A Higher Class: Rescheduling Marijuana to Schedule III Is a Welcomed Step Towards Legalization

Marijuana has a peculiar place in American society. In 2024, 22.3 percent of Americans had used marijuana at least once in the past year. Support for marijuana legalization is at 70 percent. Yet because of President Nixon's War on Drugs, marijuana was classified as a Schedule I drug under the Controlled Substances Act. This is mind-boggling considering that even back in the 1970s, a government report known as the Schafer Commission concluded that cannabis did not constitute a danger to the public. Even so, Nixon went ahead with Schedule I classification anyway. For context, Schedule I is reserved for drugs that have "no current medically accepted use" and high potential for abuse. This put marijuana on the same legal level as heroin and meth. Cocaine is a Schedule II drug, which means from the viewpoint of the Drug Enforcement Administration (DEA), marijuana is worse than cocaine.

Marijuana has retained that scheduling until last week. What happened last week? President Trump rescheduled marijuana to a Schedule III drug. Schedule III drugs are considered to have accepted medical uses while having a low potential for abuse and psychological dependence. I called for rescheduling marijuana a decade ago, but I suppose it is better late than never. Trump's decision has practical ramifications. One positive trend is that the rescheduling can reduce stigmatization of marijuana usage, particularly in terms of recognizing marijuana's legitimate uses. 

One of the biggest benefits will be for medical research. Under Schedule I, it was all but impossible to conduct medical research on marijuana due to the research restrictions. Research could only be done under the National Institute on Drug Abuse (NIDA). Approval times were slow and the marijuana allowed was not research-grade. This rescheduling removes the NIDA monopoly on marijuana research. Schedule III does not eliminate research barriers. At the same time, Schedule III drugs do not require separate researcher registration; they also have less stringent laboratory controls and more limited reporting requirements. This means that more careful and precise research with fewer barriers can be conducted. What rescheduling will do is strengthen the evidence base. 

I already pointed out how marijuana affects public health in 2023. I bring this up because rescheduling removes the legal fiction that marijuana has no medical use, which by itself will further marijuana legalization because the federal government is recognizing that marijuana is not the boogeyman that it has been made out to be. That would explain why the likes of Heritage Foundation aren't thrilled: because it can no longer be demonized. Schedule III opens the door to marijuana prescriptions. At the same time, it does not allow whole-plant marijuana to be sold. It still needs FDA approval and meet certain requirements on dosing, formulation, and labeling. 

Furthermore, rescheduling has tax implications. Under IRS Code Section 280E, businesses trafficking Schedule I or II drugs cannot deduct business expenses from their gross receipts. According to the Reason Foundation, this has resulted in cannabis businesses paying up to four times as much in taxes as a non-cannabis business. Enabling these deductions will provide greater stability to the cannabis industry. 

Reason Foundation also points out that banking opportunities will improve for cannabis businesses. The PATRIOT Act has strict anti-laundering provisions for Schedule I and II drugs. Since financial institutions were risk-averse, they ended up being more stringent than even under DOJ regulations in order to not get into trouble. Hopefully, this will ease tensions and open transparency enough that cannabis businesses can open up bank accounts. Prior to rescheduling, cannabis businesses had to be cash-based businesses because they did not have access to financial inclusion. Handling large volumes of cash attracted violent crime. As the Competitive Enterprise Institute points out, greater financial inclusion can remove this temptation. 

Although rescheduling is an improvement, it should go without saying that rescheduling does not make marijuana legal. Federal law still conflicts with state legalization laws. This means that possession, distribution, and sale of marijuana remains a crime under federal law. Even with rescheduling, there are still barriers to medical research, marijuana prescriptions, and financial inclusion. Removing marijuana from the list of federally controlled substances would be the most prudent approach for federal drug law. At the same time, rescheduling is an example of what next-best policy looks like given political reality. I predicted in 2015 that it would be a long road to marijuana legalization, so I still think this is pretty dope.  

Note to Washington Post: Drug Decriminalization in Portugal Has Been a Success

In July 2001, Portugal underwent a controversial social experiment. Portugal decided to decriminalize all of its drugs for personal use, including such harder drugs as crack and cocaine. Portugal has had the longest and most extensive drug decriminalization policy in play. If successful, the Portuguese case study would have major implications for drug policy across the world. 

Last week, the Washington Post (WaPo) wrote a scathing piece on how Portugal was experiencing fatigue with the experiment. According to WaPo, the Portuguese police are blaming increased crime on the drug use. WaPo described streets littered with drug-related paraphernalia, not to mention the long waits for state-funded rehabilitation treatment. WaPo poses the hypothetical question as to whether Portugal should question the success of the decriminalization. It is a question that I would like to answer non-rhetorically and to do so with some questions of my own. 

How do Portugal's drug statistics now compare to those from pre-2001? This policy was implemented in the first place due to high levels of heroin use, increased drug addiction, and Portugal having the highest HIV infection rate in 1999. Things have gotten better since then. Oxford University data show that the drug disorder death rate in Portugal was 0.8 per 100,000. In 2019, it was 0.38 per 100,000. One metric that stayed constant was share of population with drug use disorder, i.e., 0.8 percent (Oxford). Even better, a study from the Institute of Labor Economics (Félix et al., 2017) and a study from Sage Journal (Cabral, 2017) show that Portugal's drug policy caused a decrease in heroin and cocaine seizures, drug offenses, drug deaths, and a reduction in the incidence of drug addicts among HIV individuals.

How does drug use in Portugal compare to other countries? WaPo could not even avoid a certain reality. As we see from European Union data, drug use rates in Portugal are still lower than other European countries. Portugal's cannabis use is less than half of other countries as Spain, France, and Germany. As for cocaine use, it is about a tenth of these countries. As we see from the Oxford data, Portugal's drug death and drug use disorder rates remained lower than that of the rest of Europe since decriminalization. 

Even so, WaPo points out that drug use, overdoses, and drug-related crime increase from 2019 to 2023. Based on previous research, Portugal's drug policy seemed to have been going well prior to 2019. What could have possibly happened between 2019 and 2023 that could have caused a change? Perhaps a once-in-a-century pandemic in which governments across the world imposes onerous and harmful lockdowns. The United Nations was astute enough to realize the increase in drug usage was not confined to Portugal, but was a worldwide phenomenon due to the pandemic. As for the fatigue, it is plausible that two-plus years of pandemic mode and all the corresponding fear-mongering contributed to wearing out the police officers. 

Drug decriminalization by itself was not going to solve everything. Congregating with drug users and disturbing residents, leaving needles on the streets is unacceptable. Even under a libertarian philosophy, those create externalities and constitutes as a violation of the nonaggression axiom that arguably should be handled by the police. It is not perfect, but decriminalization beats the social costs that come with drug prohibition. 

Providing access to needle-exchange programs, make naloxone more available, and improving drug rehabilitation services can all be part of a more comprehensive response that can further help Portugal with its progress. But make no mistake: Portugal shifting its drug policy from punishment and incarceration to harm reduction with decriminalization was a huge step in the right direction. 

You Cannot Spell "Healthcare" Without "THC": What Are the Effects of Marijuana on Public Health?

In 2012, the states of Colorado and Washington legalized recreational marijuana. Since then, recreational marijuana has been made legal in a total of 21 U.S. states and Washington, D.C. Other countries have legalized marijuana, including Mexico, Uruguay, Georgia, South Africa, Canada, Thailand, and Malta. While progress has been made on marijuana legalization, there is still progress that still needs to be made, particularly when it comes to public opinion. Polling finds that how people perceive marijuana as overall good is split. According to Gallup, 53 percent believe marijuana has a positive effect on individual marijuana users, whereas 49 percent believe it has a positive effect on society. As we see below, those who have tried marijuana have a more positive view on marijuana than those who have not. 

In honor of this April 20th, I would like to examine the effects that marijuana has had on public health, as opposed to individual health. I do not expect the public health argument for marijuana to be open-and-shut. As I brought up in my argument to legalize psychedelic mushrooms, any substance is going to come with some risk. Marijuana is not an exception to that rule.  

A literature review released by the American Economic Association last month was promising (Anderson and Rees, 2023). Not only is there "little credible evidence to suggest that [medical marijuana] legalization promotes marijuana use among teenagers," but there is "convincing evidence that young adults consume less alcohol when medical marijuana is legalized." What about other effects on public health? I will be citing a Cato Institute policy analysis more than once to help answer this important question (Dills et al., 2021).

• Violent crime. I bring up violent crime because the outcomes of violent crime have impact on public health and health services usage. The concern about marijuana when it comes to violent crime is that the THC induces psychosis, which can increase likelihood of violent crime. Conversely, a decrease in crime would be a boon for marijuana proponents to illustrate how legalizing marijuana diverts marijuana sales from underground markets to legal markets. What the Cato Institute found is a disappointment to both sides: "Overall, violent crime has neither soared nor plummeted in the wake of marijuana legalization." A study from the Journal of Drug Issues concluded that medicinal marijuana laws did not have a negative impact on violent or property crime (Shepard et al., 2016). A working paper from Appalachian State University goes as far as arguing that the effects of marijuana on violent crime are in favor of marijuana legalization proponents (Callahan et al., 2021).
• Effects on alcohol use. There was postulation over how marijuana legalization would affect substance use of other substances. Would people trade in one substance for marijuana (substitution effect)? If so, it could be an argument for marijuana proponents since marijuana has been shown to be safer than alcohol. Or would alcohol users use marijuana in addition to the other substance (complementary effect)? According to a study from the National Institutes of Health (NIH), both the substitution and complementary effects exist when it comes to marijuana (Gunn et al., 2022). The Cato Institute points out that there is no clear relation between marijuana legalization and alcohol use.
• Vehicle Fatalities and Accidents. This part is interesting because it is possible that marijuana legalization could make matters worse if more people use marijuana and/or the complementary effect were in full force. On the other hand, if the substitution effect were more prominent than the complementary effect, it could very well improve road safety since marijuana tends to impair less than alcohol. A study from the Journal of Studies on Alcohol and Drugs calculated a 2.3 percent increase in fatal car crashes (Farmer et al., 2022). On the other hand, the Cato Institute went state-by-state to look at the "before/after" rates and compared those to the U.S. average. The Cato Institute found that Oregon notwithstanding, the vehicle fatality rate per 100 million miles driven stayed relatively flat post-legalization. 
• Suicide: This is another metric where the intuition could go either way. Marijuana could be used to treat depression, bipolar, or other behavioral disorders. Excessive marijuana use can also create some others, including schizophrenia and depression. In 2017, the National Academies of Science conducted a lengthy review on marijuana and mental health disorders. The conclusion from NAS was that the findings were mixed and often confounded by alcohol use. Similarly, Cato Institute surmised that "it is difficult to see any association between marijuana legalization and changes in suicide trends." A preprint state-level longitudinal analysis shows a 6.3 percent reduction in suicide (Rich et al., 2021).

Since marijuana legalization is new, the amount of post-legalization data we have are relatively limited. There are only so many conclusions we can draw based on what we have. I think there should be more research to determine the medical, public health, and economic effects of marijuana. This is one of the reasons I have been in favor of removing the DEA's Schedule I designator: so that we can conduct more research on the effects of marijuana. 

We should have a conversation about costs and benefits of marijuana legalization. We need to consider the costs of keeping marijuana in an underground market, as well as the individual and social costs of marijuana legalization. We also need to keep in mind the benefits of each, as well. This conversation about cost-benefit analysis or risk assessment was sorely lacking when politicians implemented lockdowns and other onerous regulations during the COVID pandemic. 

What I will say is that based on what data we currently have, the findings are overall underwhelming. Marijuana legalization does not seem to affect the traffic fatality rate, violent crime rate, alcohol use, or the suicide rate. These findings do not prove that marijuana legalization was the boon to public health that I would have guessed. On the other hand, violent crime, suicides, or vehicle fatalities did not skyrocket. I understand that these issues are multifaceted. But if marijuana were really that bad for public health, you would think that the negative effects would have shown up in the data. 

Correlation does not mean causation. At the same time, you cannot have causation with a correlation in the data, a phenomenon that can similarly be found in the data on gun ownership and gun deaths. From an economic standpoint, I find bans to be blunt instruments that have negative unintended consequences. For those advocating for a ban on or criminalization of marijuana, the burden of proof is on these advocates to show a clear and present danger to public safety and health. With the presently available data, you cannot make the case that marijuana legalization is a menace to public health. If you cannot prove correlation (much less a causation), you cannot even begin to justify such strict measures. Since there is no statistically significant effect on major public health metrics, we should err on the side of freedom and let people smoke their weed in the Land of the Free. 

2020 State Ballot Hodgepodge: Florida Minimum Wage, Illinois Income Tax Reform, California Gig Economy, and Marijuana Legalization

One of the things I enjoy most about election season is not the presidential election hullabaloo or even when you have Supreme Court justice vacancies. I personally get a kick out of the state ballot measures voted on in November. They are voluminous, they cover a wide range of topics, and they have greater impact on our lives than we can anticipate. Some of the fun ones I have covered in past years have included  single-payer healthcare, condom use in the porn industry, the right to hunt, and labels for genetically modified food. Today, I will cover minimum wage, tax reform, labor market reform, and marijuana. 

Florida Minimum Wage: Florida is looking to increase its minimum wage to $15 per hour by September 2026 (Amendment 2). The legislative branch's research arm, the Florida Office of Economic and Demographic Research (EDR) conducted a fiscal analysis of the ballot initiative. The EDR found that by 2027, it would cost the state of Florida $540 million per annum. Proponents argue that Florida needs to increase the minimum wage to account for rising costs in housing and transportation. Aside from contributing to the broader economy, the additional spending would offset the unemployment losses. 

The Congressional Budget Office (CBO) released a study on what a $15 federal minimum wage would look like. CBO found that while 1.3 million would be pulled out of poverty, the same amount of people would become unemployed. That on top of the fact that it would have a net cost of $8.1 billion. Not exactly an economic booster! Data from the last recession also found that minimum wage increases prolong recessions. Not exactly a winning policy if one of the main goals is to pull Florida out of the recession. Generally speaking, minimum wage increases such as these make it more difficult for low-skill labor to find or retain work, it is a poorly targeted policy when it comes to poverty reduction, and adversely impacts business operations. If you live in Florida, vote "No" on Amendment 2. For further analysis on Amendment 2, see the Reason Foundation's analysis here. 

Illinois "Fair" Tax: The main ballot initiative in Illinois this November is for what has been colloquially referred to as a "fair" tax. Essentially, Illinois is looking to switch its income tax from a flat tax (everyone pays the same percentage) to a graduated tax system (the richer you are, the higher percentage you pay). I covered the Illinois "fair" tax last year, but the proposed brackets are the same, so the analysis still applies. Aside from asking what constitutes as "fair when it comes to taxation, I took issue with the following:

• The tax will not close the budgeting gap.
• The tax reform does nothing to change Illinois' atrocious spending habits.
• The "fair" tax does not adequately address the issues of fairness that proponents purport.
• Illinois already has lousy tax competitiveness. Switching to a graduated tax system will simply incentivize more people to move outside of Illinois. 

Illinoisans should vote "no" on the "Illinois Allow for Graduated Income Tax Amendment." If you want more recent analysis on the ballot initiative, here is one from the Tax Foundation.

California Gig Economy: Last year, the California legislature passed Assembly Bill (AB) 5, which applied a three-factor test to determine whether a worker could be classified as an independent contractor under California law. AB 5 had considerable implications for gig workers, but especially app-based drivers (e.g., Uber, Lyft). If it passes this November, Proposition 22 would essentially reverse AB 5. I covered AB 5 last year shortly before it became law this past January. I thought AB 5 was inferior policy because a) it would cause greater unemployment, b) cost the California economy millions, c) increase costs for consumers, and d) eliminate the flexibility in hours that most app-based drivers prefer to the 9-5 work hour. 

Looking at the analysis by the California Legislative Analyst, it would create a minor boost in income tax revenue because drivers would be earning more in income. More to the point, passing Proposition 22 would "would allow the companies to charge lower fares and delivery fees. With lower prices, customers would take more rides and place more orders. This could increase the companies' profits. High profit would increase the companies' stock prices." This analysis points out that AB 5 has been hurting app-based drivers, customers, and companies that hire gig workers alike. In case you need more convincing, here are analyses from Reason Foundation and the American Action Forum. I urge Californians to vote "Yes" on Proposition 22 this November. 

Marijuana Legalization: This November, we have four states looking to legalize recreational marijuana - Arizona, Montana, New Jersey, and South Dakota. Reason Foundation provides analysis on each of these ballot initiatives. There is a reason states have been trending towards legalizing marijuana in recent years. It is because the fears and stigma surrounding marijuana have been overblown, to say the least. Colorado legalized in 2014, and it has not been anywhere near the disaster that naysayers thought it would be. Economically speaking, marijuana legalization makes sense. We're not spending millions to enforce laws (that includes policing, prosecuting, and imprisonment costs), which means we can focus on more serious crimes. There is more government revenue, which means that if government dollars can be spent, it could spent where it could do more good, instead of punishing a victimless crime. Also, we can reduce the size of the underground market. This is great not simply because it expands the legal economy, but because less commerce in the underground market gives criminals and drug lords less power. Let's continue the trend towards marijuana legalization by voting these ballots and making them the law of the land for these states. 

Colorado's Marijuana Legalization at Five Years

Last week was the five-year anniversary of when Colorado's legalization of recreational marijuana was enacted. This is significant because Colorado is the first state in the United States to have legalized marijuana. Other states have since legalized recreational marijuana, but the Colorado case study can provide us with further insight on legalizing recreational marijuana. While there are a few studies that I came across (e.g., the Rocky Mountain High Intensity Drug Testing Area), much of the findings for today's analysis come from the thorough October 2018 impact study from the Colorado Department of Public Safety (CDPS).


Consumption and usage patterns. For adults, past 30-day usage increased from 13.4 percent in 2014 to 15.5 percent in 2017 (CDPS, p. 65). This is what one would expect because "when you legalize something, you get more of it." I was curious to see the impact that marijuana legalization had on teenagers. The CDPS used two main surveys. The first was the Health Kids Colorado Survey (HKCS). According to the HKCS, which is conducted biannually, shows that it slightly increased, followed by a decrease in 2017 (CPDS, p. 102).

The results of the National Survey on Drug Use and Health (NSDUH) from SAMHSA show an even greater decline in youth marijuana usage since legalization (CPDS, p. 120).

Marijuana-Related Crime. In Denver, marijuana-related crimes dropped from its peak of 276 crimes in 2014 to 183 crimes in 2017. Contrast that with overall crime in Denver increasing from 61,276 crimes in 2014 to 66,000 crimes in 2017 (CDPS, p. 32).

School Discipline and Achievement. Marijuana legalization does not seem to have affected this category. Marijuana offenses steadily dropped, from 1,655 offenses in 2014 to 1,144 offenses in 2017 (CDPS, p. 125). As for the number of drug suspensions, the number went up in 2009-10, and stayed steady since (CDPS, p. 129). Looking at drug suspensions in terms of rates, the figure is slightly lower than it was before legalization (CDPS, p. 130). What is even better is that the graduation rate has increased and the dropout rate slightly decreased since legalization (CDPS, p. 135).

Traffic Fatalities and Crashes. One of the major concerns aside from "think of the children" was that people would get high, drive their car, and increase the rate at which traffic fatalities took place. On the one hand, traffic fatalities involving drivers testing positive for cannabinoids increased since 2013 (see below; CDPS, p. 51). On the other hand, it comes with a very important caveat: THC, which is the key ingredient in marijuana, can stay in the bloodstream for weeks. Until there are better methods for testing for marijuana intoxication, it is difficult to say how much of this increase is caused by marijuana. This is further suggested by the fact that the number of drivers in fatal crashes that tested above the legal limit of 5ng/ml of THC decreased from 2016 to 2017 (CDPS, p. 49), it provides more plausibility that marijuana is not the sole factor in the increase of traffic fatalities. Conversely, an October 2018 report from the Insurance Institute for Highway Safety (IIHS) found that marijuana legalization led to a 7.4 percent increase in car crashes in Colorado (IIHS, p. 9).

Hospitalization. Preliminarily looking at the data, it looks like the rate of hospitalizations due to marijuana increased quite a bit. Two things to consider. One is that the rate was already increasing before legalization. Two, and more importantly, is that the discharge diagnosis codes changed in 2015, which makes it more difficult to change the trend. It is why the CDPS was explicit in not reading too much into these preliminary findings (CDPS, p. 78-79).

Treatment Admissions. The good news here is that the number of treatments and the rate of treatment admissions have declines since the legalization of marijuana (CDPS, p. 83-84).

Economic Effects. The Federal Reserve Bank of Kansas City released an interesting April 2018 report on the topic of the economic effects. In 2014, recreational marijuana sales were $308M. In 2017, that number went up to $1.1B, which represents a 42.5 percent compound annual growth rate! Colorado State University-Pueblo's Institute of Cannabis Research released a groundbreaking report on net economic cost and benefits for Pueblo County. Its findings? While it cost $23M, it created $58M in benefit, thereby creating a net benefit of $35M.

Marijuana also contributed to 5.4 percent of Colorado's job growth since 2014. The government is also happy because of the tax revenue. In 2014, marijuana tax revenue was $67.8M. By 2017, it climbed to $247.4M.

Postscript: There are a few caveats to note with this analysis The first is this: the CDPS is careful to note that one should not ascribe all the changes in social indicators to marijuana legalization, especially given the societal stigma and legal ramifications attached to marijuana prior to legalization. Colorado Christian University's Centennial Institute made this mistake in its report stating that for every dollar in tax revenue, the State spends $4.50 to deal with the costs. The CCU also fails to isolate the impact of legalization (e.g., stoners existed before the legalization), it compares current tax revenue with calculated costs of all marijuana use over a lifetime (thereby creating a false, non-analogous comparison), and does not include the benefits in public investment (e.g., cops are no longer spending money on chasing non-violent pot users), which is why I did not include the CCU report in my analysis today (see further criticism of CCU report here, here, and here).

There are other caveats to include in this analysis. One is that marijuana research is increasing more in light of legalization. Two is that this only the course over a five-year period. The other caveat is that it is a case study covering one state. While I would not use the Colorado case study by itself as definitive proof, I can say that marijuana legalization looks promising so far. Legalization did not increase youth usage or high school expulsions and dropouts. Treatment admissions have dropped. Marijuana legalization has created more jobs and economic growth. I would not have expected all benefit without any cost, but at the same time, it is nice to see that the benefits seem to be outweighing the costs, and that the fears of the naysayers are by and large unfounded.

Keeping Marijuana as a Schedule I Drug Is Too High of a Risk

For those who watched the Democratic presidential debate a couple of weeks ago might recall the part where the candidates were asked about their stance on marijuana. I personally thought the responses were weak on the whole. However, it looks like presidential candidate Bernie Sanders is taking it up a notch by saying that the federal government should remove marijuana from being scheduled by the Drug Enforcement Administration (DEA). As much as I disagree with Sanders on a whole host of issues, I have to say that in this case, he's right: having marijuana scheduled as a Schedule I drug is ridiculous. Why?

According to the DEA, a Schedule I drug is defined as a drug with no currently accepted medical use, has a high potential for abuse, potentially causes severe psychological or physical dependence, and is categorized as such because it is considered the most dangerous drug out there. I will start with asking how it cannot be considered to have an accepted medical use when, as of date, 23 states and the District of Columbia legalize marijuana for medicinal purposes. A recent study in the Journal of the American Medical Association shows how marijuana indeed has medicinal properties. It's nice to know that the wording can be vague enough in the statute where the ambiguity of who has to accept its validity can be up for debate. Leaving that one aside for now, why is it that marijuana is considered so dangerous that it is a Schedule I drug? From the DEA's perspective, marijuana is more dangerous than even meth or cocaine, both of which are only Schedule II drugs. Taking a study done back in 2010 (Nutt et al., 2010), marijuana is safer than alcohol, crack, heroin, cocaine, or tobacco (see below), yet two of those drugs are still widely sold in the United States. If you want a more recent, 2015 study, from Scientific Reports, I can provide that, as well (Lachenheimer and Rehm, 2015).

As I was explaining when I was doing some myth-busting on marijuana last year, marijuana is a drug, and like other drugs, it comes with benefits and risks. However, unlike many other drugs, the risks of smoking marijuana are relatively small in comparison. I personally wish that we would simply allow for marijuana's legalization in the entire nation. If the fight for legalizing same-sex marriage is any indication of how America handles social issues of this magnitude, my educated guess is that it will start off with a few states legalizing marijuana, much like we are seeing now. Eventually, the movement to legalize marijuana will pick up momentum where more and more states legalize it. Before we know it, marijuana will be legal in all 50 states and DC, and we'll look back wondering how we as a nation could have been oblivious enough to allow a repeat of the Prohibition. The fact we see the American approval rate for legalizing marijuana at 58 percent helps confirm my educated guess.

I don't see full legalization of marijuana happening anytime soon, but that doesn't mean we should accept the status quo. For one, it perpetuates the War on Drugs and the "tough on crime" mentality that should have died years ago. It also keeps marijuana in the underground market, which has its own additional costs. And let's not even begin to mention law enforcement costs surrounding a Schedule I categorization of marijuana. In this case, we shouldn't let good be the enemy of perfect because there are costs to keeping marijuana as a Schedule I drug. Rather than continue with failed drug policy, we should at the very least head in the right direction and reclassify marijuana as a Schedule II drug.

Earlier this month, researchers over at the centrist Brookings Institution released a paper showing how a Schedule I categorization is tantamount to the government declaring war on medicinal marijuana research. As the authors of the paper point out, it won't suddenly legalize marijuana because Schedule II merely recognizes that there are "accepted medical benefits," but is still dangerous. Given the confines of international drug treaties that have been signed and that it's a politically safe option, perhaps categorizing marijuana as a Schedule II drug is the best that can be done for now, even though it will be quite the pain to implement. At least that way, more substantive research can be done to determine whether marijuana is really the risk that naysayers claim it is.


11-6-2015: The DEA recently released its 2015 Drug Threat Assessment Summary, in which it surveyed over 1,000 law enforcement agents regarding the danger of illicit drugs. Guess which drug made the bottom of the list at 6 percent? You guessed it: marijuana.

Cracking Down on Mexico's Drug Cartel

Since the end of 2006, Mexico has been ravaged by violence induced by the government's war on drug cartels (see Congressional Research Service background on the issue here). In spite of the Mexican government's War on Drugs (la guerra contra el narcotráfico en México), the violence really hasn't abated. As much as 120,000 have died from the carnage. There are those who have used this as an excuse to harp on "illegal immigrants," even though the Mexican unauthorized immigrant population has been on the decline since 2007. Whether we accept the narrative that these drug wars are causing "a crisis on the U.S.-Mexico border," we should want to see an end to these wars. The economic efficiency is but one aspect of it. Thousands of pesos that were spent on fighting drug lords could have been spent bettering the lives of the Mexican people. There is also the humanitarian cost to consider: 100,000 homicides and 25,000 individuals missing. Increased poverty, corruption, the list goes on. While there has been some improvement over the years, drug cartels are still an issue. Whatever the Mexican government has been doing so far, its security strategy hasn't worked. How can these drug cartels be stopped?

Before answering that question, let's start by asking a basic question: what enables drug lords to have power in the first place? To repeat an oft-used cliché, money is power. The reason they can literally get away with murder is because they have a constant stream of drug money coming in, most notably from the United States. We can talk about addressing judicial reform, police reform, the ability to enforce laws (I think fighting a war against impunity would be a good idea, but tough to implement), providing Mexico with foreign aid to fight the War on Drugs, anti-laundering restrictions (which don't help as much as one would think), or the ever-amorphous anti-corruption reform to no avail. Mexico's democratic institutions are most probably too weak to handle the cartels on their own. Until you cut off the cartels' life support, i.e., money, they will continue to be supported by the demand in the underground market.

The Cato Institute, Instituto Mexicano para la Competividad, and the Center for Strategic and International Studies (p. 42) came up with a bright idea: legalize marijuana, which would be an important step in ending the War on Drugs. Even with the three states that have legalized it in the United States, it seems to have some effect already. According to the U.S. Department of Health and Human Services survey data, the vast majority of illicit drug usage in this country is marijuana-based. Legalizing marijuana would, amongst other things, close the gateway that exposes many to the harder, illicit substances.

Last year, five Nobel Prize-winning economists published a report through the London School of Economics (LSE), and they found that the War on Drugs has been a waste of time and money. Why?

In economic terms, implementing a supply-reduction intervention like the War on Drugs backfires. Normally, a supply reduction would cause a price increase, which would deter would-be offenders. However, with illicit drugs, the price increase incentivizes new supply by shifting commodity supply chains (LSE, p. 10). This returns us to a point [E2] similar to the market equilibrium prior to the War on Drugs. The elasticity of demand for the illicit drugs causes the price increase to be much larger than the quantity decrease (see Figure above). The black-market premium is what keeps the drug lords rolling in money. Decriminalization, or even better, legalization, would hit the drug lords where it hurts: their wallets. This clearly won't happen overnight. The federalist system in the United States, in which each state would have to approve legalization before putting enough pressure on the federal government, will take time. Even though it is moving at seemingly glacial speeds, other countries can follow suit. As much as I think that having stronger governmental institutions and less corruption than it currently has would help immensely, I would opine that marijuana legalization would help the Mexican government put a quash on drug trafficking sooner than institutional reform. 

Debunking Heritage Foundation's Debunking of Marijuana Myths

Even with the legalization of marijuana in Colorado and Washington, pot is still a contentious issue with both sides adamant about their positions. When the debate is this heated, there tends to be too much misinformation out there on the topic, which is how I felt when I read an article from the Right-leaning Heritage Foundation entitled Marijuana is Harmful: Debunking Seven Myths Arguing It's Fine. What I would like to do is go through their list of myths and see if they are indeed mythical or factual in nature.

1. "Marijuana is harmless and non-addictive." Framing the effects in such absolutist terms is a straw man argument that advocates of marijuana reform don't even use. If you're smoking something, there's a good chance that it's going to come with some risks (see this interactive chart from Healthline.com). The Heritage Foundation uses emergency room visits as a metric for just how unhealthy marijuana usage is. While 455,668 emergency room visits due to marijuana sounds like a lot, put that into context of the 129.8 million emergency room visits per annum, which would make marijuana-related emergency room visits a 0.35 percent of overall emergency room visits.  I'd be curious to see a breakdown of the diagnoses of these emergency room visits. Is this merely a reflection of individuals who abuse the emergency room? Is it that because the marijuana-based visits are due to individuals incapable handling the experience of tripping out? Inquiring minds would like to know. What I find distracting about bringing this myth up is that is we allow for other substances that can be harmful and addictive, such as alcohol (See Point #4 for further elaboration). 
2. "Smoked or eaten marijuana is medicine." I'm going to try to sidestep the debate on medical marijuana as much as possible here. First, it would be nice if marijuana were no longer classified as a Schedule 1 drug so more conclusive studies can be performed. Second, if marijuana is as effective as the Sativex spray that the individuals mention in their analysis, does it really matter which treatment a patient chooses as long as it doesn't harm anybody else? Third, even if one is able to extract the necessary, medicinal components of marijuana that avoid one from getting high, it is a red herring argument because marijuana is also used for recreational purposes. 
3. "Countless people are behind bars simply for smoking marijuana." Heritage Foundation brings up that 0.3 percent of state prison inmates are behind bars for smoking marijuana. Let's assume that the incarceration rate for mere pot possession is low. The number of arrests for marijuana possession is still the most common form of drug-related arrests. It still costs our justice system time and money to process these arrests, which is made all the more frustrating by low conviction and incarceration rates. Given the financial constraints that state and local budgets have experienced since the Great Recession, wouldn't it be better to focus on crimes that have actual victims?
4. "The legality of alcohol and tobacco strengthen the case for legal marijuana." The people of Heritage Foundation's argument is "alcohol and tobacco take so many lives. Why legalize another harmful drug to the list?" Because this is a country based on the idea of freedom. Even if it comes with risks, we should have the right to consume alcohol, tobacco, or marijuana. Look at the risks of marijuana compared to alcohol. For example, one can die from alcohol overdose, but the amount of THC one would have to ingest to overdose on marijuana makes it nigh impossible to die from overdose. It would explain why the CDC does not have a category for death caused by marijuana usage. Also, a study from British Columbia Mental Health and Addictions Journal shows that health-related costs for alcohol are eight times higher than that of marijuana (Davis and Thomas, 2009). Alcohol causes more damage to the brain than marijuana (Jacobus et al., 2009). Furthermore, legalizing marijuana is shown not to increase crime rates (Morris et al., 2014). Alcohol causes way more harm to others than marijuana (Nutt et al., 2010), yet we allow for alcohol's legalization. If we see a substitution effect between alcohol and marijuana with marijuana's legalization, it would mean a decreased likelihood of harm to others. In a free society, we make certain choices and live with the consequences, whether good or bad, of those actions. We legalize alcohol and tobacco not only because we know that Prohibition doesn't work, but also because in spite of the risks of these drugs, it is preferable that we allow individuals to free to make their own choices. If we allow individuals to consume more harmful substances like alcohol or tobacco, a fortiori, we should legalize marijuana. 
5. "Legal marijuana will solve the government's budgetary problems." No one reputable would argue that marijuana is the silver bullet of budgetary problems. I sure wouldn't. On the federal level, the leading drivers are Social Security, Medicare, and Medicaid. If you look at what the Congressional Budget Office publishes regarding budget reform, it's not that simplistic. Although marijuana is not meant to solve fiscal woes, it still creates a net positive for the budget. 500 economists signed off on the positive budgetary implications of legalizing marijuana. From an economic standpoint, legalizing marijuana is a no-brainer.
6. "Portugal and Holland provide successful models of legalization." I am not going to disagree with Heritage Foundation on this one. Portugal and Holland have only decriminalized marijuana, and Holland has become more strict about its drug laws in the past few years. We have no modern-day examples of whether marijuana legalization, which is why it will be nice to see how Colorado, Washington, and Uruguay handle marijuana legalization. 
7. "Prevention, intervention and treatment are doomed to fail, so why try?" This does not refute the argument for legalizing marijuana. Prevention, intervention, and treatment are not mutually exclusive options when it comes to marijuana legalization. The difference between legalization and prohibition is that in the former scenario, you don't pile on the additional issues that come along with prohibition.  
8. "Colorado and Washington are examples to follow." Heritage Foundation added this so-called myth at the end as an addendum. Calling this a myth is premature. After all, marijuana has been legalized in these states for a few short months. That is hardly enough time to determine anything of substance. Rather than take a pot shot at marijuana legalization, what should be done is that we wait and see what the effects of marijuana are before making conclusions.

Considering Non-Economic Factors in Marijuana Legalization

One month ago from today, I wrote a blog entry about the economic implications of marijuana legalization. I came to the conclusion that from an economic standpoint, marijuana legalization is a no-brainer. I would now like to assess the remaining factors to see how non-economic factors play a role in answering the question of whether we should legalize marijuana.

From a libertarian standpoint, being able to be free to do what one wants as long as it doesn't infringe on other people's freedom is paramount. Since I consider myself a consequentialist libertarian/classical liberal, I view freedom to be an exceptionally weighty factor, not an absolute one, and as such, one would have to come up with a very detrimental factor that is causing all sorts of negative externalities to others before one can even begin to justify making marijuana illegal.

Health: "Marijuana is bad for you, and as such, we should ban it." Some even go to the point of claiming that marijuana is actually worse for you than smoking cigarettes or drinking alcohol. We already have a good amount of government data showing that people still use marijuana, even in spite of its illegality, which means one cannot really counter-claim the fact that the CDC doesn't even have a category for marijuana-related deaths because these deaths are virtually non-existent. Contrast that with the near 40,000 lives per annum lost due to alcohol, or approximately one in five deaths in this country are caused by cigarette smoking. The Economist published an article a couple years ago illustrating how cannabis is less harmful to society and individuals than nicotine or alcohol, meaning that although there are some adverse health effects, it's not as bad as the licit alternatives.

Crime: There were economic impact factors (e.g., backlog of court systems, overcrowded prisons) that I covered in my last blog entry. Aside from those important reasons, I want to point out the reason why marijuana is a criminal issue: prohibition. For a drug that is less harmful than cigarettes, and certainly less so than alcohol, we have attached a lot of stigma to marijuana. I'm not denying that there aren't any adverse health effects with smoking marijuana because there are. As pointed out in the last paragraph, alcohol and cigarettes are harmful. Trans-fats or the high amounts of sugar found in soda can be considered "menaces to society." What happens with prohibition is in addition to the health affects of marijuana, you have thrown in the costs that come with more law enforcement and underground markets, the latter of which the government perpetuates by prohibiting marijuana. Not only do we turn people's lives upside-down, as well as those of their families, for a non-violent drug offense  (can't emphasize that point enough), but once they serve their prison sentence, they are labeled as felons, and thus disenfranchised (e.g., cannot vote, rendered de facto unemployable) for weed possession. For those who do want to get treatment, it's difficult because they fear being jailed, which just leads them into a downward spiral. Just another example of what happens when the government intervenes with good intentions, but delivers bad results.

Conclusion: There is much more that I can cover, but I would like to conclude at this time. Other arguments, such as marijuana would cause unproductive members of society or additional family issues, my response is this: We already tolerate such consequences with cigarettes and even more so with alcohol, which are arguably worse than those of marijuana. Yet we learned our lessons from the Prohibition and re-legalized alcohol with the 21st Amendment, which led to the disappearance of alcohol from the underground market. Why do we tolerate substances like alcohol and cigarettes, even though we know they cause certain harms? Because we realize that in a free society, people will inevitably do things with which we don't agree. If an individual commits a crime under the influence of marijuana, then they would be prosecuted, just like people who commit crimes while under the influence of alcohol. Short of any spillover effects such as those instances, people should have the freedom to smoke marijuana because that is what "life, liberty, and the pursuit of happiness" is about.

I'm sure the government likes to think that it's doing more good than harm on fighting the War on Drugs, but it's not. Federal drug laws ignore this reality, as well as ignoring the increased support for marijuana reform. I'm hoping that the states of Colorado, Oregon, and Washington pass their marijuana initiatives this November so that we can change the tide on the issue. We need a sensible drug policy that treats marijuana addiction as a health issue, not the use of marijuana as a criminal issue. Not only does it make fiscal sense, but it also makes for good common sense.

Looking at Economics and Why Marijuana Legalization Needs to Go Beyond Colorado

The state of Colorado is looking to legalize marijuana this November with Amendment 64. Although you have your proponents and opponents, what polling shows is that a majority of citizens support it (Public Policy Polling, Rasmussen), and there is a good chance that the ballot initiative will pass. If this bill passes, it will collide with federal law that classified marijuana as a Schedule I Controlled Substance, which is the DEA's classification stating that marijuana is amongst the most dangerous of drugs. If Colorado does indeed legalize marijuana, it will most probably lead to a debate regarding the federal legalization (or at least decriminalization) of marijuana in which I can make an educational guess that the Supreme Court will be ruling on whether marijuana legalization is ultimately a matter of state versus federal government. As of date, the legal status on a worldwide level is that most countries have made marijuana illegal, whereas some countries have decriminalized marijuana.

I want to take a look at the issue of marijuana legalization with a two-part blog series. This blog entry, Part I, will deal with the interconnected implications on the justice system and the economics. The second blog will deal with the health issues and other social costs (e.g., freedom, how it effects households and jobs, crime levels).

Gateway Theory: The argument made with the Gateway Theory is that marijuana is a stepping stone towards hard drugs. That could very well be, or the phenomenon can be explained without the Gateway Theory. One reason I find the Gateway Theory unconvincing is because when I look at government data for drug usage (See Tables G1-G8), the amount of people who try marijuana is way larger than those who try harder drugs, which would have to assume that 100% of the individuals who have tried harder drugs have tried marijuana first. Another reason I have a problem with the Gateway Theory is that it is just as plausible, and I would argue more plausible, that the reason why the stepping stone exists in the first place is because marijuana has been forced to the underground markets.  For individuals who want to purchase marijuana, they cannot go to a white market (a.k.a. legal market). They have to go to the black market. The distributors in the black market are drug dealers. Illicitness of their business set aside, drug dealers are just like any other businessmen: they want to sell as much of their product to you as possible. Due to the increased availability (read: easier to get pot than booze) and its perception as a "soft drug," people start off with marijuana. More interactions with a drug dealer gives the drug dealer more opportunities to sell the hard stuff. For those individuals that are more susceptible or are just looking for something stronger, they have already inserted themselves in the black market, making it all the easier to try the harder drugs. In this alternative way of thinking about the "gateway" concept, the gateway is not marijuana, but the black market. If marijuana were removed from the black market, I would make an educated guess that the "gateway effect" would disappear over time.

Basic Economics of Marijuana Legalization: What I would like to do now is look at some of the economic implications of marijuana legalization, much like the Colorado Center on Law and Policy (CCLP) has done with their cost-benefit analysis on Amendment 64. It should go without saying that legalizing marijuana would take marijuana out of the black market and bring it into legal markets. This self-evident statement is important because it matters for the economy. First, the revenue created by the legal production and selling of marijuana would count towards the GDP and help boost the economy. If this revenue is in the legal market, that means that we are depriving that revenue from the underground market, which delivers a coup to criminals. Since marijuana would be taxed much like tobacco, there is  also the benefit of creating tax revenue for the government. As Matthew Yglesias brings up, there are still costs of regulating substances. However, as both he and I point out, legalization is by far a more efficient way of going about marijuana.

Legalization would also impact law enforcement. The number one drug-related reason for arrests is marijuana possession, and marijuana-related drug violations consists of the 52.1% of the 1,638,846 annual drug abuse violations. After doing the math, that would amount to law enforcement not having to deal with about 854,000 arrests a year. Since rough economic times have caused law enforcement to cut back financially, it would be a much better use of government revenue to go after the hardened criminals instead of arresting individuals for mere marijuana possession. Also, think of how much less the burden on the justice system would be if marijuana were legal. To read more on the budgetary implications, here is the report from Dr. Jeffrey Miron, which was endorsed by 500+ economists, including Milton Friedman.

I will stop here for now and save the remaining factors to be considered for my next blog entry on the topic.



5-17-2016 Addendum: It looks like that tax revenues for Washington and Colorado are exceeding expectations. According to a recent Tax Foundation study, legalizing on the federal level would bring in $28B in revenues each year. Combine that effect with not having to enforce the inane law, and imagine how much society would benefit.

1-22-2017 Addendum: Here is the most rigorous report on the effects of marijuana from the National Academies, which entails 10,000 scientific abstracts.

Should We Rethink the War on Drugs?

Ever since President Nixon "declared war on drugs" back in 1971, the whole War on Drugs has been a highly contentious issue. Based on how the government is doing on the War on Terror and the War on Poverty, it makes me wonder whether the War on Drugs has been equally disastrous.

I know that by going over various sub-points, each one can be a blog entry of its own. I'm also sure that I am not covering every possible facet of the War on Drugs. With Colorado's ballot initiative to legalize marijuana this November, there very well could be more blog entries on this topic. However, I want to give a brief overview to see what the War on Drugs entails.

First, there is the matter of rate of drug usage itself. According to the UN Office on Drugs and Crime (UNODC), drug usage has stabilized in the developed world. Data from the National Survey on Drug Use and Health (NSDUH), the largest national survey of its kind, affirms that fact. Looking at the NSDUH's report from 2008, which was the most recent one published, provides insight. Take Table G.1 on page 242, which shows the types of illicit drugs used in the lifetime of those 12 and older. 108,255,000 people have admitted to using illicit drugs, and 94,946,000 of those people had tried marijuana. Per Table G.2 (p. 243) and G.10 (p. 251), that translates into 47% of Americans 12 and older who have tried. Obviously, the percent of those who have tried in the past year or month, which are 14.2% and 8.0% respectively, will be lower. However, the point here is that in spite of the War on Drugs, the deterrent is not as strong as one would expect; illicit drug usage is not uncommon. Just ask teenagers. According to a study done by the National Center on Addiction and Substance Abuse, it is easier for teenagers to get a hold of marijuana than beer.

The incarceration rate in America of 760 prisoners per 100,000 people is higher than any other country in the world and well above the OECD average of 140 prisoners. Drug abuse violations is one of the largest causes of arrests (FBI data) and accounts for 51% of federal inmates (Department of Justice). Why do I bother mentioning the incarceration rate? Because one of the primary causal mechanisms for its vast increase is the War on Drugs. Just think how much we would save in terms of maintaining all of these prisoners and the prisons who are charged with non-violent crimes. And don't forget how many less lives would be ruined because the individuals now have a record.

There is also the matter of unintended consequences. One of them, recently reported by the UNODC, is that on a global level, there is an significant increase of HIV and AIDS as a result. Much like with increasing the sin tax on cigarettes, another consequence is the black market. There was a time where we prohibited alcohol in this country, and did so through a constitutional amendment (i.e., the 18th). Remember how that one turned out? There were black markets and increased crime, and as a result, the 21st amendment of the Constitution repealed the 18th amendment. Instead of having Al Capone, we now have drug cartels that are not only causing issues on our own borders, but increasing crime on an international level. On top of it, cocaine has gotten cheaper over time.

We've spent over a trillion dollars on a war that cannot be won. What do we have to show for it? Drugs are easier than ever to obtain, prisons are overcrowded because we are punishing non-violent crimes in an exceedingly austere manner, and the black markets perpetuate the existence of drug cartels. If we don't use corporal punishment, what else could we do? First, we could decriminalize these drugs. Decriminalization has been a success for Portugal. It's better to keep these drugs out of the underground market. We don't see people bootlegging alcohol anymore, and that's because there isn't a prohibition on it. Plus, prohibition is an infringement on our civil liberties. After decriminalization, we should provide treatment for those who truly need it. As I pointed out already, most illicit drug usage is marijuana, a drug that wouldn't be considered any more harmful, if not less harmful, than alcohol. Backing off on the "War on Drugs" would ease the fiscal burdens on both the state and federal levels, both in terms of less enforcement and less congestion in the court system, while handling the problem of drug abuse in a more mature, responsible fashion.