Pot Could Be Gold for California

The popular TV series "Weeds" is about a widowed suburban mother who deals pot to preserve her family's cushy California dream. Not a few Californians would like to see the theme writ large for their state. California has legalized medical marijuana, its cannabis crop is valued at $17 billion a year, and people there smoke pot openly. But the state can't collect a penny of revenues from the enormous enterprise.

As California faced budget Armageddon, Gov. Arnold Schwarzenegger called for "a debate" on the potential of tapping marijuana as a source of tax revenues. That's all he can do, because federal law still criminalizes marijuana use.

Harvard economist Jeffrey Miron has already calculated the sort of revenues California and other states could see were marijuana taxed like cigarettes and alcohol. California's taxes would easily top $100 million a year.

But that's the least of it. Miron puts California's costs of enforcing the marijuana ban -- policing, the courts, jail time -- at $981 million a year.

Nationally, legalizing marijuana would save $7.7 billion a year on drug-war spending, according to Miron. And government could raise $6.2 billion annually in tax revenues.

A vain hope rose that President Obama's naming of Gil Kerlikowske as drug czar would lead to a more rational and humane policy on drugs. As Seattle's police chief, Kerlikowske oversaw the city's annual Hempfest (a giant and mellow smoke-in) without bothering the celebrants.

But Kerlikowske announced this month that "marijuana is dangerous and has no medicinal benefit." And to end any idea that the hip, liberal Obama administration would ease up on pot, he added, "Legalization is not in the president's vocabulary, and it's not in mine."

Obama readily admits having used marijuana in his youth (in addition to cocaine). And every year, many thousands of Americans are arrested and their lives ruined for doing what he did. Does Obama get to be president only because he wasn't caught?

Miron is a libertarian who sees all drug prohibition as interfering with people's private lives. But he well understands the politics that stop politicians from taking the no-brainer position on marijuana.

"Democrats know that the potheads are going to vote for them anyway," he told me, "and the people on the other side who care about this stuff know that this is really a big deal." If marijuana were legalized, and the sky didn't fall in, many drug laws would crack.

In previous economic downturns, state and local governments had turned to casinos and other gambling for revenues. These tough times may push legislators to ease their umbrage over additional "sinful" activities.

If they want to tax marijuana, they'll have to legalize it. But even the lesser step of decriminalization -- whereby people may possess marijuana but not sell it -- would save the billions spent going after users.

Selling the public on expanded gambling and legalized marijuana require different arguments. Casino gambling was already permitted in Las Vegas and Atlantic City, so Americans were used to the idea when other states started allowing it. And of course, there's a long history of wagering at racetracks or church bingo games. Marijuana was never part of the official culture.

Marijuana does have an advantage over gambling as a revenue source: It doesn't compete with other taxed businesses. Casinos take entertainment dollars away from restaurants, amusement parks and movie theaters. Legal marijuana would take business away from foreign drug gangs.

A bill to "tax and regulate" marijuana like alcohol now before the California legislature has strong support. But it's not going anywhere as long as "legalization" is not in Obama's vocabulary. The word "hypocrisy" has apparently made the cut.

COPYRIGHT 2009 THE PROVIDENCE JOURNAL CO.

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Views expressed in this column are those of the author, not those of Rasmussen Reports.

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