Feeds:
Posts
Comments

Posts Tagged ‘Drug War’

I wanted California to decriminalize marijuana because I believe in freedom. Smoking pot may not be a wise choice in many cases, but it’s not the role of government to dictate private behavior so long as people aren’t violating the rights of others.

Politicians, by contrast, are interested in legalization because they see dollar signs. They want to tax marijuana consumption to they can have more money to spend (I half-joked that this was a reason to keep it illegal, but that’s a separate issue).

Lawmakers need to realize, though, that the Laffer Curve is very real. They may not like it, but there’s very strong evidence that imposing lots of taxes does not necessarily mean collecting lots of revenue. Especially when tax rates are onerous.

Here’s some of what the AP recently reported about California’s experiment with taxing pot.

So far, the sale of legal marijuana in California isn’t bringing in the green stuff. Broad legal sales kicked off on Jan. 1. State officials had estimated California would bank $175 million from excise and cultivation taxes by the end of June. But estimates released Tuesday by the state Legislative Analyst’s Office show just $34 million came in between January and March. …it’s unlikely California will reap $175 million by midyear.

And here are some excerpts from a KHTS story.

Governor Jerry Brown’s January budget proposal predicted that $175 million would pour into the state’s coffers from excise and cultivation taxes…analysts believe revenue will be significantly lower… Some politicians argue high taxes are to blame for the revenue shortfalls preventing that prediction from becoming reality, saying the black market is “undercutting” the legal one. …The current taxes on legal marijuana businesses include a 15 percent excise tax on purchases of all cannabis and cannabis products, including medicinal marijuana. The law also added a $9.25 tax for every ounce of bud grown and a $2.75-an-ounce tax on dried cannabis leaves for cultivators.

These results should not have been a surprise.

I’ve been warning – over and over again – that politicians need to pay attention to the Laffer Curve. Simply stated, high tax rates don’t necessarily produce high revenues if taxpayers have the ability to alter their behavior.

That happens with income taxes. It happens with consumption taxes.

And it happens with taxes on marijuana.

Moreover, it’s not just cranky libertarians who make this point. Vox isn’t a site know for rabid support of supply-side economics, so it’s worth noting some of the findings from a recent article on pt taxes.

After accounting for substitution between products by consumers, we find that the tax-inclusive price faced by consumers for identical products increased by 2.3%. We find that the quantity purchased decreased by 0.95%…, implying a short-term price elasticity of -0.43. However, over time, the magnitude of the quantity response significantly increases, and our estimates suggest that the price elasticity of demand is about negative one within two weeks of the reform. We conclude that Washington, the state with the highest marijuana taxes in the country, is near the peak of the Laffer curve – further increases in tax rates may not increase revenue. …tax revenue has historically been one of the many arguments in favour of legalising marijuana…the optimal taxation of marijuana should be designed to take into account responses…excessive taxation might prop up the very black markets that legal marijuana is intended to supplant. As additional jurisdictions consider legalising marijuana and debate over optimal policy design, these trade-offs should be explored and taken into account.

Let’s close by reviewing some interesting passages from a McClatchey report, starting with some observations about the harmful impact of excessive taxes.

Owners of legalized cannabis operations face a range of challenges… But taxes – local, state, federal – present a particular headache. They are a big reason why, in California and other states, only a small percentage of cannabis growers and retailers have chosen to get licensed and come out of the shadows. …In a March report, Fitch Ratings suggested that California may not realize the tax revenue – $1 billion a year – the state projected when Proposition 64, a legalization initiative, was put before voters in 2016. “While it is still too early to assess California’s revenue performance, comparatively high taxes on legal cannabis will likely continue to divert sales to illegal markets, reducing potential tax collections,” Fitch said in its report. …Add it all up, and state-legal cannabis in some parts of California could be taxed at an effective rate of 45 percent, Fitch said in a report last year.

Interestingly, even politicians realize they need to adapt to the harsh reality of the Laffer Curve.

Some state lawmakers blame the taxation for creating a price gap between legal and illegal pot that could doom California’s regulated market. Last month, Assembly members Tom Lackey, R-Palmdale, and Rob Bonta, D-Oakland, introduced legislation, AB 3157, that would reduce the state marijuana sales tax rate from 15 percent to 11 percent, and suspend all cultivation taxes until June 2021.

And I can’t resist including one final passage that has nothing to do with taxes. Instead, it’s a reference to the lingering effect of Obama’s dreadful Operation Choke Point.

Davies owns Canna Care, a medical marijuana dispensary in Sacramento. Like other state-legal cannabis businesses nationwide, her pot shop operates largely with cash. Most banks won’t transact with enterprises deemed illegal by the U.S. government. That forces Davies to stuff $10,000 in bills into her purse each month… even lawyers who represent state-legal marijuana businesses face financial risks. Sacramento lawyer Khurshid Khoja recently lost his two bank accounts with Umpqua Bank, after Umpqua started asking him about his state-legal cannabis clients.

The good news is that Trump has partially eased this awful policy. The bad news is that he only took a small step in the right direction.

But let’s get back to our main topic. I’ve written several times on whether our friends on the left are capable of learning about the Laffer Curve. Especially in cases when they imposed a tax in hopes of changing behavior!

What’s happening in California with pot taxes is simply the latest example.

And I’m hoping leftists will apply the lesson to taxes on things that we don’t want to discourage – such as work, saving, investment, and entrepreneurship.

P.S. I’ve pointed out that some leftists want high tax rates on income even if no money is collected. That’s because their real goal is punishing success. I wonder if there are some conservatives who are pushing punitive marijuana taxes because they want to discourage “sin” rather than collect revenue.

Read Full Post »

Here are two statements that seem in conflict.

But there’s actually no conflict because we can decide that some things are distasteful without wanting to infringe on the freedom of others to partake. And you can make that decision for moral reasons or utilitarian reasons.

Now let’s consider two more statements.

  • The rule of law is a bulwark of a civilized society and government officials should not engage in arbitrary enforcement.
  • Attorney General Jeff Sessions is wrong to enforce federal drug laws in states that have decriminalized marijuana.

I’m tempted to agree with both sentences. The rule of law is vital, after all, and I definitely don’t like (and not for the first time) when Sessions uses the Justice Department to hassle people for victimless crimes.

But here’s my quandary: Should we applaud if government officials ignore laws, even laws we don’t like? That approach has some distasteful implications. If you’re on the right, would you want a left-leaning government to have the leeway to ignore criminal behavior by, say, union bosses? If you’re a leftist, would you want a libertarian-leaning government to have the ability to decide that tax laws can be ignored?

Charles C. W. Cooke of National Review hits the nail on the head.

There’s no question that the right approach is for the federal government to eliminate drug laws. Heck, even people who support the War on Drugs should favor this approach since criminal justice (other than a few select areas such as treason) should be a matter for state and local governments.

And a broader point is that we simply have too many laws. Harvey Silverglate estimates that the average person unknowingly commits three felonies per day.

This means that government officials could probably indict, convict, and imprison almost all of us. Needless to say, that’s not how a free and just society should work.

Our Byzantine tax code is an example. Many of us probably unintentionally violate the law because of needless complexity. Or even if we haven’t violated the law, I’m guessing a prosecutor could convince a grand jury that we should be indicted. And who knows what would happen after that.

So while I mostly argue for tax reform because I want more growth, I also think there’s a moral argument for a simple and fair system.

And there are other laws that shouldn’t exist at all. I obviously put drug laws on that list, but I’d also add anti-money laundering laws and civil asset forfeiture laws.

All that being said, I obviously don’t want the Justice Department in Washington to waste law enforcement resources in a campaign to undermine states that have decriminalized pot. But there’s a right way and a wrong way to solve this problem.

P.S. You can click here for other libertarian quandaries.

Read Full Post »

When I write an everything-you-need-to-know column, it’s not because I’m under any illusions that I’ve actually amassed all the information one could need on a topic. Instead, it’s just a meme.

Today’s column belongs in the latter category. Could there possibly be something that more perfectly captures the essence of California than a story about the over-taxation of legal marijuana?

Marijuana dispensaries across California experienced long lines on the first day of legal recreational pot sales. But advocates warned the legal industry won’t survive without big changes…said Steve DeAngelo, co-founder and CEO of Harborside in Oakland. “At the same time, I’m terrified about what’s going to happen with these taxes.” Harborside has been a medical marijuana dispensary for more than a decade, and is now selling recreational marijuana… “In our shop here, the tax rate has gone from 15 percent all the way up to almost 35 percent for adult consumers,” DeAngelo said. …There is the regular state sales tax of 6 percent, and the regular Alameda County sales tax of 3.25 percent. Then there is a 15 percent state tax on marijuana, and a 10 percent Oakland tax on recreational marijuana. Total taxes: 34.25 percent. …In addition to taxes, marijuana regulations drive up the cost.

Excessive government and lifestyle liberalism. A perfect summation of California.

By the way, even though I’m a social conservative-style teetotaler, I agree with the pot legalization. But I have mixed feelings because I don’t want politicians to get more money to waste.

Though I am happy that people have the option to still use the underground economy.

…”a significant number of people, less affluent consumers, are going to turn to the lower prices of the underground market,” DeAngelo said. …People who are disabled or on fixed incomes may turn to the black market. “They can barely afford cannabis now, much less with a 35 or 40 percent tax increase,” DeAngelo said. When people aren’t buying from a regulated business, the state is getting zero taxes.

Yet another example of the Laffer Curve, which is simply the common-sense notion that marginal tax rates impact incentives.

When taxes are too high, there’s either less taxable activity, or the activity moves where the government can’t tax it. In other words, higher tax rates don’t necessarily mean higher tax revenue.

And it definitely means revenues will never be as high as the pro-tax crowd would like.

Such a simple concept that even some leftists are catching on.

This may lead California to lower tax rates, as has happened in other states.

Colorado, Washington state and Oregon each legalized marijuana at one tax rate and then had to lower the rate to keep people in the legitimate market. DeAngelo believes California will have to do the same. “I don’t think that the current tax rate for cannabis in California is sustainable,” he said.

That last sentence puts me in a good mood. I very much like when greedy politicians are forced to lower tax rates.

For those that want a more detailed and serious look at the economics of taxation and drug prohibition, this column from last November is a good place to start.

And for those who want a closer look at the moral/practical issues of drug prohibition, I recommend this piece from last May.

Read Full Post »

When I explain to people how the government’s War on Drugs violates the rights of people to do dumb things to their own bodies, they intellectually understand but they’re usually not convinced.

When I also explain why the Drug War causes additional crime and enriches mobsters, they almost always nod their heads in agreement but resist the obvious implication that we should decriminalize.

When I then explain that the War on Drugs has led to horrific policies such as civil asset forfeiture and senseless policies such as costly and ineffective money-laundering laws, they agree that the consequences are bad but they’re generally unpersuaded about legalization.

The stumbling block in every case is that they fear decriminalization will lead to more drug use, more addiction, and more suffering families.

Unfortunately, we don’t have a lot of real-world examples to put their minds at ease. But “a lot” isn’t the same as “any.”

This report about Portugal from the U.K.-based Guardian is must reading and may convince the doubters that we can end the War on Drugs without societal chaos and decay. It starts  with an observation about the ravages of illegal drugs.

It was the 80s, and by the time one in 10 people had slipped into the depths of heroin use – bankers, university students, carpenters, socialites, miners – Portugal was in a state of panic. …one in every 100 Portuguese was battling a problematic heroin addiction at that time… Headlines in the local press raised the alarm about overdose deaths and rising crime. The rate of HIV infection in Portugal became the highest in the European Union.

This led to predictable responses.

In the early days of Portugal’s panic, …the state’s first instinct was to attack. Drugs were denounced as evil, drug users were demonised, and proximity to either was criminally and spiritually punishable. The Portuguese government launched a series of national anti-drug campaigns that were less “Just Say No” and more “Drugs Are Satan”.

But something remarkable then happened. Rational voices began to push a libertarian-oriented message.

The first official call to change Portugal’s drug laws came from Rui Pereira, a former constitutional court judge who undertook an overhaul of the penal code in 1996. He found the practice of jailing people for taking drugs to be counterproductive and unethical. “My thought right off the bat was that it wasn’t legitimate for the state to punish users,”

And Portugal ultimately went in that direction – and got very positive results.

In 2001, …Portugal became the first country to decriminalise the possession and consumption of all illicit substances. …The opioid crisis soon stabilised, and the ensuing years saw dramatic drops in problematic drug use, HIV and hepatitis infection rates, overdose deaths, drug-related crime and incarceration rates. HIV infection plummeted from an all-time high in 2000 of 104.2 new cases per million to 4.2 cases per million in 2015. …The official policy of decriminalisation made it far easier for a broad range of services (health, psychiatry, employment, housing etc) that had been struggling to pool their resources and expertise, to work together more effectively to serve their communities.

Here’s a summary of the Portuguese approach, which certainly seems more humane and logical than what we do in America.

Portugal’s policy rests on three pillars: one, that there’s no such thing as a soft or hard drug, only healthy and unhealthy relationships with drugs; two, that an individual’s unhealthy relationship with drugs often conceals frayed relationships with loved ones, with the world around them, and with themselves; and three, that the eradication of all drugs is an impossible goal.

Want some additional evidence?

Here’s a chart from the invaluable Mark Perry of the American Enterprise Institute.

A 2009 study from the Cato Institute also highlighted the benefits of Portugal’s reform.

Because more than seven years have now elapsed since enactment of Portugal’s decriminalization system, there are ample data enabling its effects to be assessed. Notably, decriminalization has become increasingly popular in Portugal since 2001. …very few domestic political factions are agitating for a repeal of the 2001 law. …none of the nightmare scenarios touted by preenactment decriminalization opponents — from rampant increases in drug usage among the young to the transformation of Lisbon into a haven for “drug tourists” — has occurred. …The political consensus in favor of decriminalization is unsurprising in light of the relevant empirical data. …drug usage rates in Portugal, which, in numerous categories, are now among the lowest in the EU, particularly when compared with states with stringent criminalization regimes. …drug-related pathologies — such as sexually transmitted diseases and deaths due to drug usage — have decreased dramatically. …judged by virtually every metric, the Portuguese decriminalization framework has been a resounding success.

By the way, allow me to reiterate that my support for decriminalization is not an endorsement of drug use.

It’s not just that I’m a teetotaler and want others to make the same choice. Stories like this one from CNN genuinely worry me.

Regina Mitchell, a co-owner of Warren Fabricating & Machining in Hubbard, Ohio, told The New York Times this week that four out of 10 applicants otherwise qualified to be welders, machinists and crane operators will fail a routine drug test. …”We have a 150-ton crane in our machine shop. And we’re moving 300,000 pounds of steel around in that building on a regular basis. So I cannot take the chance to have anyone impaired running that crane, or working 40 feet in the air.” …For 48 of the 50 years her company has been around, drug abuse had never been an issue, she told Smerconish.”It hasn’t been until the last two years that we needed to have a policy, a corporate policy in place, that protects us from employees coming into work impaired,” she said. …there are almost 12,000 open skilled labor jobs in Mahoning County.”There are good-paying jobs and the opportunity for people in our area. We just can’t find people to show up who can pass a drug test,” she said.

This is not good news for the country. And I’ve personally spoken to several employers in other parts of the country who have made the same point.

But I’ll simply observe that we have this problem with drugs being illegal already. Given the evidence from Portugal, I’m hopeful that decriminalization might lead to less drug use.

I also wonder whether redistribution programs enable reckless behavior. In other words, people may decide it’s okay to be stoners because they can rely on handouts to stay alive instead of staying clean and having a job.

In any event, let’s review a couple of additional stories. Here’s a column from National Review, written by Michelle Malkin, which shows continuing progress on the right.

My own interest in pediatric use of medicinal marijuana is more than academic. When my daughter, Veronica, fell ill in late spring of 2015 — unable to breathe normally, bedridden with chronic pain and fatigue — she saw of specialists. …The various drugs prescribed to my daughter weren’t working and had awful side effects. …To our surprise, the mainstream neurologist suggested Veronica try CBD. This doctor had other young patients who used CBD oil with positive results… So we did our own independent research…consulted with other medical professionals and friends — and entered a whole new world. Two physicians signed off on our daughter’s application for a medical-marijuana card. She became one of more than 360 children under 18 to join Colorado’s medical-marijuana registry in 2015. …we became pediatric pot parents. For Veronica, CBD provided more relief than all the other mainstream pharmaceutical interventions she had endured, and without the scary side effects.

To her credit, Michelle has learned that the harm of government intervention exceeds any potential benefit.

As a lifelong social conservative, my views on marijuana policy may surprise some of you. I used to be a table-pounding crusader for the government’s war on drugs. …But the war on drugs has been a ghastly quagmire — an expensive and selective form of government paternalism that has done far more harm than good. What has this trillion-dollar war wrought? Overcrowded jails teeming with nonviolent drug offenders. An expanded police state enriched by civil asset forfeiture. And marginalization of medical researchers pursuing legitimate research on marijuana’s possible therapeutic benefits for patients with a wide variety of illnesses. …let me be clear as a liberty-loving, conservative mom: Keep your hands off. Let the scientists lead. Limited government is the best medicine.

Her commentary brings to mind this snarky – but accurate – image from Reddit‘s libertarian page.

Now let’s add some economic analysis to the discussion.

Here’s some insight from the Foundation for Economic Education about how the Drug War is increasing the potency and danger of drugs.

One issue that is often mentioned but rarely explained is the increasing potency of illegal drugs, whether it be cannabis with a high percentage of THC in the US or super potent MDMA (Ecstasy) in Europe. What’s behind this phenomenon? …economic theory might have the answer. …The theory that can explain rising drug potency under prohibition was first described in 1964 by Armen Alchian and William R Allen. It states that when the price of two substitute goods is increased by a fixed per-unit amount (such as transportation or taxation) the consumer will opt for the higher priced, higher quality good because the price of the more expensive product has sunk in proportion to the price of the less expensive product. …In the particular case of illegal drugs, two different kinds of drugs–let’s say two different kinds of cannabis–act as the substitute goods. When buying illegal drugs on the black market, you do not only pay for the drug itself. On top of the monetary price comes the potential social cost you pay. This can range from a small regulatory offence, where you must pay a fine, to a felony where you can face a prison sentence. This comes with other problems: losing your job, family, social status and so on. This is the fixed per-unit cost added on top of the price of the drug itself.

All of which leads to yet another reason why prohibition is backfiring and another reason why decriminalization is the answer.

It is not worth the risk to buy a low-quality product regarding the potential price you must pay. …Drug cartels have recognised this behaviour and increased the potency of their drugs (i.e. improved the quality of their product) so you get more value for the potential fixed per-unit cost you pay. …What sounds good in economic theory becomes a massive public health problem in real life. The potency of many drugs has increased too much. As it is in most prohibitionist countries, many consumers don’t know exactly what drug they are taking and in which dosage they are consuming the drug: not to mention added substances that increase quantity. …If drugs were decriminalized, customers would have knowledge about the contents of their MDMA, their cocaine, their cannabis. Drugs that are too potent could easily be avoided. Legalized drugs would include packaging with the specific content. Sales in specialized stores would allow customers to receive medical help if they show signs of problematic consumption, without fear of being imprisoned over it.

And since we’ve veered into some economic analysis, one of the reasons I favor legalization is that I don’t want law enforcement resources being misallocated.

Which is why this column resonates with me.

Police in Ohio are blaming a lack of resources for the fact that unsolved homicide cases greatly outnumber the cases that are solved, yet they seem to have the resources to arrest thousands of suspected cannabis users. …in the state of Ohio…an average of over 20,000 people are arrested on charges of cannabis possession each year. …despite the fact that they seem to have plenty of resources when it comes to arresting and detaining nonviolent offenders, police in Ohio are blaming a lack of resources for the fact that the number of homicide cases they solve continues to decline. …How did police in the United States go from solving over 90 percent of homicides in the 1960s to around 60 percent today, with cities like Columbus solving as little as 30 percent of homicides? It was not a change in resources—it was the introduction of the Drug War. …“Around the country, police make more arrests for drug possession than for any other crime,” an ACLU and Human Rights Watch report found last year. “More than one of every nine arrests by state law enforcement is for drug possession, amounting to more than 1.25 million arrests each year.” In fact, police make more arrests for marijuana possession alone than for all violent crimes combined. …As states like Ohio find that the number of unsolved homicide cases greatly outnumber the cases that are solved, it makes you wonder—what more could they accomplish if they were able to use their resources to track down violent murder suspects, instead of wasting them on nonviolent individuals who are found in possession of a plant?

Let’s close with some wisdom from Milton Friedman (h/t: Reddit).

As was so often the case, Friedman was right. If you look at the real-world consequences of the War on Drugs, the net effect of prohibition has been to enrich some very bad people.

P.S. It’s an open question whether the War on Drugs has been more damaging or less damaging than the War on Poverty. I guess the moral of the story is that there are a lot of “friendly fire” casualties when politicians declare war.

Read Full Post »

My view on the Drug War is somewhat schizophrenic. In my personal life, I’m basically a social conservative. I don’t like drugs, I’ve never tried drugs, and I urge others to behave the same way.

But I know that prohibition is a costly failure that leads to abusive government (such as intrusive money-laundering laws and Orwellian asset-forfeiture laws).

And even if one doesn’t care about individual rights, the Drug War is an irrational misallocation of law enforcement resources.

So does this make a libertarian on the issue? The answer is yes, of course, but I confess that legalization has a downside. And I’m not talking about more people wrecking their lives with drug abuse (indeed, evidence from Portugal suggests drug use may go down).

Instead, I don’t like the fact that politicians see legalization mostly as an opportunity to generate additional tax revenue.

My fears have materialized. sort of.

According to a CNN report, politicians in California want to be the biggest profiteers from legal pot.

Between customers, retailers and growers, taxes on cannabis may reach as high as 45% in parts of the state, according to a Fitch Ratings report. …Consumers will pay a sales tax ranging from 22.25% to 24.25%, which includes the state excise tax of 15%, and additional state and local sales taxes ranging from 7.25% to 9.25%. Local businesses will have to pay a tax ranging from 1% to 20% of gross receipts, or $1 to $50 per square foot of marijuana plants, according to the Fitch report. In addition, farmers will be taxed $9.25 per ounce for flower, and $2.75 per ounce for leaves. …Van Bustic, a specialist in the environmental impact of cannabis cultivation for Berkeley’s College of Natural Resources, said that registering with the state and becoming compliant will cost about $100,000.

Geesh, greedy governments can take the fun out of anything!

But not so fast. It seems that politicians are being so greedy that the geese with the golden eggs (or, in this case, drug-addled geese with golden buds) will stay in the shadow economy.

Not that we should be surprised. There is a wealth of evidence showing that high tax burdens lead to evasion and avoidance.

The Wall Street Journal looks at this issue and hits the nail on the head, editorializing that high tax rates on pot are a recipe for non-compliance.

…in California, where recreational pot was legalized last year, citizens now have a much clearer view of the unintended consequences that come from high tax rates. A new report from the global credit-rating firm Fitch Ratings highlights the effect of California’s high taxes on the marijuana market. The combined local and state rate on non-medical cannabis may be as high as 45% in some places, and Fitch says this acts as an incentive for Californians to shun legal pot dealers who pay the tax in favor of black-market sellers who don’t and can charge lower prices. …The irony is that one argument for legalizing pot has been to reduce illegal trafficking. But by imposing taxes that are too high on legal weed, politicians give pot heads an incentive to go back on the illegal market. This will come as no surprise to anyone who has followed the boon to illegal smokes from high cigarette taxes in places like New York City.

The CNN story cited above also addressed this issue.

Among the eight states where recreational marijuana is legal, only Washington has a higher tax rate at about 50%. Colorado and Nevada both follow with rates of 36%. Oregon has a tax rate of 20% and Alaska has a rate of up to 20%. …If taxes increase the price of cannabis beyond a certain point, the legal market becomes less competitive than the illicit market and then consumers become less likely to make the transition from the illicit market to the legal market,” said John Kagia, analyst for New Frontier Data, which tracks the cannabis industry. The Fitch report says this dynamic has already prompted Colorado, Washington and Oregon to lower their “initially uncompetitive” tax rates.

Indeed. I wrote about Colorado’s experience with pot taxation back in 2015.

A story in the Washington Post confirms that the buzzed version of supply-side economics is alive and well.

High taxes on legal marijuana in California could have the potential to turn many consumers away from the state’s cannabis shops and toward the black market, according to a report from Fitch Ratings. …“The existing black market for cannabis may prove a formidable competitor to legal markets if new taxes lead to higher prices than available from illicit sources,” the report says. …These high tax rates have the potential to drive customers toward the black market. …Colorado, Oregon and Washington all reduced tax rates after the commencement of legalization to shift customers back toward the legal market.

That last sentence warms my heart. Isn’t it nice when politicians are forced to lower tax burdens even when they don’t want to?

P.S. Government is a buzz-kill in other ways. Deregulation helped unleash the craft beer industry, but also created a new source of tax revenue.

P.P.S. Since I’m a fiscal wonk, legalizing drugs has never been high (no pun intended) on my list of priorities. But when U.N. bureaucrats try to tell American states that they’re not allowed to end prohibition, I’m almost tempted to become a user.

Read Full Post »

What word best describes the War on Drugs?

The right answer is All of the Above. Politicians have ruined lives and wasted money in a futile campaign to stop people from recreational drug use.

It may be true that people who use drugs are being stupid. Or even immoral. But the key thing to understand is that it’s a victimless crime.

Actually, that’s not true, there are victims. They’re called taxpayers, who have to finance the government’s drug war. And there are secondary victims thanks to bad laws (dealing with asset forfeiture and money laundering) that only exist because of the drug war.

Speaking of which, here’s another horror story from the drug war.

A report by the Justice Department Inspector General released Wednesday found that the DEA’s gargantuan amount of cash seizures often didn’t relate to any ongoing criminal investigations, and 82 percent of seizures it reviewed ended up being settled administratively—that is, without any judicial review—raising civil liberties concerns. …the Inspector General reports the DEA seized $4.15 billion in cash since 2007, accounting for 80 percent of all Justice Department cash seizures.

Here’s the jaw-dropping part of the story.

…$3.2 billion of those seizures were never connected to any criminal charges.

In other words, the government took people’s money even they weren’t charged with a crime, much less convicted of a crime.

Drug users also can be victims. Heck, sometimes people are victims even if they’re not users, as we see from this great moment in the drug war.

“They thought they had the biggest bust in Harris County,” Ross LeBeau said. “This was the bust of the year for them.” A traffic stop in early December led to the discovery of almost half a pound of what deputies believed to be methamphetamine. The deputies arrested LeBeau and sent out a press release, including a mug shot, describing the bust. According to authorities, the arrest was due to deputies finding a sock filled with what they believed to be methamphetamine. …After the arrest, LeBeau was fingerprinted and booked into a jail where he spent three days before being released. The problem came after two field tests, performed by deputies, came back positive for meth. Later a third test was conducted by the county’s forensic lab which revealed that the kitty litter was not a controlled substance. The case was later dismissed.

And more bad things like this are probably going to happen because the Justice Department now wants a more punitive approach to victimless crimes.

C.J. Ciaramella of Reason reports on the grim details.

Attorney General Jeff Sessions ordered federal prosecutors to seek the toughest charges and maximum possible sentences available, reversing an Obama-era policy that sought to avoid mandatory minimum sentences for certain low-level drug crimes. …the overall message is clear: Federal prosecutors have the green light to go hard after any and all drug offenses. …The shift marks the first significant return by the Trump administration to the drug war policies that the Obama administration tried to moderate. In 2013, former Attorney General Eric Holder ordered federal prosecutors to avoid charging certain low-level offenders with drug charges that triggered long mandatory sentences. The federal prison population dropped for the first time in three decades in 2014, and has continued to fall since.

Some Republicans are unhappy about this return to draconian policies.

“Mandatory minimum sentences have unfairly and disproportionately incarcerated too many minorities for too long,” Sen. Rand Paul (R-KY) said in a statement. “Attorney General Sessions’ new policy will accentuate that injustice. …Sen. Mike Lee (R-UT), although he did not directly criticize Sessions, wrote in a tweet Friday morning that “to be tough on crime we have to be smart on crime. That is why criminal justice reform is a conservative issue.”

For what it’s worth, Sessions isn’t the only one who deserves blame.

While it’s easy to point the finger at Sessions, …Congress ultimately passed the laws the Justice Department is tasked with enforcing. Lawmakers in Congress had a golden window of opportunity over the past three years to revise federal sentencing laws—with bipartisan winds at their back and a friendly administration in White House—and failed miserably.

And there is a tiny bit of good news.

…the Office of National Drug Control Policy… Trump plans to reduce the agency’s budget by 95 percent… there are plenty of actual harm reduction advocates who would be happy to see the agency close up shop.

Though don’t get too excited.

…you know what federal agency with drug policy ramifications is not dormant? The Justice Department. …In the grand scheme of the drug war, who might occupy the ONDCP’s bully pulpit matters less than the army Sessions is building.

So don’t hold your breath waiting for better policy.

Here’s another reason why the war on pot is so absurd. As reported by the Daily Caller, people without access to marijuana are more likely to get in trouble with opioids.

Opioids continue to claim 91 lives a day across the U.S., but new research shows medical marijuana programs are drastically cutting down on rates of painkiller abuse. Research from the Journal of the American Medical Association is adding to a growing body of evidence showing states with medical marijuana programs have lower rates of opioid related overdoses. Patients who are offered pot as an alternative treatment for chronic conditions are increasingly shifting off their prescription opioids entirely, reports WLBZ. The researchers found states with medical marijuana programs in 2014 had an opioid overdose rate roughly 25 percent lower than the national average.

Last but not least, an article in Reason explains how greedy politicians are undermining the otherwise successful pot legalization in Colorado.

Colorado…voters legalized recreational marijuana in 2012, transforming the popular stuff from a prohibited vice to a substance that could be produced, bought and sold without the hassle of hiding dealings from the authorities and the fear of arrest for voluntary transactions. Yet the marijuana black market is still going strong over four years later, with many sellers and customers willing to take a chance on legal consequences rather than make a risk-free deal. …the driving force behind the black market…is taxes so sky high and regulations so burdensome that they make legal pot uncompetitive. “An ounce of pot on the black market can cost as little as 180 dollars,” according to PBS correspondent Rick Karr. “At the store Andy Williams owns, you have to pay around 240 dollars for an ounce. That’s partly because the price includes a 15 percent excise tax, a 10 percent marijuana tax, the state sales tax, and Denver’s marijuana sales tax.” Colorado also piles on expensive regulatory requirements to get a license.

This is not a surprise.

I wrote back in 2015 that the tax burden was excessive.

Indeed, I even wondered if legalization in Colorado was a good thing if the net result was a big pile of tax revenue that could be used to expand government.

The libertarian part of me says Colorado made the right decision, though the fiscal economist part of me definitely sees a down side.

And that down side may become an even bigger downer.

Governor John Hickenlooper wants to increase the marijuana sales tax from 10 percent from 8 percent. “It seems kind of odd that at the same time they’re trying to do something about the black and gray markets they’re going to ratchet up the taxes and drive more people to the black and gray markets,” state Sen. Pat Steadman (D-Denver) commented.

P.S. I wonder if Senator Steadman realizes he just embraced the Laffer Curve?

P.P.S. It’s worth noting that voices as diverse as John Stossel, Mona Charen, Gary Johnson, Pat Robertson, Cory Booker, John McCain, and Richard Branson all agree that it’s time to rethink marijuana prohibition. 

Read Full Post »

When writing about money laundering laws, I’ll sometimes highlight gross abuses by government and I’ll periodically make the usual libertarian arguments about privacy.

But I mostly focus on how the laws simply don’t make sense from a cost-benefit perspective. Anti-money laundering laws and regulations impose large burdens on the private sector, which creates disproportionate hardship for the poor. Yet there’s no evidence that the laws actually hinder criminal activity, which was the rationale for imposing the laws in the first place.

I have the same attitude about the War on Drugs. Yes, I get upset that people are mistreated and it irks me as a libertarian that people aren’t free to make their own choices (even if they are dumb choices) about what to put in their bodies.

But what really gets me angry is the absurd misallocation of law enforcement resources. Consider this info from a recent WonkBlog column in the Washington Post about the ever-expanding efforts of government to harass drug users.

Federal figures on drug arrests and drug use over the past three decades tell the story. Drug-possession arrests skyrocketed, from fewer than 200 arrests for every 100,000 people in 1979…, hovering near 400 arrests per 100,000 people. …despite the tough-on-crime push that led to the surge in arrests in recent decades, illicit drug use today is more common among Americans age 12 and older than it was in the early 1980s. Federal figures show no correlation between drug-possession arrests and rates of drug use during that time.

But here’s the part that should upset all of us, even if we don’t like drugs or even if we think they should be illegal.

Instead of focusing on the fight against crimes that actually have victims (such as robbery, murder, rape, assault, etc), the government is squandering an immense about of time, energy, resources, and money on drug arrests.

…arrests for drug possession continue to make up a significant chunk of modern-day police work. “Around the country, police make more arrests for drug possession than for any other crime,” the report finds, citing FBI data. “More than one of every nine arrests by state law enforcement is for drug possession, amounting to more than 1.25 million arrests each year.” In fact, police make more arrests for marijuana possession alone than for all violent crimes combined.

That last sentence is breathtaking. Does anyone think that busting potheads is more important than fighting genuine crime?!?

Do you want an example of law enforcement resources being misallocated?

Well, this story from New Hampshire tells you everything you need to know.

…an 81-year-old grandmother had been growing…the plant as medicine, a way to ease arthritis and glaucoma and help her sleep at night. Tucked away in a raspberry patch and separated by a fence from any neighbors, the plant was nearly ready for harvest when a military-style helicopter and police descended on Sept. 21. In a joint raid, the Massachusetts National Guard and State Police entered her yard and cut down the solitary plant…authorities are using budgeted funds, prior to the end of the federal fiscal year Saturday, to gas up helicopters and do flyovers. …“Is this the way we want our taxpayer money spent, to hassle an 81-year-old and law-abiding patients?” Cutler said.

Gee, I don’t know about you, but I’ll sleep more comfortably tonight knowing that lots of taxpayer money was squandered to seize a pot plant from this dangerous granny!

Still not convinced that law enforcement resources aren’t being wasted? And still not upset that lives are being disrupted and harmed by heavy-handed government.

Then consider this horror story from Reason.

James Slatic, a California medical marijuana business owner, found out all his family’s bank accounts had been seized by the government one day in January when his 19-year-old daughter tried to buy lunch at the San Jose State University cafeteria and her card was declined. Slatic’s wife tried to transfer money to their daughter, figuring she had simply overdrawn her account, as teenagers are wont to do, but her account wouldn’t work, either. What the Slatics soon learned was the San Diego police had frozen all of their bank accounts: $55,258 from Slatic’s personal checking and savings account; $34,175 from his wife Annette’s account; and a combined $11,260 from the savings accounts of their two teenage daughters, Penny and Lily. …The Slatics’ crimes? None. Or at least, the San Diego District Attorney’s Office hasn’t charged them with any in the nine months since it seized their accounts.

His business also was shut down, which wasn’t good news for him or his employees that are now out on the street.

The trouble for James Slatic began five days before his family’s accounts were frozen, when around 30 San Diego police officers and DEA agents raided Slatic’s medical marijuana business, Med-West Distribution, and seized nearly $325,000 in cash from a safe. …The raid was a crushing blow to Slatic—not to mention his 35 employees, who lost their jobs and benefits without notice.

Here’s a video detailing this disgusting abuse by government.

There is some good news. Voters in several states voted last week to decriminalize pot.

And for those who worry that legalizing marijuana will be a gateway to decriminalizing harder drugs, I encourage you to read this Cato Institute study on what happened after Portugal legalized all drugs early last decade.

This isn’t an argument about whether you should use drugs, like drugs, or approve of drug use. You can be the drug equivalent of a teetotaler like me and still realize that it makes no sense for the government to squander lots of money and hurt lots of lives simply because politicians want to control what people choose to put in their own bodies.

Read Full Post »

Older Posts »

%d bloggers like this: