The Black-Market Markup

Mar 23 2012 @ 5:56pm

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Mike Riggs argues that legal cannabis isn't going to solve our budget woes:

"To get a sense of the disparity in price between legal and illegal drugs," Reason's Jacob Sullum wrote in 2007, "compare the production value of marijuana—about $1,600 per pound, by Gettman’s estimate—to the production value of tobacco, a legal psychoactive weed that U.S. farmers sell for less than $2 per pound."

Let’s go back to 2005, make marijuana legal, and give it an astronomically high production value of $800 per pound, or half of Gettman’s black market estimate: It would have tied with soy beans in 2006 as America’s third largest cash crop, with an average production value of roughly $17 billion. If it had the same production value per pound as tobacco, or $2, its APV in 2005 would have been $44 million; or less than 10 percent of beans, 2005’s 20th most valuable cash crop.

(Photo: Police officers guard seized packages of marijuana totalizing 20 tons on February 24, 2010, in Santander de Quilichao, department of Cauca, Colombia. According to authorities, this is the largest marijuana seizure in Colombia's history. By Luis Robayo/AFP/Getty Images)