Marijuana and federalism

I was a discussant for two drug policy sessions at the Association for Public Policy and Management (APPAM) this week. Yesterday’s session included some fine presentations by RAND-affiliated researchers regarding marijuana legalization/decriminalization/ depenalization. With collaborators, four of the best in the business—Peter Reuter, Mark Kleiman, Beau Kilmer, and Jonathan Caulkins—weighed in.

The discussion of Colorado and Washington’s marijuana ballot initiatives reminded me of four things:

First, no one can be all that confident in predicting the likely impact of these initiatives. Existing data largely indicates what might happen if one reduced demand-side penalties. In different ways—and the details matter here–these initiatives recognize and legitimate the supply-side in a qualitatively different way.

Second, the market price of marijuana is likely to drop—almost certainly in these states, and quite likely beyond them. Moreover, the risks and inefficiencies of participating in the marijuana economy will also decline. The impact of this price decline remains uncertain, but it is worrisome. Will this increase youth use? Will this increase or decrease DUI rates and alcohol-related problems? No one really knows. Much depends on the quality of implementation and regulation.

Third, I doubt that these initiatives are unlikely to substantially reduce prison populations or raise substantial tax revenues. Our current marijuana policies are too punitive. They result in far too many arrests of low-level users and sellers. It’s an incredibly bad idea to saddle young people with criminal records for nonviolent offenses. Colorado, Washington, and other states are wisely altering these policies. At the same time, marijuana accounts for fewer than 10 percent of those incarcerated for drug-law violations. I fear that people expect these ballot initiatives to accomplish more than they can do in ameliorating mass incarceration problems.

I also wonder how much tax revenue  states will be able to raise if marijuana is legalized.  Annual gross sales of illicit drugs in the United States are smaller than you might think. As I’ve noted before, the entire world of Mexican heroin, cocaine, marijuana, and methamphetamine trafficking here–if treated as a single firm—would be hard-pressed to match the gross revenue of Wrigley’s gum and Dollar General. State tax rates are constrained by competition from illegal marijuana markets and from other sectors. In Colorado, 100,000 people participate in the large medical marijuana sector, which will remain essentially untaxed under Tuesday’s initiatives.

Fourth, few non-libertarians genuinely care about federalism as a governing principle. Both the Colorado and Washington initiatives bluntly violate federal law. Compare the reactions of liberals and conservatives to these marijuana initiatives and to the Supreme Court’s decision regarding the Affordable Care Act. Many people—including me—regard ACA as obviously constitutional under the commerce clause as interpreted in post-New-Deal America.*  We have national health care and health insurance markets. Measures such as the individual mandate help to stabilize and properly regulate these markets. If some Supreme Court justices want to re-litigate post-New-Deal social policy, all the more reason to appoint other justices to push back this dangerous constitutional conservative challenge.

Well, we have a national marijuana market, too. I happen to believe that that our current marijuana policies are misconceived. Yet it seems equally clear that the federal government has the constitutional authority to regulate this market.

How heavy-handed the feds should be–that’s another matter.  In different ways, Beau Kilmer and Mark Kleiman each suggested that the right negotiation between state and federal authorities would be to depenalize growth and consumption of marijuana for personal use, to allow some form of commercial or government sales for local use, and to ensure that these efforts genuinely stay local while the rest of the county gauges what is working well or poorly in these efforts. States can truly be laboratories of democracy in drug policy.

In some ways, the smartest state policy may be to establish a state marijuana store, in which price, quality, and quantity could be readily controlled, and whose policies could be changed in light of experience. This would bluntly violate federal law.  Yet the federal government actually has powerful reasons to prefer this to the alternatives.

Tuesday’s vote accelerated the trends to a fundamentally less punitive marijuana policy in America. A little give and take from both sides seems essential to do this wisely and pragmatically, learning from our experience.

*Other constitutional justifications are available. That’s another matter.

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