treatment. It is only rational to use the money we spent on war on marijuana for these programs and for law enforcements to use, in policing violent crimes instead. Without legalization, there will always be fundings for marijuana arrests and this would only divert the police from policing the real crimes. This will eventually increase the number of people arrested for marijuana law violations arrested for possession. Therefore, legalization of marijuana should happen as it will only benefit the law enforcement agencies. They will have better options to exercise their rationality in making sure public safety is at the top of their priority.
Legalization of marijuana also creates more job for the society and we can definitely see this in Colorado as it is the first state that legalized recreational marijuana. According to the Marijuana Policy Group which was hired by Colorado for an economic analysis, legalization of marijuana in Colorado created 18005 full-time equivalent (FTE) jobs in 2015 and among these jobs, 12591 were employees directly involved with the marijuana business – either in stores and dispensaries, cultivations, or infused product manufacturing operations. If there are more states that legalized marijuana, new report from New Frontier Data projects that by 2020 the legal cannabis market will create more than a quarter of a million jobs. This is more than the expected jobs from manufacturing, utilities or even government jobs, according to the Bureau of Labor Statistics (Borchardt, 2017). These numbers are showing that marijuana is a major economic driver and job-creation engine for the U.S economy.
It is also important to note that not only it produces more jobs for the industry, but additional employment will be generated when marijuana employees and proprietors spend their income on local housing, food, and entertainment at the area too – this is called “induced employment effects” (Marijuana Policy Group). With the creation of more employments, the society will benefit from this industry as they will get income and and use the earnings to support their lives.
We can see that the legalization of marijuana curbs price gouging, gives more options to users and law enforcers to exercise rationality, and increase creation of jobs. These only benefit the society as a whole especially for the consumers who are using marijuana either for medical use or recreational use. As there are immense benefits for the society that comes out of legalizing marijuana, it is only fair that we should legalize marijuana nationwide and allow consumers and marijuana producers to enjoy surpluses and thus increase the socially efficient outcome.
Work Cited
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