Marijuana as a source of tax revenue

The argument

One of the most concrete arguments for legalising recreational marijuana is fiscal. Under prohibition the trade does not disappear; it simply operates outside the reach of the state, which means that every transaction generates revenue for an illicit market rather than for the public purse. Legalisation changes that relationship. Once the substance is legal, the state can license producers and retailers, set the terms on which it is sold, and levy tax on each sale. The windfall can be considerable: Colorado gained $5 million in tax revenue in the first week that marijuana was legalised there. The revenue side is only half of the ledger. Prohibition is itself expensive to maintain. Enforcing a ban requires police time to investigate and arrest, prosecutors and courts to process cases, and prison places to hold those convicted, and the cost of a prison place is borne year after year for as long as the sentence runs. Legalisation removes an entire category of offence from that pipeline. The state therefore saves money it would otherwise spend on the incarceration of people imprisoned for marijuana-related offences, and frees the enforcement capacity those cases consumed for other purposes. Taken together, these two effects move money in the same direction. A government that legalises gains a new and recurring stream of tax receipts while shedding a standing expenditure it was previously obliged to meet. For proponents, that combination of new revenue on one side and avoided cost on the other is a straightforward public-finance reason to make recreational marijuana legal.

Premises

Counter-arguments

Theoretically, legalising any drug could be a significant source of tax revenue for the state. This is not a reason to do so. The amount in tax revenue legalising marijuana would produce does not alleviate the harms it would cause to individuals.

Rejecting the premises

[Rejecting P2] Something earning the state money is not a reason to allow it.