The Question of Marijuana (To Be Marked)

15 05 2011

Justice Donald Taliano found that prohibitions against the production and possession of marijuana in a few sections of the Controlled Drugs and Substances Act as well as Canada’s Marijuana Medical Access Regulations to be constitutionally invalid. The government has up till July 11 to fix these or marijuana will be in effect legal to possess and produce.  It is the most recent of moves towards making pot legal in Canada. Will the government correct laws, thus stopping decriminalization? The reality is quite likely. However, as revealed in the most recent opinion poll done by Angus Reid, 53% of Canadians are for legalization. Shouldn’t the government respond to belief of the public?

But that brings into question of what continues to hold us back from legalizing this substance? Such a substance has been around for so long but only within the last hundred years has it been made illegal in most places around the world. As of late, though, there have been quite a few success stories in terms of decriminalization and legalization, for instance Portugal. However there are many reasons for this inhibition of policy in Canada, all of which are understandable.

To many, marijuana is quite controversial in usage. Quite a few gasp at the thought of this dry plant being used. It is against many religious and moral codes defined by society. There is a feeling that it is wrong to use marijuana. Notice how I have avoided called marijuana a drug and rather opted for the term substance. There is a stigma, a sort of distaste involved with an item categorized as a drug. Some may link this to the views taught throughout the 1990’s that this substance makes you insane and that it is bad for your health. Although one does get the intended high, there are other adverse effects. Abuse of the substance can lead to increased lung problems similar to those associated to tobacco smoking, and increased chances of cancer development. In addition to that, is the negative externality resulting from smoking of any substance including marijuana, is the risk second-hand smoking. Those who did not choose to smoke are being exposed and thus are susceptible to lung problems as well if the exposure becomes regular. Also those under the influence of this substance are more likely to be involved in injuries for instance the most critical one being vehicle accidents. Driving high can be quite dangerous and can put others on the road at risk. With all this in mind, those who smoke marijuana have an elevated risk of being admitted to a hospital. As a result of this, legalization would potentially put more of a burden on the healthcare system.

There is also a fear that comes with legalizing. Once done, what is to say that it would not open the window to drugs to many other people? This statement means many things. First of all, some argue that marijuana could act as a gateway drug to other more intense substances. Secondly, if we legalize marijuana, that would set a precedent for other drugs. We could potentially see a flood of demand for fixing up legislation for other illegal substances.

Earlier on in this blog, it was mentioned that marijuana can be harmful if it is abused. The key word is abused. Yes, one can argue that as a result marijuana is harmful. But the counter argument, McDonalds is also harmful when consumed in copious amounts. Does that merit making it illegal? No. The fact is using the drug is not truly harming anybody. Most studies have concluded that marijuana is not as harmful as initially thought. It is far safer to use than cigarettes and tobacco in terms of health as has proven to be effective in medical treatment, for instance reducing the bad effects of chemotherapy and treating strokes.

Having marijuana continue to be illegal has proven to be inefficient as many are not deterred. It is panning out the way prohibition did. Even thought it was illegal, people still got it and as a result there were higher crime rates in trafficking and violence due to the drug trade. Legalizing would almost destroy the black market that was created because it was illegal. Thus it would reduce drug related crimes and free up the policing and judicial systems that would normally go after those who committed these offenses. In addition to that the system would not be overwhelmed with dealing with crimes for possession and distribution. First of all, this would require no more policing. As a result our police forces can focus on other crimes and also governments can reduce police spending and allocate it to other regions. The judging of cases would also be affected. Since lawyers and judges have to be brought in, these tend to be quite expensive. In 2003 alone, 150 million was spent on court cases. The last area that would be affected is that of detention. Our jail facilities cost quite the pretty penny to detain each breaker of the law. Imagine how much would be saved if those convicted of only possession were not detained. In Canada, drug related crimes may have only made up 3%. But every percentage counts when trying to improve a system. And in terms of government spending to deal with that 3%, one will see, it is not a small number. If anything reduces crime, it’s a good thing.

Now we look upon the most obvious reason to legalize the substance. Every economist seems to drool over the prospects of what the marijuana industry could hold. It is estimated that in Canada alone the industry is as large as $20 billion per year. Thus being the largest agricultural product in the country. The first droolable prospect is taxes. The fact is upon legalization; the government can do what it does to alcohol and tobacco and attach excise taxes to marijuana. This in turn would allow more cash to go to the government and be allocated for various government services. Another tax area that would be utilized is that currently, marijuana growers and distributers are not making a traceable income. However, once legislation allows for it, it opens the window for new people to be counted in income tax, thus giving more back to government funding. This can also be a source for job creation since the population is growing and more and more may be inclined to use it. This would allow more people to go into the work force and make incomes to support themselves. As a result, the marijuana industry could potentially reduce unemployment.

With all these benefits, it seems almost foolish not to go on right ahead and make steps towards legalizing this long been thought to be naughty substance.

Quite honestly, beliefs are what hold us back from legalizing. The economic benefits of freeing up our judicial system and police force and making more tax revenue greatly outweighs the negative. Some may fear that marijuana may still be bad or immoral but the truth is the methods used are not working as the common phrase is that marijuana is easier to access for a teenager than alcohol. It may open up the door to more users, but ultimately it is a choice. Marijuana is not being forced down the throats of the unwilling, no, this is only arguing for the legalization of the substance. From there society will have to decide how it will act. In weighing the crimes caused by the drug trade and the many people jailed for possession of the substance, it makes me wonder. The true crime might actually be continuing to criminalize cannabis.

High Times: The Economics of Marijuana

14 05 2011

Historically, marijuana has been dated back to China around 2737 BC. In later years, it has been tracked in the cultural scriptures of almost all cultures. It gained worldwide popularity as not only a recreational drug, but as a utility that could be made into other useful products such as fabrics, papers, ropes, jewelery among other things. In Canada, marijuana was first banned in 1923 under the Opium and Drug Act. Nowadays, it is still criminalized, but the many courts declare it to be “of no force and affect”. There has been an ongoing debate since then as to why it should be legalized once more and in this entry, I plan to outline the economics of the plant as both a recreation drug as well as it’s other uses, where it can go in the future as well allowing you to take a ride on my train of thought.

This debate over the legalization shares a great number of similarities to the the Canadian Alcohol Prohibition of 1918. With the criminalization of alcohol, booze simply became underground, bootlegged and opened up thousands of black markets, leading to the rise of crime in both the smuggling as well as the illegal production. This led to the eventual disbanding of all alcohol-related prohibition laws. I believe, that by utilizing the same concepts we have learned from 1918, legalizing, taxing and regulating marijuana will allow for benefits both economic and social.

Seeing Green

The legalization of marijuana would provide many positive externalities to society.

Marijuana has a huge following around the world, in spite of it’s illegality. In 2004, the most recent year cited, it was estimated that “16.8% of Canadians aged 15 to 64 smoked marijuana or used other cannabis products”, four times the the global rate. Although due to it’s secretive nature, it is hard to estimate the monetary value of marijuana in Canada, many economists and agencies believe that it is in the range of around $20 Billion per year, making it Canada’s single largest agricultural product. By legalizing and using excise taxes (or “sin” taxes) on marijuana, similarly to the tax on cigarettes and alcohol, the government can make use of the industry and gain profits to be reallocated to other places, which is a huge positive externality within itself.

Another positive externality of the legalization of marijuana would be the freedom of our policing and judicial systems. One gripe that many have with the current criminalization of marijuana is that it strains our cities public resources on an issue that shouldn’t be dealt with. Like any other crime, it comes with three main (and costly) aspects; policing, judgment and detainment. When people are caught for marijuana-related crimes, they must first be physically caught by the police. Afterward, they are put through a court system and finally, if found guilty, they are then detained for the sentence deemed by the judge. This may seem regular, but in the grand scheme of things, marijuana-related crimes make up around 3% of all crimes in Canada (excluding traffic). Though this seems like a small number, this would mean that 3 in every 100 court cases would not need to happen, affecting the system greatly in the long run. The entire three-prong system itself is extremely costly to the government and with that small chunk of crimes need not worried about, it is evident that we should see a smoother system overall.

Thirdly, the legalization of marijuana would almost destroy the underground black market of marijuana and thus the criminals behind it. With marijuana able to be sold more freely, those who currently sell it will have less market power due to the number of sellers in the marketplace. With the huge number of sellers in the market, there will be no use in violent crimes over turf or selling grounds that is commonly associated with illegal drug rings.

Combating the Negative

Many people argue that with the legalization of marijuana, many negative externalities will arise. One main concern with marijuana is the second hand smoke it provides. Although this is a very valid point, there has yet to be any research showing the co-relation between long-term marijuana  usage (as well as the smoke it produces) and health risks.

The quality of the evidence suggesting a link between long-term use of marijuana and cancer is neither as strong nor as comprehensive as the evidence regarding tobacco and cancer. A number of studies have reported an increase in head, neck, lung and throat cancers. To date, no epidemiological studies have consistently confirmed an association between long-term marijuana use and cancer risk because there is no standard amount of THC (the main active ingredient in marijuana) in every marijuana cigarette.

– Canadian Cancer Society
Another potentially hazardous externality that is often discussed is the “gateway” aspect of marijuana. Many believe that though not as harmful, marijuana actually coaxes the users into trying more addictive and dangerous drugs (ex. cocaine, heroin, etc). Many also go on to argue that the legalization of marijuana will lead the government to legalize the more dangerous drugs aforementioned. This gateway theory has yet to be proven yet and produces inconclusive evidence of the co-relation between the two. As for the legalization of more dangerous drugs? Fallacious. It would be a stretch the say that because of the legalization of marijuana would lead to the legalization and leniency towards more harmful drugs.

Most people who experiment with marijuana do not go on to use harder drugs.

Still, “the vast majority of people who we see who do cocaine or heroin have done marijuana in the past, or are likely to do it at some time in the future.” But “if we could push a button and all the marijuana would go away, by no means will that stop the drug problem in this country.”

– Dr. Neil Capretto, Medical Director, Gateway
So what do we do now?

From a supply and demand standpoint, I believe that marijuana can be graphed like so. The supply is inelastic as it is tough to increase production as a result of an increase of demand. Demand is inelastic because it is tough to find a drug with the same effects without the same low levels of addictiveness and the consumer does not spend a large amount of their income on the good. With the criminalization of marijuana, we decrease it’s supply (higher price, lower quantity) and decrease it’s demand because of the illegality of possession (lower quantity, lower price). I propose that the strongest way to go about really utilizing marijuana’s economic power is by legalizing and regulating it the same way we do with cigarettes. Because of the relatively inelastic nature of the good, a heightening in price, no matter how large won’t have as much affect on the quantity consumed and thus is easy to tax.

The boil-down

Overall, I feel marijuana does more help than harm for our society. The legalization and taxation of it would bring us some economic gains similar to the money we make by taxing 28 billion dollar cigarette industry. Not only that, it would free up our judicial system and policing systems and allow them to focus on more important issues. Finally, it would also reduce drug related violence that is often based off of the underground nature of the industry. Marijuana will be used whether we legalize it or not, the only real question is if we’ll harness it’s potential, or let it go to waste.

“That is not a drug. It’s a leaf” – Arnold Schwarzenegger

J7 – Income Inequality [To be marked]

19 01 2011

Income inequality is one of the most pressing issues of our time. According to a Globe and Mail article, Toronto, a city once prized for being a middle-class even city, is becoming more and more of income polarized both numerically and geographically. So, should the government actively be trying to reduce income inequality?

Well, first we should realize that income inequality is not altogether a bad thing. In fact, it is a healthy part of a capitalist society. Being able to increase income is a great incentive to increase productivity and innovation, both for individuals and corporations. Higher income brackets thus turn into goals and lower ones become threats, always there to prod you forward. No matter what anyone says or thinks, someone is going to have more than someone else. Since resources are scarce, those who call for income equality are fighting a loosing battle in our greedy world. Everyone has a different idea of what is completely “equal”, “fair”, or “equitable” and complete equality is close to impossible in these conditions.

But should we just leave it at that and completely ignore the problem of income inequality (polarization)? No! Even though we cannot and should not create full equality, we should still try and close the gap between the high and the low, something which is far less controversial than complete equality. But why?

The first reason is one from morality – it is simply wrong for people to let their fellow brothers and sisters waste away while they enjoy their jacuzzis.  This is akin to leaving someone who tripped on the floor.  In fact, many people who are stuck in poverty are not neccessarily there because of themselves – they are stuck in the cycle of poverty. They need help getting out and we should be there to help them. If we don’t they will be both a burden to themselves and to us – they will need protection by families, friends, and relatives not to mention the fact that there is a chance of increased crime rate for them.

The second reason relates to our current economic “growth”. Not only does the GDP not document spending distribution leading to improper views about our society, but the poor are generally not included in economic “growth” rallies. Should they not feel the growth too? It is also not surpirsing then that, by not increasing in income, even in the best of times,  many low-income areas have limited business ventures/start-ups regardless of “economic conditions”. Let’s look at a projection of Toronto in only 15 years from The Globe and Mail:

Because these red areas have not seen the light of day, businesses will be loosing out on investment opportunities that could see them grow many fold. This can’t happen without letting these people get some income. Businesses cannot set up shop, hire more workers, and sell items, all activities which increase total GDP (C up, then I up, then C up, etc = multiplier effect!!).

In the hands of a few, large sums of money is useless. One can even call it “too much money”. There is only a certain amount of goods and  services that a rich individual can consume. Beyond that, their money is invested. But why not invest in the community? If that money was spread out, it can increase spending (and therefore GDP) even more because more people will spend more on bare minimums.

So how would this work? Well, I would say that those with super-high and high incomes transfer a percent or two (increasing progressively) of their incomes to those of lower income brackets. Though this is a small fraction from those of high incomes, it would be a large fraction when compared to the income it is being transfered too. I would suggest that$150,000 is considered “high class” but I could be wrong.

So, in conclusion, it is clear that, though it may cost more in the short run, the government should work actively to reduce income inequality. We could simply choose to be efficient and take the cheapest route – letting everyone whither away. But no. We are humans and we must try to be as fair as we subjectively can. Fairness requires a lot of sacrifice on our part, but after many years, with more people spending, we will see the positive effects it has on the growth of our economy.