What If We Legalized All Drugs

How does a $50 billion boost to the US economy sound? Not bad? Well, what about all the new addicts we could see pop up on the streets? Theoretically, it's all possible.

​By Shirley Skeel

Every year, about 2 million people in the U.S. are arrested for drug offenses, including using or selling marijuana, heroin, cocaine or methamphetamine. About a third of the country's prisoners are held on drug charges or for crimes attributed to drug abuse.

But what if we legalized all street drugs?

More kids would decide to try drugs "just once," and more would get hooked. Some lives would be ruined. But other lives would be saved. Gang murders would fall sharply. Thousands of people now in jail would be free to find work and feed their families. We'd save billions on the war on drugs, and a new drug industry would create jobs and loads of taxable revenue.

Of course, it may sound like madness. And the gut feeling among many people is that it would be disastrous.

Don Semesky, the former chief of financial operations for the Drug Enforcement Administration in Washington, D.C., asks: "Have you ever seen a meth addict, with all those sores and rotten teeth? And what they do to their kids? Do you want the government to be responsible for that?"

Yet some economists, including American Nobel laureate Milton Friedman, have supported the idea of legalizing drugs. Friedman believed America's war on drugs was at the root of police corruption and caused thousands of unnecessary deaths, with few gains for ordinary citizens.

So just how would legalized drugs affect the economy and your standard of life?

Running some numbers

Let's look at two scenarios: if marijuana alone were legalized and if all street drugs were legalized. Either way, we assume there'd be strict regulation similar to that for alcohol and cigarettes, including age limits, licensing, quality control, high taxes and limits on advertising.

At first glance, on a "strictly numbers" basis, the effect on the country's pocketbook looks promising. We'd see:

Savings on drug-related law enforcement -- FBI, police, courts and prisons -- of $2 billion to $10 billion a year if marijuana were legalized, based on various estimates, or up to $40 billion a year if all drugs were legalized, based on enforcement costs from the White House's Office of National Drug Control Policy. That's before the cost of overseeing the new drug regulations.

Increased productivity as fewer people were murdered, drug offenders were freed to find work and those stripped of their criminal record found it easier to get jobs (including running drug boutiques). However, how many of those now in prison would turn away from crime is unknown.

Tax gains. Drug prices would have to fall sharply in order to squeeze out the black market. Still, Jeffrey Miron, a senior lecturer in economics for Harvard University, calculates the $10 billion-plus U.S. marijuana market could reap $6 billion in annual taxes. The $65 billion market for all illicit drugs, he estimates, might bring in $10 billion to $15 billion in taxes.

A new legal drug industry would create jobs, farm crops, retail outlets and a tiny notch up in gross domestic product as the black market money turned clean. A 1994 study by the National Organization for the reform of Marijuana Laws in Washington, D.C., suggested 100,000 jobs and 60,000 retailers could emerge from a legal marijuana industry.

So, seemingly we'd get a shower of money for the government coffers -- perhaps an initial $50 billion under the "all drugs" scenario -- and gains for business and the community. But at what cost?

The answer is that it all depends, mostly on how many more people would use drugs, which drugs and how much more they used.

Give me a latte and a joint

Currently, considering it can get you arrested (or kill you), drug use is surprisingly common. A 2006 federal government study said 20% of Americans 18-25 had taken an illicit drung in the month prior to the survey.

So what if Starbucks-style chain of drugstores that fullfilled Abbie Hoffman's wildest dreams opened across the country? What if you could sit on a sofa, pick up a magazine and light up, or even shoot up in a congenial atmosphere?