KENNEDY: Here’s a revenue enhancement for you

Keywords Opinion / Taking Issue

Sheila Suess KennedyI’ve been pondering arguments about how to reduce the national debt, and I have a proposal: Dump the drug war.

The fiscal consequences of current policies are staggering. A Harvard economics professor reported in 2005 that just replacing marijuana prohibition with a system of taxation and regulation similar to that used for alcohol would produce annual savings and tax revenue between $10 billion and $14 billion. Other estimates are far higher, but even that’s not chump change. Marijuana prohibition costs U.S. taxpayers nearly $42 billion dollars a year just in criminal justice costs and lost tax revenue.

The federal government alone spends approximately $500 every second on drug prohibition; as of Aug. 19, state and federal governments together had reported spending nearly $26 billion this year on an effort that—as Fox News and the Associated Press recently reported—has failed to meet any of its goals.

Then there are the opportunity costs. Indiana used to have a robust hemp industry. Hemp is a versatile and useful product that cannot be smoked or used as a recreational drug, but our indiscriminate drug policies still outlaw its growth.

Those policies also prohibit use of marijuana to alleviate side effects of chemotherapy. And the drug war diverts needed dollars from serious crime-control efforts, among other programs. Estimates are that the money spent annually on the drug war would pay for a million more teachers.

Law Enforcement Against Prohibition (LEAP) is an organization of current and former police officers, sheriffs, prosecutors and judges. These people have seen the drug war up close and ugly, and their message is simple: It has been a costly disaster. Just as with our prior experiment with alcohol prohibition, drug prohibition policies have created a set of perverse incentives that have made drug dealing so profitable that the lure of wealth outweighs the prospects of being caught.

Last year, the FBI estimated that there is a drug arrest every 19 seconds in the United States, and 82 percent of those were for simple possession. That isn’t surprising; other government estimates are that 47 percent of Americans over the age of 12 admit to using illegal drugs—mostly marijuana, which is arguably no more harmful than those legal drugs, tobacco and alcohol.

There is a copious academic literature documenting the failures of American drug prohibition and wide consensus on the magnitude of its social and human costs. There is also wide recognition that politicians are loathe to act on the basis of evidence when that evidence contradicts their ideology or—heaven forbid—threatens their electability by causing them to be seen as insufficiently concerned about law and order.

On the other hand, the country’s current fiscal crisis may finally provide a rationale for doing what most students of the issue have long advocated: Discard a policy that has never worked. We should decriminalize, tax and regulate marijuana, and focus on treatment and prevention for those with genuine addictions. (Ironically, federal law does not distinguish between use and abuse. It simply declares that any use of any substance that has been declared illegal is a crime. Axing this “zero tolerance policy” would save taxpayers a bundle.)

The other side of this equation is “revenue enhancement.” Taxing marijuana could raise serious money. Surely, even rabidly anti-tax Republicans would have a hard time objecting to taxation of another “sin.”

For over 30-plus years, we have ignored the numerous books, scholarly studies and organizations advocating the repeal of drug prohibition. Perhaps our current anxiety over national financial issues can help us achieve both savings and sanity.•


Kennedy is a professor of law and public policy at the School of Public and Environmental Affairs at IUPUI. Her column appears monthly. She blogs regularly at She can be reached at

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

{{ articles_remaining }}
Free {{ article_text }} Remaining
{{ articles_remaining }}
Free {{ article_text }} Remaining Article limit resets on
{{ count_down }}