Since the Anti-Drug Abuse Act of 1986, the U.S. Government has been fighting intensively to decrease illegal drug abuse and drug-related crime for decades. Yet despite its very limited effect on reducing illegal drug production, trades and use, the War on Drugs also requires a huge amount of funds and resources, adding even more burden to the society (Becker, 2005). Today, many has been debating whether to legalize drug use as a new way to manage public health and drug-related crime. One part of this debate is whether the government should decriminalize marihuana use for recreational and medical purposes.
Economically, the governments’ ineffective enforcement and prohibition on drug is explained by the supply and demand price elasticities (graph1). When there are strict laws and enforcement on illegal drug production and trade, the quantity supplied goes down while the demand remains unchanged. As a result, the equilibrium moves towards higher price and lower number of drugs. Because the supply of illegal drug is price
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To start with, the demand for marijuana is price elastic (Williams et.al., 2001), thus if legalized marijuana sales are regaled with high tax just like that of alcohol and tobacco, the government can still discourage unhealthy abuse of marijuana without overspending on prisons and other enforcements. Also, high tax will increase the cost of production, therefore shifting supply curve left ward, forcing the market moving toward higher price and less quantity available on the market. As a result, neither supply nor the demand for marijuana will be overflowing, and even more importantly, those who need and can afford marijuana for medical or healthy recreational reason do not have to go underground and risk their lives to purchase