Govt sitting on $70 million in earnings, says economist
The Government of Barbados is spending a staggering $150 million annually on policing, 15 times as much as it makes in fines for trafficking and use of marijuana, according to a leading economist.
It is for this reason that President of the Barbados Economic Society Jeremy Stephen said he has adopted a pro-legalization position.
Making a strictly economic argument, Stephen today told a symposium on marijuana at the Cave Hill Campus of the University of the West Indies that due to the sharp disparity between income and expenditure, Government simply could not justify spending as much as it does trying to keep ganja off the streets in these tough economic times, while taking in so little in return.
“The entire cost to the Attorney General’s office, one is looking at $149 million per year. In other words, of all ministries it has the fourth most expenses. I did not draw out all of the numbers but this legal cost is ascribed to the condemnation of marijuana.
“Now let’s look at revenue that you make . . . . Overall the Attorney General’s office only gets $10 million in revenue; in other words roughly 1.5 per cent of the expenses are covered,” the university lecturer and financial analyst explained.
In providing a breakdown of the financial returns through the prosecution of marijuana-related offences, Stephen urged the authorities to do the math in order to determine if continued criminalization of the drug made economic sense.
“Where does this revenue come from? Forensic services for narcotics that are the fines paid, only accounts for $30,000 per year. Supreme Court fines [bring in] $750,000 per year, which is really not that much. So let’s look at this math. You are effectively saying that less than approximately one per cent of expenses for policing marijuana are covered by the fines,” he stressed.
Citing examples of taxes derived from other sectors, which many may categorize as immoral, Stephen argued that marijuana could also result in similar revenue intakes.
He said that based on the accepted premise by most legal pundits, for every shipment of marijuana intercepted by lawmen, ten get into the country and on the streets.
Stephen estimated that Barbados could earn close to
$70 million annually from taxes on the drug, enough, he said, to offset the cost of tertiary education.
While Jamaica decriminalized small amounts of marijuana last year and establish a licensing agency to regulate a lawful medical cannabis industry on the island, its economic contribution was not immediately clear.
The country’s Cannabis Licensing Authority announced in June this year that it would install marijuana-dispensing kiosks for tourists in order to regulate the growing drug market and to bring in more government revenue.
The dispensers would be situated at airports and seaports, manned by a person with medical training.
But perhaps the place where the impact of legalization is most visible is the US state of Colorado, where legal pot sales jumped by more than 42 per cent last year and sales of medical and recreational marijuana raked in US$996.2 million up from the $699 million earned in 2014, according to state’s Department of Revenue.
Colorado’s first pot stores officially opened on January 1, 2014, although medical marijuana has been legal there since 2000.
The Denver Post reported that Colorado collected more than $135 million in taxes and licence fees related to legal cannabis sales last year, up nearly 78 per cent from the $76 million in taxes and fees collected the previous year.
“The additional tax revenue far exceeds the cost of regulating the system,” the multinational business magazine Fortune quoted Mason Tvert, a spokesman for industry advocacy group the Marijuana Policy Project, as saying in a statement. “Regulating and taxing marijuana has been incredibly successful in Colorado, and it represents a model for other states to follow.”
Four US states and Washington D.C. have legalized recreational marijuana, while another 20 allow use of the drug for medicinal purposes.
ArcView Market Research, which produces a report on the state of the cannabis industry, has predicted that the legal cannabis market will grow by 25 per cent this year to reach US$6.7 billion in total sales, and that sales could approach US$22 billion by 2020.