Drug legalisation: What was learned from Colorado's marijuana experiment

Guy Bentley
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It's almost two years since the US state of Colorado voted to legalise the recreational use of marijuana.

With several US states set to vote on similar initiatives and the debate surrounding the war on drugs more raging more furiously than, the Cato Institute, a Washington think tank, has released a paper examining the effect of drug legalisation in the centennial state.

Supporters of the reforms had argued legalisation would reduce crime, raise revenue and cut the cost of the criminal justice system. Their opponents claimed legalisation far from cutting crime would provide new opportunities for criminal activity and hit students educational achievement.

Since full legalisation has only been in place since January 2014, the report's findings are probationary. The study's author Jeffrey Miron director of economic studies at the Cato Institute and director of undergraduate studies in the Department of Economics at Harvard University finds that changes in Colorado's marijuana policy over the past 14 years have had "minimal impact use and the outcomes sometimes associated with use".

Colorado has scooped a substantial amount of tax revenue from legalising cannabis, but less than was forecast by some legalisation supporters. Colorado has a 15 per cent tax on sales of recreational marijuana from cultivators to retailers and a 10 per cent tax on retail sales, plus a 2.9 per cent state sales tax for all goods.

The first $40m in revenues was set aside for statewide school construction, with the rest to be allocated for educational campaigns on marijuana use. The first retail marijuana business opened in Colorado on January 1, 2014. Each business was required to pay hundreds of thousands of dollars of licensing fees.

Colorado's current drug laws came to pass over a number of years starting in 2001 with the legalisation of medical marijuana. Miron examines what changes or lack thereof have occurred after changes in outcomes did, in fact, occur. However, he cautions that one must always be aware that correlation does not equal causation.

Unfortunately, there is no data on marijuana use post-legalisation period but there is data do exist for the times before and after commercialisation of marijuana in 2009. The report shows there was a slight uptick in cannabis use in the years before 2009 where medical marijuana had been established in the state for some time, but it has leveled off since then. The use of harder drugs like cocaine had a modest decline.

Alcohol consumption fell in 2011–12 rather, suggesting a substitution between marijuana and alcohol. Miron says the trend shows "mild, but temporary upward bumps in the years when medical marijuana is introduced and expanded", however the overall trend is downward. There appears to have been no real change in the crime rate one way or the other since the commercialisation of medical marijuana.

Furthermore, there is very little we can glean about the effect of legalisation on students. The drop-out rate fell for the first couple years after medical marijuana was legalised but then rises for several years.

Drop-outs fall once again after the medical marijuana commercialisation and full marijuana legalisation. The amount of cash raised from medical and recreational sales of marijuana In the most recent month reached $7m, implying annual revenues of about $84m.

This is quite a ways below Colorado’s February 2014 projection of $134m, but more than the $50m that Katherine Waldock and Miron estimated in a 2010 study. In terms of the effect on the criminal justice system, incarceration has continued to grow but slowed after the liberalisation medical marijuana.

Miron's report shows that both the most optimistic and pessimistic sides of the argument have failed to see their predictions materialise, at least in the short-term. There will need to be further research conducted in the years ahead to understand the impact of Colorado's reforms.

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