Smoking the National Debt: Financing our Future...

First and foremost I would like to state that the intention of this essay is not to debate the ethics of drug use as a whole, or marijuana use in specific. The fact of the matter is our ever growing national debt presents an enormous challenge for this and every future generation until a means can be devised to pay off that debt. It is also a fact that marijuana use is common throughout much of our nation. Given these two facts, the following is an attempt to use one problem to help alleviate another, and perhaps generate some conversation about both topics from an economic standpoint.

Fact #1)
According to the published results of the 2007 National Survey on Drug Use and Health conducted by the Federal Department of Health & Human Services’ Substance Abuse & Mental Health Services Administration (SAMHSA): Approximately 14.4 million people over the age of 12 illicitly used marijuana within a month’s time of the survey being conducted. (http://oas.samhsa.gov/nsduh/2k7nsduh/2k7Results.cfm).

Fact #2)
In the above referenced survey, marijuana users accounted for 72.36% of all illicit drug users in America.

Fact #3)
According to the same SAMHSA survey, the percentage of the American population engaged in the use of illicit drugs has been consistent at just over 8% of the total population over the age of 12 since 2002.

Fact #4) According to Office of National Drug Control’s 2009 National Drug Control Budget Summary, approximately $14.1 Billion will be spent this year by the Federal Government on Drug Control efforts. (http://www.whitehousedrugpolicy.gov/publications/policy/09budget/index.h...)

Fact #5)
According to the Federation of Tax Administrator’s website, the average state excise tax on a package of cigarettes as of the January 1st, 2008 was approx. $1.10. (http://www.taxadmin.org/fta/rate/cigarett.html)

With these facts serving as our foundation, let’s play with some numbers and see what we come up with. Given the consistency of the annual SAMHSA survey data since 2002, it stands to reason that the number of marijuana users given in the survey is representative of regular users, not just occasional or one time users. For the sake of argument however, let us assume that just 8 out of 10 of those 14.4 million marijuana users are regular monthly users. That gives us approximately 11.5 million regular marijuana users nationwide, not accounting for medical marijuana users. Let us also assume that, if legalized, those 11.5 million users would consume 2 packs per month of marijuana cigarettes.

At 2 packs per month, assuming an excise tax of $1.10 per package, the tax revenue generated by the sales of these marijuana cigarettes would total over $1.27 billion per month. In a year, the tax revenue would total approximately $15.28 billion.

Now, let’s turn to our figures related to the federal government’s “War on Drugs.” If the total cost of the war on drugs will be approx. $14.11 billion this year, and assuming the government spends equally when working to counter all drugs, decriminalizing marijuana use would reduce the expense of the war on drugs by $10.21 billion annually.

The net gain for the federal government of legalizing the consumption and sale of marijuana and then taxing those sales could potentially be $25.48 billion per year.

Once again, the purpose of this essay is not to consider the ethical or social issues involved in legalizing the recreational use marijuana. However, keeping in mind the prevalency and consistency of marijuana use as recorded by the Health and Human Services Department, one does have to wonder – might the good done by the annual addition of that $25.48 billion to the national budget be worth considering?

According to the 2007 National budget expenditure information available on this website, that money could cover over 80% of our unemployment benefits, 27% of our Education, Training, and Social Services costs, or almost 90% of our international aid and relations expenses.

The above discussion is, by necessity, over simplified. However, it is at least an idea. The challenges of the day behoove us to reconsider our priorities, reevaluate where our money is going, and get creative in finding new sources of revenue to support our on going needs. Is legalized marijuana an ethically and socially viable source of revenue? I don’t know. That said, the potential revenue seems to me too great to let the possibility just go up in smoke.