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Legalizing marijuana is a hot topic that continues to burn. From an economic standpoint, there would be numerous benefits to legalizing marijuana. A new industry could emerge that would allow people to buy and sell marijuana without being incarcerated. The illegal pot dealer that is currently making their “dirty money” under the table, and possibly living on welfare or other government aid, could possibly start a profitable business. They would already have a client base, which is a key component in a sales environment. A marijuana distributing business could be created with a small amount of capital thanks to the Internet. Marijuana could be shipped out to customers, since drug trafficking would no longer be illegal. This would create desperately needed jobs across the country. It would also help increase our Gross Domestic Product (GDP), since more goods would be created/grown and sold. Current drug sales make a noticeable difference in our unofficial GDP, even though they are not part of our official GDP. According to the United Nations Office on Drugs and Crime, in 2003, illicit drugs accounted for 1% of the world’s GDP. A mere percent sounds minute, but this “small” amount is higher than 88% of all countries’ GDPs in the world. Individuals participating in the legal marijuana industry would finally have a steady and more importantly, legal stream of income that would be taxed and go towards the ungodly budget deficit that has accumulated.


What about the Consumer?

There would be numerous venues for purchasing legal marijuana, which means stronger competition, thus creating lower prices for the consumer. Since the current consumer is purchasing marijuana illegally, a higher price is charged for the risk and also for the low amount available. Remember, a lower supply available results in higher prices. These consumers that are currently spending top dollar would have more disposable income to save, invest, or spend directly into the economy. Since the consumer is buying goods legally, there is no doubt a sales tax would be involved, once again leading to more money for the government. Overall, more people would be paying in to the system, rather than being supported by it.

Lowering the Amount of Poverty

Let’s face it. Virtually all drug peddlers are part of the lower socioeconomic spectrum. There simply aren’t many doctors or lawyers selling weed on the street corner. Most of these people are just trying to make ends meet while struggling with poverty. Having the opportunity to run or to be a part of a legitimate business is part of the entrepreneurial spirit that drives the American Dream. People who are selling marijuana illegally now could become respectable and accepted individuals in our society. If they pursued their business venture with enough effort and motivation they could raise their position in society and create a better, more positive future for their children.

Lowering Government Expenses

In 2008, Texas state prisons spent $46.1 million supervising marijuana-only related prisoners. The cost of marijuana enforcement in California alone is estimated to be over $146 million. This means if marijuana was legal, prisons would save a ton of money and the taxpayer would be spared for a change. It would also help, but likely not solve the overcrowding problems.


The Effect on the Financial Markets

If a marijuana distribution firm grew large enough, it could be registered and traded on an exchange. Typically, when the market is in a recessionary period, alcohol and tobacco brands sometimes perform better than other companies. Marijuana companies may be classified in a similar category and would provide a safe house for investors. Since marijuana is a type of commodity, it would likely be traded in the futures markets as well. So who knows, in the future, the floor traders on CNBC may be buying and selling marijuana.

So my question is why hasnt this happened to pull the USA out of the fire before china owns us all.