Balancing the budget, one toke at a time

Canada's debt and deficit situation might not be quite as bad as other countries, but it's still a  major issue that we need to address. The interest payments alone eat in to the money we could be spending on health care, green technologies, pensions and almost literally countless other things.

So what if I told you there was we could cut potentially $5 billion from our deficit this year, next year, and every year to come?

Legalization of marijuana would do just that. And there's a good chance that it might actually be able to contribute more than that.

This article lays out a fair amount of useful information on the costs of marijuana being illegal. But it doesn't account for all sources for revenue. But to keep things simple I'll use some of the numbers found in that article. 

If we take the 400 tonnes mentioned in the article (almost certainly lower than the actual amount) and then use his price per gram estimate, we come up with a simple calculation using the numbers provided:

400 tonnes= 400,000,000 grams. 

each gram produces a total of $4.24 of taxable income.

Law enforcement costs= $400 million (rough number)

All social costs (lost productivity etc)= $400 million (rough number)

He estimates somewhere between 2 and 3 billion dollars being lost in revenue to the government.

But what also needs to be factored in is the way our tax system works, combined with market practices. It's not so much that X is lost in taxable income, but rather we have: growers, shippers/distributors, sellers, marketers, all with incomes that could be taxed if marijuana were legalized. Then on top of that there are sales taxes, and if those followed the model of tobacco taxes, then we're talking about millions, upon millions in additional revenue.

You then factor in what would likely be greater drops in law enforcement costs, since gangs and other criminals benefit from the sale of an illegal product (marijuana) and then use those profits toward other criminal activity.

We then factor in 'tourism'; and, yes, there would be tourism.

Even if we account for any cross border slow downs etc, the year-after-year benefit of legalizing marijuana would still be well above 4 billion dollars, and likely, as I said, above 5 billion dollars.

I am hardly the first person to argue this with these type of figures, but at a time when the world is facing almost unprecedented economic turmoil and never before seen debt and deficit levels, to ignore this kind of economic argument, especially when the social argument is even stronger for legalization, shows how broken our policy is in Canada.

To put it another way, in 10 years we could pay down 10% of our national debt.