Effects of Legalization of marijuana in the Economy of California
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Published: Mon, 5 Dec 2016
Cannabis sativa L. is a plant that appears naturally in most of the states and all over the world. The plant has been associated with a lot of benefits and other uses by people from all walks of life. Medically, the plant has been proven to possess a lot of medical benefits as it can be used in manufacture of drugs with curative nature and also has various other medical benefits. Marijuana is the name given to the plant and all its components and products including its leaves, stem, roots, seeds and all the other products obtained from it, both when it is growing and even when it has been cut and dried. On the other side, marijuana has been used by individuals in different ways, especially for social uses such as recreation, reducing stress and other uses (Pacula 2009).
The drug has been outlawed in all the states in the USA. However, there remains a large percentage of the population that still relies on the drug for their daily living, either by engaging in its use or by engaging in its business. The Marijuana business has been operating underground and unlawfully. However, studies have shown that the business has been in a constant state of a boom and has been estimated to amount to millions of dollars. In this way, those operating the business have been able to make great earnings especially since there are no cost implications on them in terms of taxes and other legal requirements (RAND 2010).
Legalization of Marijuana
It has been a common debate in most of the states as to whether Marijuana should be legalized and inscribed in the state laws hence allowing it to be used freely, just like any other item in the market. In this way, the law will give a provision for legality of the marijuana market and also for all the undertakings concerned with the drug, including registration and taxation of all businesses, protection of those using the drugs in the right way and also a way to deal with all the crimes associated with the drugs. In addition, the states will be able to lay restrictions on the drug, hence ensuring the citizens use the drugs more responsible and in a humane way (RAND 2010).
The California state is one of the states that have embraced the idea of legalizing the drug and even inscribing it in the list of the allowed social drugs together with alcohol and cigarettes. In this way, it has been believed that the drug will act as a source of revenue for the government in terms of the taxes collected as well as a source of employment and income for many. The step will also ensure citizens who follow the law to the letter and do not cause trouble to others are protected even if they use the drug. Moreover, citizens will embrace the use of the drug more responsibly avoiding any cases that may require jailing, probation and medical expenses for treatment of abuse of the drug (Pacula 2009).
Hence, there is a need for the state of California, as well as the other states in the USA, to embrace legalization of Marijuana since this will have greater benefits both to the citizens and to the state in the long-run instead of use of the drug illegally which results to serious and undeserved penalties to those caught and also leads to loss of billions of dollars per year I n government revenue that would have been collected from the marijuana business.
Effect of the Legalization on Demand
It has been predicted that if the government legalizes the drug, there will be a lot of changes pertaining to the demand for the drug in the market and as a result, there will be a lot of restructuring in the marijuana market. Currently, due to the prohibition of the use of the drug as well as the strictness from law enforcers which includes heavy penalties and possible imprisonment of those involved in possession, sale or use of the drug, a lot of people who wish to use the drug in a reasonable way have evaded its use. These restrictions from the government have acted as an incentive to the use of the drug and hence many either just avoid its use or carry out illegal activities associated to the drug. In fact, there have been a lot of underground undertakings in the market leading to large illegal underground markets for the drug. In these markets, there are a lot of people involved in the sale and purchase of the drug, though usually in disguise so as to avoid detection by the law enforcers. However, most of the citizens are not able to act on the platform of the underground undertakings since they are involve a lot of risk and hence are quite dangerous. This has left the whole business in the hands of very cunning and dangerous gangs that undertake the sale and distribution of the drug and actually are armed in a manner to try and face any opposition from the law enforcers, posing a lot of risk and un rest to the law enforcers and the state at large (Deist, 2010).
However, it has been observed that with legalization of the drug, there will be a lot of sanity in the market and elimination of illegal gangs that are involved in the market hence allowing the drug to be sold freely and in a safer way. This will improve the image of the marijuana market and attract more clients who will in return opt to use the drug more responsible and without carrying out any illegal undertakings (Whitcomb 2010).
The demand for the drug is hence bound to increase in a great way as many will not be afraid of getting involved in its sale. This ay, there will be a larger market for the sales, even as the already existing market gets boosted due to its legalization.
There are many factors that are attributed to an increase in the demand for marijuana. First, the increased demand will increase the prices for the drug causing more people to be involved in growing and supplying the product, a factor that is bound to result in an eventual lowering of the price for the drugs and hence stableness in the market. On the other side, the market will have a greater base for its returns and will also result to increased revenues for the government. In addition, the market will force a competition between traders resulting to an improvement of the quality offered and the way it is delivered. In this way, the drug will be used more responsibly and will hence have more advantages to the entire society (Robak 2010).
Effect on supply
The legalization of marijuana in the state of California will have a large effect on the supply of the product in the market. The main effect is that it will result to more people wishing to venture into the trade since it is associated with a lot of cash flow as well as high returns gotten from sale of the naturally according drug. In this way, even farmers will wish to plant more plants and hence increase their harvests since the plants require less inputs and less attention but have a lot of returns and do not require any further processing, except in the medical cases. In the normal circumstances, the plants are harvested and then dried before being packaged and supplied to the market. The high prices in the market places will hence attract many farmers who will wish to be involved in the production of the drug and then supply it to the market (Preston and Tracy 2006).
In addition, legalization of the drug will result to more people getting involved in the sale and distribution of the drug in the market in a legal and right way. This will lead to a high competition among the suppliers resulting to increased supply and consecutively a lowered price for the drugs. This will also ensure the dealers in the marijuana industry adhere to the law and avoid evasion of taxes, a factor that will lead to collection of more revenue for the government (Whitcomb 2010).
Elasticity of demand and supply
The increased demand and increased supply will have an overall effect of undergoing oscillations of a rise and a fall in the prices of marijuana. This market will hence be demand and supply driven, where prices will be fully dependent on the demand and the supply of the drug as well as the competition between dealers.
Therefore, due to a competitive market, the demand and supply will become more elastic resulting to a more stable market that will be more reliable by those carrying out the trade, the customers who buy the product and even to the government especially in terms of collection of taxes and duties associated to the trade.
There are various other factors that will change due the legalization of the trade and use of marijuana. In the onset, there will be less involvement of illegal gangs being associated to the trade and use of the drug. This will result to an improved security to all involved in the marijuana use and trade, the law enforcers and even the citizens at large.
Also, there will be less spending by the government on law enforcement as it has always been the case before, therefore, less people will be arrested as associated to the drug and therefore the government can divert the funds to more constructive ways.
On the other side, there will be a lot of registration of those involved in the trade of the drugs as well as taxation on such a trade. This will result to increased sources of revenue for the government leading to more development in the economy (Deist, 2010).
Finally, citizens will be able to embrace the use of the drug and hence use it more responsible in the social, recreational and even medical aspects.
The state of California has many reasons to consider the legalization of marijuana in the state. In the long-run, the state will be able to save a lot on its budget as well as earn more revenue from the trade. In addition, the state will save its citizens a lot of problems as it also allows them a chance to venture into the business and also to exercise the trade and use of the drug in a more responsible and beneficial way.
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