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Economics of Prohibition

Videos


Cost of AR Drug WarAR Marijuana Market AnalysisBudgetary Implicatons


Costs of the Drug War in Arkansas 

1.  Arkansas spends over $122 million yearly to prohibit illegal drugs.

According to the most recent figures from the Office of National Drug Control Policy (ONDCP), in 1999 state and local expenditures on control of illegal drugs exceeded $13 billion per year. With Arkansas at .94% of national population, its per capita share of this cost is $122,200,000.

 Source: National Research Council, National Academy of Sciences, “Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us,” (Washington DC: National Academy Press, 2001) p. 1

2.  Arkansas spends over $32 million per year for police enforcement of drug laws.

Arkansas arrested 14,873 persons for drug law violations in 1999, 6.8% of its total arrests. Police costs for these arrests, based on the Bureau of Justice statistics, was $32,023,920. 

3.  Of this, Arkansas spends over $20 million for marijuana arrests alone.

Arkansas arrested 9421 persons for marijuana law violations in 1999, 4.3% of its total arrests. Police costs for these arrests, based on the Bureau of Justice statistics, was $20,250,420.   

Source: Bauer, Lynn & Steven D. Owens, “Justice Expenditure and Employment in the United States, 2001" (Washington DC: US Dept of Justice, Bureau of Justice Statistics, May 2004), NCJ202792, p. 4.                        

Source: Arrest Data 1999, Arkansas Crime Information Center 

4.  Arkansas spends over $29,300,000 yearly on marijuana arrest, prosecution, and jail.

In 2000, marijuana offenses were 3.87% of all state arrests. Police costs were estimated at $13.6 million; judicial and legal costs over $3 million, and correctional costs over $12.6 million.

Source: Bureau of Justice Statistics, Criminal Justice Expenditure and Employment Extracts Program (2000); Uniform Crime Reports, County-level Details Arrest and Offense Data (2000).  Full report “Crimes of Indiscretion” online at www.norml.org.  

5. Over 24% of Arkansas’s corrections system population are prisoners of the drug war, costing the state over $86 million per year.

In 1998, Arkansas prisons housed 15,950 prisoners, of which 3834 were drug law offenders (24%).  Based on Bureau of Justice statistics where Arkansas’ annual cost for state corrections is $301,054,000, drug law violators account for corrections expenditures of approximately $86,652,960.                                               

The average annual cost in the United States for total justice expenditures in 2001 was $167 billion, of which local police accounted for 30% and state corrections for 23%. Arkansas’s share in this cost per year is $470,940,000 for police and $301,054,000 for state corrections.  

Source: Leslie Powell, Director, Arkansas Sentencing Commission by phone July 2000.

Source: Bauer, Lynn & Steven D. Owens, “Justice Expenditure and Employment in the United States, 2001" (Washington DC: US Dept of Justice, Bureau of Justice Statistics, May 2004), NCJ202792, p. 4.

 Money Wasted in Failed Drug War Could Help Our Kids 

·                    Arkansas taxpayers spend over $20 million per year paying police to arrest marijuana users. 1  In many states, persons caught with marijuana receive a citation like a traffic ticket, which saves millions of dollars in expenditures for police, legal services, and corrections. Researchers have found that giving 'on-the-spot' fines to marijuana users did not cause marijuana use to increase. 2

 ·                    Almost $13 million of the state correctional budget is spent on marijuana offenders if marijuana offenders are incarcerated at the same proportion of overall offenses as they are arrested, at 4.3%. 3 

·                     Do we want to build more prisons instead of schools?  In 2002 about 15% of the population admitted using marijuana in the last month. In Arkansas, that's about 305,000 people. Do we really expect our law enforcement community to be diligent in its duty under current law to arrest these nonviolent offenders? 4           

·                    Arkansas spends over $122 million per year in support of failed drug policies. How many children would avoid the risk of addiction if that money was invested in early education, family support, and community health and mental services treatment centers? 5                     

 1 Marijuana arrests comprise 4.3% of total Arkansas arrests at a police cost of $20,250,420 for 2001. The Bureau of Justice Statistics report “Justice Expenditures and Employment in the United States, 2001,” by Lynn Bauer and Steven D. Owens, (Washington D C: US Dept of Justice, Bureau of Justice Statistics, May 2004), NCJ202792., p. 4, revealed total justice expenditures in 2001 of $167 billion, of which local police accounted for 30%. At .94% of the national population, Arkansas’ estimated police costs in 2001 were $470 million.

 2 Ali, Robert, et al., The Social Impacts of the Cannabis Expiation Notice Scheme in South Australia: Summary Report (Canberra, Australia: Department of Health and Aged Care, 1999) p. 44.

3 Bauer and Owens study noted that state corrections accounted for 23% of the $167 total justice expenditures in 2001, of which the Arkansas share would be $301,054,000.

4  Over 24% of the Arkansas prison population are prisoners of the drug war, costing the state over $86 million per year. (Data from Arkansas Sentencing Commission for 2000)                                               

 5 The Office of National Drug Control Policy (ONDCP) estimated that in 1999 state and local expenditures on control of illegal drugs exceeded $13 billion per year. Arkansas’ per capita cost, based on these figures, would be $122,200,000 per year. (National Research Council, National Academy of Sciences “Informing America’s Policy on Illegal Drugs: What We Don’t Know Keeps Hurting Us,” (Washington DC: National Academy Press, 2001) p. 1)

See www.acic.org for Arkansas arrest data

For the SAMSHA Household Study of Drug Abuse, see www.samhsa.gov/oas/NHSDA/2k1NHSDA/vol2/appendixh_1.htm

and

www.samhsa.gov/oas/NHSDA/2k1NHSDA/vol2/appendixg.htm

For 2001 census figures on Arkansas population, see http://quickfacts.census.gov/qfd/states/05000.html

 

FOR IMMEDIATE RELEASE November 5, 2002

Supply/Demand Economics Led To Football Team Captain Arrest for Marijuana

Drug Policy Reform Group Analyzes Marijuana Market in Arkansas; Estimates Arkansas’ Cost for Marijuana Prohibition

Fayetteville, AR: Perhaps we should not be surprised when intelligent and ambitious young entrepreneurs such as UA football team captain Jermaine Brooks are discovered selling marijuana. We are, after all, a nation proud of our free enterprise economic system; making money is a highly respected goal in life. Mr. Brooks, like thousands before and – as long as marijuana prohibition lasts – after him, finds it difficult to ignore the enormous profits available in the supply/demand cycle of the marijuana marketplace. It was the same with alcohol prohibition.

Based on the U. S. Department of Health and Human Services’ 2001 National Household Survey on Drug Abuse, 55.6% of Mr. Brooks’ peer group (ages 18-24) have experimented with drugs, the majority of which used marijuana (50% of the peer group; only 5.6% bothered to mess with other drugs). One out of four has used marijuana in the last month.

The actual population numbers for Arkansas show that for the 262,738 people in Mr. Brooks’ peer group, at a use rate of one-quarter ounce per month for the one in four who use at least monthly, approximately 16,400 ounces of marijuana, or 1026 pounds, would be required to meet the monthly demand for marijuana.

Those who have been shocked by the seven and one-half pounds of marijuana found in Mr. Brooks’ home may wish to place that quantity into the context of the actual demand. Mr. Brooks’ stash was about seven percent of the market share for a month. Considering that the UA-F campus is the largest collection of 18-24 year old people in the state, it is likely that at least 750 pounds of marijuana are marketed in this area on a regular, per-monthly basis.

Beyond his peer group, nearly 10% (9.3%) of the adult population use marijuana at least monthly, according to the 2001 HHS survey. Observers agree that this official estimate is no doubt quite conservative, considering that many adults will not answer "yes" to a telephone survey asking about their use of marijuana. This estimate alone, however, shows an additional Arkansas market for 2705 pounds per month, bringing total monthly demand in this illegal marketplace to 3455 pounds.

Let’s talk about supply: Like the moonshiners of yore, marijuana growers are a furtive lot. Sweating out the lengthy, somewhat conspicuous process of production, growers sell at prices that reflect the quality of their goods. On average, for street grade marijuana generally imported from Mexico, a wholesale pound brings a farmer less than $100. For above average marijuana produced in Arkansas, growers expect to receive up to $1200 per pound. For purposes of our economic analysis, let’s say that farmers in a legal market could expect to earn $200 per pound.

A healthy marijuana plant of good genetic stock will flourish in four square yards of growing space. At that spacing, a small Arkansas Delta farmer could expect to grow 440 plants per acre. Each plant would yield a minimum of one pound, assuming adequate sunlight, nutrients, and water. At $200 per pound, the farmer’s one-acre crop would be worth $88,000, from which he would subtract his costs. In order to meet in state demand conservatively estimated at 41,460 pounds per year, approximately 200 farmers producing one-half acre plots of marijuana each could generate this annual crop, each farmer grossing $44,000 and creating a total of $8,800,000 in new farm income for the most depressed region of the state.

But the real money in marijuana, like moonshine, is not so much in production but rather in distribution. Current marijuana markets inflate the base price of $200 per pound up to as much as $2500 per pound at the point of sale, when customers buy quarter-ounce portions at $40 per bag. At every exchange along the way, handlers expect to at least double their investment.

Like alcohol prohibition, marijuana prohibition places this marketplace outside the regulatory processes of commerce and law. And like the times of alcohol prohibition, persons wishing to take advantage of this lucrative market must become a law unto themselves. Guns, gang turf, and unsavory violence often become a part of the marketplace.

Like the repeal of alcohol prohibition, a regulated market for marijuana would bring this commerce within the framework of state and federal control. Marijuana-related guns and violence would disappear. Quality standards would control purity, grade, and packaging. Sellers would conduct regular business hours and expect protection by local law enforcement. Buyers would be checked by identification to regulate the product’s distribution to appropriate age groups.

Along with regulation would come taxation. If we look only at the Arkansas-age-25-and-older market for marijuana, at 2705 pounds per month, at approximately $2500 per pound retail, the gross monthly trade is $6,762,500. While not all this is profit by any means (farming, harvesting, processing, packaging, transportation, retailing), it can be used to estimate what a 20% state tax on marijuana might produce: $1,352,500 monthly.

A market comparable to alcohol, allowing sales to persons aged 21 and older, would produce an additional $250,000 in monthly tax revenue. Overall, yearly taxes could be conservatively estimated at $19.2 million.

We know from multiple studies that less than one person in a hundred who tries marijuana will ever move on to use harder drugs. We know that for many marijuana users, marketing by drug dealers is the most likely means by which marijuana users become exposed to more dangerous drugs. We know that about 5% of all drug use is hard drugs, meaning that 95% of our current drug war is actually a marijuana war. By ending marijuana prohibition, resources could be focused on the dangerous drugs and substance addicts who most need our attention.

By ending marijuana prohibition, we could expect to see an enormous reduction in our national drug war costs, currently estimated at $40 billion per year. Take away 95% and you don’t have much cost left. We know that marijuana arrests account for over half of Arkansas’ total annual drug arrests. Ending marijuana prohibition would result in enormous taxpayer cost reductions for law enforcement, prosecutors, jails, prisons, probation, and other direct services.

In the case of Mr. Brooks, if sentenced to the possible 40 years his offense can carry, the State of Arkansas will spend at least $740,000 for his prison costs alone, based on a very conservative current estimate of $18,500 per year for Arkansas incarceration. Roughly, we could estimate lost wages at $35,000 per year, including state tax of $2000 per year. The average marijuana prisoner leaves a job and a family; we could assume that social support for a wife and two children would cost the state another $20,000 per year. Other costs: loss of economic activity supported by his earnings; long-term lost productivity/economic benefit due to having a prison record; psycho-social damage caused by arrest and prison time. It would be reasonable to estimate these "hidden" costs at $60,000 per year for each year a marijuana prisoner is incarcerated. Overall, we can safely estimate that jailing a marijuana prisoner costs the state between $25,000 and $75,000 per year.

If only 20% (1394) of the persons arrested on marijuana charges (6974) end up spending one year in jail, marijuana prohibition costs $25,789,000 in prison costs alone. Averaging the socio-economic costs at $50,000 per year, we can add an additional $69,700,000 expense to our tally. If we conservatively estimate that the state loses another $3,000 per arrested person in the costs of law enforcement salaries and equipment, building jails, hiring prosecutors, paying public defenders, maintaining courthouses, and multiple other expenses, we can add another $20,922,000 to our tally. Grand total conservatively estimated cost of Arkansas’ marijuana prohibition per year: $116,411,000.

And let’s not forget to consider the lost tax revenue and lost productivity that would become part of Arkansas economy with marijuana regulation. We estimated a rough monthly gross commerce of $6,762,500, so one year would come to $81,144,000, including taxes generated. Added to saved costs, the grand total of Arkansas’ potential fiscal benefit from ending marijuana prohibition: $197,555,000 per year.

 

The Budgetary Implications of Marijuana Prohibition

June 2005

Jeffrey A. Miron
Visiting Professor of Economics
Harvard University
Cambridge, MA 02138
781-856-0086
miron@fas.harvard.edu

The Marijuana Policy Project provided funding for the research discussed in this report. Daniel Egan provided excellent research assistance.

Executive Summary

  • Government prohibition of marijuana is the subject of ongoing debate.
  • One issue in this debate is the effect of marijuana prohibition on government budgets. Prohibition entails direct enforcement costs and prevents taxation of marijuana production and sale.
  • This report examines the budgetary implications of legalizing marijuana – taxing and regulating it like other goods – in all fifty states and at the federal level.
  • The report estimates that legalizing marijuana would save $7.7 billion per year in government expenditure on enforcement of prohibition. $5.3 billion of this savings would accrue to state and local governments, while $2.4 billion would accrue to the federal government.
  • The report also estimates that marijuana legalization would yield tax revenue of $2.4 billion annually if marijuana were taxed like all other goods and $6.2 billion annually if marijuana were taxed at rates comparable to those on alcohol and tobacco.
  • Whether marijuana legalization is a desirable policy depends on many factors other than the budgetary impacts discussed here. But these impacts should be included in a rational debate about marijuana policy.

I. Introduction

Government prohibition of marijuana is the subject of ongoing debate. Advocates believe prohibition reduces marijuana trafficking and use, thereby discouraging crime, improving productivity and increasing health. Critics believe prohibition has only modest effects on trafficking and use while causing many problems typically attributed to marijuana itself.

One issue in this debate is the effect of marijuana prohibition on government budgets. Prohibition entails direct enforcement costs, and prohibition prevents taxation of marijuana production and sale. If marijuana were legal, enforcement costs would be negligible and governments could levy taxes on the production and sale of marijuana. Thus, government expenditure would decline and tax revenue would increase.

This report estimates the savings in government expenditure and the gains in tax revenue that would result from replacing marijuana prohibition with a regime in which marijuana is legal but taxed and regulated like other goods. The report is not an overall evaluation of marijuana prohibition; the magnitude of any budgetary impact does not by itself determine the wisdom of prohibition. But the costs required to enforce prohibition, and the transfers that occur because income in a prohibited sector is not taxed, are relevant to rational discussion of this policy.

The policy change considered in this report, marijuana legalization, is more substantial than marijuana decriminalization, which means repealing criminal penalties against possession but retaining them against trafficking. The budgetary implications of legalization exceed those of decriminalization for three reasons.[1] First, legalization eliminates arrests for trafficking in addition to eliminating arrests for possession. Second, legalization saves prosecutorial, judicial, and incarceration expenses; these savings are minimal in the case of decriminalization. Third, legalization allows taxation of marijuana production and sale.

This report concludes that marijuana legalization would reduce government expenditure by $7.7 billion annually. Marijuana legalization would also generate tax revenue of $2.4 billion annually if marijuana were taxed like all other goods and $6.2 billion annually if marijuana were taxed at rates comparable to those on alcohol and tobacco. These budgetary impacts rely on a range of assumptions, but these probably bias the estimated expenditure reductions and tax revenues downward.

The remainder of the report proceeds as follows. Section II estimates state and local expenditure on marijuana prohibition. Section III estimates federal expenditure on marijuana prohibition. Section IV estimates the tax revenue that would accrue from legalized marijuana. Section V discusses caveats and implications.

II. State and Local Expenditure for Drug Prohibition Enforcement

The savings in state and local government expenditure that would result from marijuana legalization consists of three main components: the reduction in police resources from elimination of marijuana arrests; the reduction in prosecutorial and judicial resources from elimination of marijuana prosecutions; and the reduction in correctional resources from elimination of marijuana incarcerations.[2] There are other possible savings in government expenditure from legalization, but these are minor or difficult to estimate with existing data.[3] The omission of these items biases the estimated savings downward.

To estimate the state savings in criminal justice resources, this report uses the following procedure. It estimates the percentage of arrests in a state for marijuana violations and multiplies this by the budget for police. It estimates the percentage of prosecutions in a state for marijuana violations and multiplies this by the budget for prosecutors and judges. It estimates the percentage of incarcerations in a state for marijuana violations and multiplies this by the budget for prisons. It then sums these components to estimate the overall reduction in government expenditure. Under plausible assumptions, this procedure yields a reasonable estimate of the cost savings from marijuana legalization.[4]

The Police Budget Due to Marijuana Prohibition

The first cost of marijuana prohibition is the portion of state police budgets devoted to marijuana arrests.

Table 1 calculates the fraction of arrests in each state due to marijuana prohibition. Column 1 gives the total number of arrests for the year 2000.[5] Column 2 gives the number of arrests for marijuana possession violations. Column 3 gives the number of arrests for marijuana sale/manufacturing violations. Columns 4 and 5 give the ratio of Column 2 to Column 1 and Column 3 to Column 1, respectively; these are the percentages of arrests for possession and sale/manufacture of marijuana, respectively.

The information in Columns 4 and 5 is what is required in the subsequent calculations, subject to one modification. Some arrests for marijuana violations, especially those for possession, occur because the arrestee is under suspicion for a non-drug crime but possesses marijuana that is discovered by police during a routine search. This means an arrest for marijuana possession is recorded, along with, or instead of, an arrest on the other charge. If marijuana possession were not a criminal offense, the suspects in such cases would still be arrested on the charge that led to the search, and police resources would be used to approximately the same extent as when marijuana possession is criminal.[6]

In determining which arrests represents a cost of marijuana prohibition, therefore, it is appropriate to count only those that are “stand-alone,” meaning those in which a marijuana violation rather than some other charge is the reason for the arrest. This issue arises mainly for possession rather than for trafficking. There are few hard data on the fraction of “stand-alone” possession arrests, but the information in Miron (2002) and Reuter, Hirschfield and Davies (2001) suggests it is between 33% and 85%.[7] To err on the conservative side, this report assumes that 50% of possession arrests are due solely to marijuana possession rather than being incidental to some other crime. Thus, the resources utilized in making these arrests would be available for other purposes if marijuana possession were legal. Column 6 of Table 1 therefore indicates the fraction of possession arrests attributable to marijuana prohibition, taking this adjustment into account.[8]

Table 1: Percentage of Arrests Due to Marijuana Prohibition
  Total Arrests MJ Possession MJ Sale/Man. Poss % S/M % Poss % /2
  1 2 3 4 5 6
Alabama 215587 11501 258 0.053 0.001 0.027
Alaska 40181 1239 200 0.031 0.005 0.015
Arizona 304142 16288 1233 0.054 0.004 0.027
Arkansas 218521 6846 928 0.031 0.004 0.016
California 1428248 50149 12338 0.035 0.009 0.018
Colorado 282787 12067 604 0.043 0.002 0.021
Connecticut 146992 6751 773 0.046 0.005 0.023
Delaware 41515 2151 131 0.052 0.003 0.026
D.C.* 4009 32 0 0.008 0.000 0.004
Florida* 0 0 0 0.043 .006 0.022
Georgia 429674 24321 4093 0.057 0.010 0.028
Hawaii 64463 1110 167 0.017 0.003 0.009
Idaho 76032 2949 219 0.039 0.003 0.019
Illinois* 319920 0 0 0.043 0.006 0.000
Indiana 270022 14484 1806 0.054 0.007 0.027
Iowa 113394 6054 551 0.053 0.005 0.027
Kansas 78285 3277 594 0.042 0.008 0.021
Kentucky* 160899 10669 1188 0.066 0.007 0.033
Louisiana 297098 14941 2526 0.050 0.009 0.025
Maine 57203 3294 554 0.058 0.010 0.029
Maryland 318056 17113 2711 0.054 0.009 0.027
Massachusetts 160342 8975 1365 0.056 0.009 0.028
Michigan 413174 14629 2050 0.035 0.005 0.018
Minnesota 269010 9325 6782 0.035 0.025 0.017
Mississippi 202007 9925 1054 0.049 0.005 0.025
Missouri 322775 13202 1338 0.041 0.004 0.020
Montana 30396 384 35 0.013 0.001 0.006
Nebraska 97324 6787 326 0.070 0.003 0.035
Nevada 148656 3828 933 0.026 0.006 0.013
New Hampshire 50830 3706 550 0.073 0.011 0.036
New Jersey 375049 20285 3058 0.054 0.008 0.027
New Mexico 112829 2966 325 0.026 0.003 0.013
New York 1295374 101739 11309 0.079 0.009 0.039
North Carolina 523920 21179 2539 0.040 0.005 0.020
North Dakota 27846 896 137 0.032 0.005 0.016
Ohio 533364 25420 1863 0.048 0.003 0.024
Oklahoma 166004 11198 1302 0.067 0.008 0.034
Oregon 157748 6336 283 0.040 0.002 0.020
Pennsylvania 493339 16471 5057 0.033 0.010 0.017
Rhode Island 35733 2200 293 0.062 0.008 0.031
South Carolina 216451 14348 2370 0.066 0.011 0.033
South Dakota 41615 2449 153 0.059 0.004 0.029
Tennessee 232486 12869 2586 0.055 0.011 0.028
Texas 1074909 55509 1926 0.052 0.002 0.026
Utah 125553 4192 311 0.033 0.002 0.017
Vermont 17565 632 65 0.036 0.004 0.018
Virginia 303203 13140 1443 0.043 0.005 0.022
Washington 298474 13146 1329 0.044 0.004 0.022
West Virginia 51452 2618 248 0.051 0.005 0.025
Wisconsin 322877 45 16 0.000 0.000 0.000
Wyoming 34243 1633 164 0.048 0.005 0.024
* Quoting http://fisher.lib.virginia.edu/collections/stats/crime/2000cb.pdf : “(3) No arrest data were provided for Washington, DC, and Florida. Limited arrest data were available for Illinois and Kentucky.”

Source: FBI Uniform Crime Reports accessed at http://fisher.lib.virginia.edu/collections/stats/crime/.

 

The first portion of Table 2 uses this information to calculate the police budget due to marijuana prohibition in each state. Column 1 gives the total expenditure in 2000 on police, by state. Column 2 gives the product of Column 1 with the sum of Columns 5 and 6 from Table 1. This is the amount spent on arrests for marijuana violations. For 2000, the amount is $1.71 billion.

The Judicial and Legal Budget Due to Marijuana Prohibition

The second main cost of marijuana prohibition is the portion of the prosecutorial and judicial budget devoted to marijuana prosecutions. A reasonable indicator of this percentage is the fraction of felony convictions in state courts for marijuana offenses. Data on this percentage are not available on a state-by-state basis, so this report uses the national percentage. Data on the percentage of possession convictions attributable to marijuana are also not available, so this report assumes it equals the percentage for trafficking convictions.

In 2000 the percent of felony convictions in state courts due to any type of trafficking violation was 22.0%.[9] Of this total, 2.7% was due to marijuana, 5.9% was due to other drugs, and 13.4% was unspecified. This report assumes that the fraction of marijuana convictions in the unspecified category equals the fraction for those in which a specific drug is given, or 31.4% [=2.7%/(2.7%+5.9%)]. The report also assumes that the percentage of possession convictions due to marijuana equals this same fraction. These assumptions jointly imply that the percentage of felony convictions due to marijuana equals the fraction of felony convictions due to any drug offense (34.6%) multiplied by the percentage of trafficking violations due to marijuana (31.4%). This yields 10.9% (=34.6%*31.4%).[10]

The second portion of Table 2 uses this information to calculate the judicial and legal budget due to marijuana prohibition. Column 3 gives the judicial and legal budget, by state. Column 4 gives the product of Column 3 and 10.9%, the percentage of felony convictions due to marijuana violations. This is the judicial and legal budget due to marijuana prosecutions. For 2000, the amount is $2.94 billion.

The Corrections Budget Due to Marijuana Prohibition

The third main cost of marijuana prohibition is the portion of the corrections budget devoted to incarcerating marijuana prisoners. A reasonable indicator of this portion is the fraction of prisoners incarcerated for marijuana offenses.

As with the percentage of prosecutions due to marijuana, state-by-state information on the percentage of prisoners incarcerated for marijuana offenses is not available. Appropriate data do exist for a few states, however, and this percentage is likely to be similar across states. This report therefore computes a population-weighted average based on the few states for which data exist; it then imposes this percentage on all states. This percentage is 1.0%, as documented in Appendix A.

The third portion of Table 2 calculates the corrections budget due to marijuana prohibition.[11] Column 5 gives the overall corrections budget, by state. Column 6 gives the product of Column 5 and 1.0%, the estimated fraction of prisoners incarcerated on marijuana charges. This is the corrections budget devoted to marijuana prisoners. For 2000, the amount is $484 million.

Overall State and Local Expenditure for Enforcement of Marijuana Prohibition

As shown at the bottom of Table 2, total state and local government expenditure for enforcement of marijuana prohibition was $5.1 billion for 2000. This is an overstatement of the savings in government expenditure that would result from legalization, however, for two reasons. First, under prohibition the police sometimes seize assets from those arrested for marijuana violations (financial accounts, cars, boats, land, houses, and the like), with the proceeds used to fund police and prosecutors.[12] Second, under prohibition some marijuana offenders pay fines, which partially offsets the expenditure required to arrest, convict and incarcerate these offenders. The calculations in Appendix B, however, show that this offsetting revenue has been at most $100 million per year in recent years at the state and local level. This implies a net savings of criminal justice resources from marijuana legalization of $5.0 billion in 2000. Adjusting for inflation implies savings of $5.3 billion in 2003.[13] [14] [15]