FINANCIAL IMPLICATION OF THE PROHIBITON OF MARIJUANA
Open Access
Author:
Myers, Christopher I
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
Timothy T Simin, Thesis Supervisor Timothy T Simin, Thesis Supervisor James Alan Miles, Thesis Honors Advisor
Keywords:
marijuana prohibiton
Abstract:
This thesis examines the various financial costs and potential economic gains forfeited due to the prohibition of marijuana and industrial hemp. The cost to enforce marijuana laws comes from monitoring, prosecution, and incarceration of users and sellers. To understand the economic impact, state and federal budgets at the judicial, corrections, and law enforcement levels were analyzed and a percentage of each budget was calculated and attributed to marijuana enforcement. The potential economic gains from legalizing and taxing marijuana were also analyzed by first estimating the current market size of the marijuana industry and then calculating an appropriate tax rate similar to that of tobacco. To understand the potential economic gains from allowing farmers to grow industrial hemp the profitability of an acre of corn and hemp was calculated and a hypothetical situation of converting corn acreage to hemp was analyzed. This thesis shows how 16.9 billion dollars per year is attributed to the prohibition of marijuana.