Marijuana Legalization and taxation: Approaches of states from the perspective of public finances.

Serena Iglina

Master's thesis

Abstract:

The very long political debate, the growing amount of economic data and new scientific studies on drugs have brought to the attention the academic literature on the economic consequences linked to prohibition and legalization of drugs. This study aims to provide an economic and political analysis starting from the analysis of historical data concerning prohibition and legalization. Moreover, it aims to estimate the limits imposed by the so-called anti-drug policies, which have long hindered the growth and development of emerging and significant sectors from a mainly economic but also political and social point of view. The economic and social consequences related to alcohol prohibition in the U.S.A. are highlighted to be able to draw up a cost-benefit analysis that allows a comparison between a market in which consumption is prohibited with one that rules its consumption and sale. Then, drug consumption trends - in particular cannabis - are analyzed both in a context of legality and in an illicit market. After an overview about the regulatory systems in force, the potential tax benefit (in terms of savings on public spending and tax revenues generated by tax collection) generated by a tax on cannabis sales is evaluated, comparing the results of two different ways of taxation.

Abstract:

The very long political debate, the growing amount of economic data and new scientific studies on drugs have brought to the attention the academic literature on the economic consequences linked to prohibition and legalization of drugs. This study aims to provide an economic and political analysis starting from the analysis of historical data concerning prohibition and legalization. Moreover, it aims to estimate the limits imposed by the so-called anti-drug policies, which have long hindered the growth and development of emerging and significant sectors from a mainly economic but also political and social point of view. The economic and social consequences related to alcohol prohibition in the U.S.A. are highlighted to be able to draw up a cost-benefit analysis that allows a comparison between a market in which consumption is prohibited with one that rules its consumption and sale. Then, drug consumption trends - in particular cannabis - are analyzed both in a context of legality and in an illicit market. After an overview about the regulatory systems in force, the potential tax benefit (in terms of savings on public spending and tax revenues generated by tax collection) generated by a tax on cannabis sales is evaluated, comparing the results of two different ways of taxation.

Keywords

Marijuana, taxation, legalization, prohibition, revenue, drug consumption, economic cost-benefit analysis

Language used: English

Date on which the thesis was submitted / produced: 4. 2. 2021

Thesis defence

• Date of defence: 22. 2. 2021
• Supervisor: doc. Ing. Robert Jahoda, Ph.D.
• Reader: prof. Ing. Juraj Nemec, CSc.

Masaryk University

Faculty of Economics and Administration

Master programme / field:
Public Finance and Economics / Public Finance and Economics