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June 9, 2004 - The Ottawa Citizen (CN ON)

Legalize Marijuana And Tax It

Think-Tank: Revenue Would Be $2 billion a Year; War on Drugs Is Lost Anyway, Fraser Institute Says

By Eric Beauchesne

Return to Drug War News: Don't Miss Archive

Marijuana should be legalized and then taxed like any other product, says a study by an economic think-tank.

The Fraser Institute estimates such a move would easily generate more than $2 billion a year in additional tax revenue.

All that would really change is that governments, rather than criminals, would enjoy the spoils, argues the study being released today by the Vancouver-based institute.

The potential tax revenue is based on the study's estimate that in British Columbia alone, the annual marijuana crop, if valued at retail street prices and sold by the cigarette, is worth more than $7 billion.

"Using conservative assumptions about Canadian consumption, this could translate into potential revenues for the government of over $2 billion," states the study. "In British Columbia -- as in other provinces, notably Quebec and Ontario, it is a significant crop that fuels organized crime."

Study author Stephen Easton, professor of economics at Simon Fraser University and a senior fellow at the institute, estimates that there are as many as 17,500 marijuana grow operations in B.C. alone.

Marijuana is widely produced and about one quarter of Canadians admit to having used it, the study says. As such, the broader social question has become not whether to approve or disapprove of production, but rather who should enjoy the spoils.

"If we treat marijuana like any other commodity we can tax it, regulate it, and use the resources the industry generates, rather than continue a war against consumption and production that has long since been lost," said Mr. Easton. "It is apparent that we are reliving the experience of alcohol prohibition of the early years of the last century."

In British Columbia, indoor marijuana cultivation and consumption appear to be higher than in the rest of Canada, it notes. The most striking difference is that only 13 per cent of offenders in the province are actually charged while that number climbs to 60 per cent for the rest of Canada.

In addition, the penalties for conviction in B.C. are low, it said. Fifty-five per cent of those convicted receive no jail time.

While police resources are spent to destroy nearly 3,000 marijuana grow operations a year in B.C., the consequences are relatively minor for those convicted, it says. The industry is simply too profitable to prevent new people moving into production and old producers from rebuilding.

A modest grow-operation of 100 plants generates $80,000 a year in gross revenues, with production costs of about $25,000. It currently costs $1.50 to produce a marijuana cigarette, which sells for $8.60.

"Unless we wish to continue the transfer of these billions from this lucrative endeavour to organized crime, the current policy on prohibition should be changed," it says.

Two years ago, a Senate report also urged the government to end its prohibition on the drug and implement a system to regulate its production, distribution and consumption.

A federal bill that would have decriminalized marijuana use, but imposed harsher penalties on growers, died with the calling of the election.

You may download the full Fraser Institute Report here. (PDF Format)

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