Nicholas F. Lara
Contested Issues of the US Economy
Professor Peter Simon
January 28, 2013

Legalization of Marijuana

Marijuana is a very controversial issue that is often debated on in the United States and there are several implications of legalization of marijuana. One of the main implications of legalization of marijuana is the idea of taxation. If the federal and state governments legalize the distribution of marijuana, they can tax it both at the state and federal levels. Additionally, if they can regulate the market and only permit those with licenses to distribute, the government can collect revenue from the license sales. In terms of supply and demand, the supply curve will shift to the right while the demand curve will shift to the right causing the price for marijuana to fall and the quantity to increase.
Another implication of legalization is the idea of over crowded jails. CNBC documentary “Billions Behind Bars” says that “With more than 2.3 million locked up…One out of 100 American adults is behind bars”. With about 800,000 people working in the industry, the United States spends about $74 billion a year on maintaining prisons. The crime rate in the United States would decrease and this would have two effects. If less people are being incarcerated, the prisons’ demand for workers would also decrease and they could utilize the excess space for something that might be more useful. Secondly, those who are interested in distributing marijuana, instead of being incarcerated, will contribute to a rapid growth of the market creating jobs and opportunities for more people. Lastly, some of the $74billion spent maintaining prisons each year could be spent elsewhere like on educational development or subsidies on clean energy creation.
I believe that this could contribute a faster recovery from the