Econ term paper revision

Marijuana

Introduction

Marijuana has certainly grown through veritable leaps as well as bounds right since it was first being approved by the Proposition 215 in the state of California which was all the way back in the year 1996. Presently we can count that there are 23 states being legalized by this drug for fulfilling the medical needs. Moreover, right from the year 2012 we have four states being Colorado and Washington along with Oregon and then Alaska, which have been legalized for the sale and purchase of marijuana. The overall outcome, at least for a few of the recreation legal states has shown real explosive growth.

The impact on price

We have quite a number of things that tend to influence and impact the overall prices of legal marijuana, comprising of consumer demand as well as the overall number of retail outlets that are supplying the various marijuana goods. While we can view that it’s still an illegal drug in the eyes of federal government. With this the overall amount of federal indulgence as well as prosecution tends to play a greater role in terms of cost along with the overall produced revenue varies from one state to the other.

The two real time big factors that will impact the cost of legal marijuana counts to be the production costs as well as the taxes

We will concentrate on the production costs first so having large-scale production we have the price generating nearly a pound of marijuana dropping as low as around 20 cents per pound on the basis of data stated by Canada's industrial hemp farms but certainly we basically won’t be able to take this as granted. When all the production costs will be factored for marijuana growers then the overall estimates per pound would tend to remain under a value of $20 which will be for a highly graded quality good. (Fuchs, Erin, 2012).

While we have few considerable alterations, existing between 20 cents and also $20 we can take into account that at present's black market prices every pound of the mid-grade prices will be around $4,800. Presently, if we look at the prices, then for an ounce of marijuana the range lies from $100 to around $200 for every ounce of the reduced grade towards an upwards value of $400 to around $600 for the other top end strains. The gradual costs of an ounce ranging in middle graded marijuana if purchased illegally, then would count to be $300 every ounce and at the same time would also drop at a lower rate of $3 for every ounce that been legalized. It’s unlikely that the prices might also drop low as we have another part which terms itself as taxation. (Gieringer, Dale, 2012).

Taxation of marijuana if legalized

Producing revenue for the state might not factor to the overall average American's desires towards bringing home a level of ounce of marijuana, but certainly the revenue will become the driving force staying right behind the looser state laws related to the sale as well as possession of drug consumed. Colorado Center on Law and Policy identified that if marijuana is legalized and if regulated just like alcohol then it might produce combined savings along with revenue of around $60 million every year for the state. (Gieringer, Dale, 1994).

So certainly if we have numbers matching the presented value then it won’t be a surprise that state legalization laws will borrow tax from other intoxicants including alcohol which in turn implies that we would expect excise tax being calculated on the overall commercial sales of marijuana.

But certainly the taxes will also tend to vary from one state to other. As an example we have, according to the Washington's legalization laws, we have a tax of around 25 percent calculated on marijuana and this tax is then applied right at the duration of sale to consumers and also during other instances which comprise as an ounce of marijuana being taxed if it is legally bought from any particular retailer but that excise tax might get applied whenever the producer plans to sell it any of the processor and also during the time when processor in turn would sell it to any of the retailers.

At this moment the unit price of marijuana per ounce might not get cheaper as compared to black market prices till the point that it gets legalized fully both in the lights of individual states for any kind of medicinal utilization but also at the federal level. While we have the state legalization making marijuana cultivation easier than the producers would still have to face federal penalties which in turn would imply a very huge agricultural farming along with industrial functions being designed for the purpose to generate cheaper grown products. (Gieringer, Dale, 2012).

Legalization would therefore lower the overall costs of supplying the drugs through more than the taxes charged that might offset at the same time also push the retail prices into the uncharted waters. We might also be confident regarding the overall effects of consumption since we are actually not aware of the overall implications. One might not consider providing legalization for a trial run, then the pledging in order to repeal it for the consumption would gradually end up increasing from more than what is actually anticipated.

However, even we have temporary legalization that would cause permanent impacts. The society would basically ‘illegalize’ at the same time also re-impose any kind of prohibition, but then that might not return the matters. The overall economists would then estimate that marijuana utilization will get increased by a value from 75% to around 289% once it gets legalized and certainly more if we have advertising also getting permitted. (Mendes, Elizabeth, 2010).

As having a greater consequence the medical providers might require adapting to the overall influx of the new consumers who basically gets involved in any kind of accidents or someone who tends to report being fallen under the marijuana linked panic attacks or prior dependence. While the Medicaid as well as other public assistance activities presently paying for nearly around two-thirds of the overall inpatient admissions.

Inevitably, we also have the scenario as any increase in utilization will on the other hand also correspond to the uptick in terms of cases of dependence as well as abuse. If the overall number of new customers lies between the values of 13.05 million to around 47.85 million, then the treatment related admissions might likely get increased from a value of 1.3 million to around 4.8 million respectively. Ingold, John, 2012).

The non-dependent consumers are seen to be prone to any kind of illnesses or accidents and even crime as compared to the non-users. Since we expect legalization to cut down the marijuana prices to approximately half and then making it affordable would impact as the drop in market prices compounding more risks for the consumers who are already addicted.

Substantial Implementation Costs

We will examine the city of Colorado which has recently legalized marijuana and is presently spending huge money for the purpose to controlling it and in return only few tax revenues has been collected. In fact, as per the recent report over prevailing conditions of Colorado’s medical marijuana organization it has been stated that the State of Colorado has basically collected $5.4 million in terms of sales tax over the medical marijuana purchases.

Like this we also have costs that are linked to implementing education as well as prevention programs in order to mitigate the rise in any kind of substance abuse as well as dependence. The government agencies who are involved in this field of healthcare along with social services as well as law enforcement might tend to incur immediate brunt of the economic values in terms of addressing the present spikes in terms of medical complaints accompanying accidental injuries and also a crime. (Kilmer, Beau; Caulkins, Jonathan P.; Bond, Brittany M.; and Peter H. Reuter, 2012).

Overall impact after legalization

We will now see in the figure stating what is basically expected to happen after the process of legalization. In this figure SN is the supply curve for the non-legal marijuana, which is present before legalization, but after that we can see a new curve appearing as SL which presents the overall supply of marijuana that is legally manufactured in the state.

At moderate levels of quantities the overall legal supply curve would lie just below the prevailing illegal supply curve since it might cost lesser in order to generate the legal good. The overall demand curve for legalizing marijuana being indicated as DL is seen to lie to the right of illegal demand curve which is DN. This states that most of the consumers of illegal products will tend to buy from the prevailing legal market if the prices is not actually higher and also we would also have new users who will enter the existing market trusting the product quality and the risks associated with it. (Mendes, Elizabeth, 2010).

It also depicts that the results basically proponents of legalization. The overall price is seen to be lesser as compared before. The quality of the legal product will certainly be of higher standard, reducing the implications of health risks. Higher costs as well as uncertain quality will then render the illegal suppliers to be non-competitive as well as also the legal producers along with retailers will take control over the entire market. (Mendes, Elizabeth, 2010).

Conclusion

Thrower depends on the state and their current conditions the government needs to take up crucial decisions with legalizing or not legalizing taking into consideration its overall impact over the economy.

Reference

· Campaign to Regulate Marijuana like Alcohol. "Amendment 64: The Regulate Marijuana Like Alcohol Act of 2012." 2012. (Dec. 13, 2012 http://www.regulatemarijuana.org/s/regulate-marijuana-alcohol-act-2012

· Fuchs, Erin. "Legalizing Pot In Just 2 States Isn't Really Going To Make Weed Cheaper." Business Insider. 2012. (Dec. 13, 2012) http://www.businessinsider.com/will-legalization-make-pot-cheaper-2012-11

· Gieringer, Dale H. "Testimony on the Legalization of Marijuana." National Organization for the Reform of Marijuana Laws -- NORML. 2009. (Dec. 13, 2012) http://norml.org/pdf_files/AssPubSafety_Legalization.pdf

· Gieringer, Dale. "The Cheapest Intoxicant." National Organization for the Reform of Marijuana Laws -- NORML. 1994. (Dec. 13, 2012) http://norml.org/library/item/the-cheapest-intoxicant

· Ingold, John. "Colorado revenue boost from marijuana legalization uncertain." The Denver Post. 2012. (Dec. 13, 2012) http://www.denverpost.com/news/marijuana/ci_21857898/colorado-revenue-boost-from-marijuana-legalization-uncertain

· Kilmer, Beau; Caulkins, Jonathan P.; Bond, Brittany M.; and Peter H. Reuter. "Reducing Drug Trafficking Revenues and Violence in Mexico: Would Legalizing Marijuana in California Help?" International Programs and Drug Policy Research Center -- RAND. 2010. (Dec. 13, 2012) http://www.rand.org/content/dam/rand/pubs/occasional_papers/2010/RAND_OP325.pdf

· Mendes, Elizabeth. "New High of 46% of Americans Support Legalizing Marijuana." Gallup. 2010. (Dec. 13, 2012) http://www.gallup.com/poll/144086/New-High-Americans-Support-Legalizing-Marijuana.aspx