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Tuesday, 04 June 2013 09:21

Looks Like Wall Street Is Starting to See the Dollar Signs in Legalizing Pot

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pot555Barron's, the conservative financial news weekly published by Dow Jones, chose as its June 1st cover story an article that basically states the case for legalizing marijuana.

Coming from a publication that symbolizes the driving-force of Wall Street – financial data and investment prospects— the prominent placement of the story pondering marijuana legalization is a boost to those seeking to end its prohibition.

Although Barron's journalist Thomas G. Donlan also offers a few of the arguments against legalization, the article virtually advocates for an end to the criminalization of pot. For Barron's it is just good business: for the private market and for cash-strapped governments.

The sub-title of Donlan's piece is, "Legalizing marijuana will hurt drug lords, help cash-strapped states, and ease burdens on police and prisons. Yet D.C. dithers." The lengthy article goes on to state:

It's not just about the right to light up. With the nation's retail marijuana market estimated at about $30 billion, legalization also would bring some important economic benefits. It could lead to sharply lower prices, striking a blow to the Mexican drug cartels and American street gangs. Pot could be produced in the U.S. for much less than Mexican pot produced illegally. By some estimates, illegality adds 50% to marijuana's prices. If both countries legalized the drug, Mexicans might grow a lot of it and sell it to American consumers, but the inexpensive legal product would not draw the attention of the ultraviolent Mexican drug traffickers any more than Mexican tomatoes do.

Legalization also could bring some relief to cash-strapped states. Marijuana taxes would join levies on liquor, tobacco, gambling, and other pursuits that once were banned. A report prepared for the libertarian Cato Institute suggests states could raise a total of about $3 billion from marijuana taxes, and other estimates are even higher. California alone could pull in $1.4 billion a year, a state tax authority has projected…

Colorado may get about $100 million a year in tax revenue, and Washington could get $310 million [the two states just recently legalized marijuana, with the details still being worked out]…

Unquestionably, a loosening of marijuana laws would ease burdens on law enforcement. Some 663,000 people were arrested for marijuana possession in 2011, up 32% since 1995. In New York, according to the pro-legalization Drug Policy Center, a pot bust typically requires 2.5 hours of a policeman's time.

Not only will law enforcement personnel be freed up, legalization would save imprisonment costs that run – on the low end of the range -- $25,000 per incarcerated individual per year.  It will also offer more opportunity to persons of color (by not criminalizing them), the primary group put in jail for marijuana violations.

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The marijuana legalization bandwagon has such strong momentum that you encounter the irony of a conservative California Republican attempting to get the Obama administration to back off its inexplicable hard line on states that loosen pot laws:

Rep. Dana Rohrabacher, a California Republican, last month introduced a bill to require the feds to respect state laws on marijuana. "The Herculean effort undertaken by the federal government to prevent the American people from smoking marijuana has undeniably been a colossal failure," he says. Lacking a groundswell of bipartisan support, however, Rohrabacher's bill is considered to have no chance of passage.

There is no groundswell of support in Congress, even though polling shows a continued trending upwards of  the number of Americans supporting legalization. According to Barrons, "The Pew Research Center recently found that 52% of Americans support legalized possession of small quantities of marijuana."

Perhaps of more significance in terms of assessing which way the wind is blowing in public sentiment is this Barrons revelation:

Whether Congress realizes it or not, a good number of citizens want the problem fixed. The same Pew study that found a majority of people favoring legalization also found that 60% of Americans think the federal government should not enforce its prohibition in states that permit marijuana use. And 72% agreed with the proposition that federal enforcement of marijuana laws is not worth the cost.

DC, as usual, seems to be enveloped in a fog of "conventional wisdom" that bears little relationship to the sentiments of the American public.  Not to mention that Donlan's article is the cover story in about as conservative a financial publication as one can find.  Barron's is one of the bibles, along with The Wall Street Journal, of the heavy Wall Street hitters.

Meanwhile, in another sign that business interests may trump Washington DC's obsession with marijuana prosecutions, a former Microsoft executive, Jamen Shively, is putting together a company to create the first national pot brand.  

According to CNN and other news outlets, no less than Vicente Fox, the former president of Mexico and close ally of George W. Bush during Fox's term from 2000 – 2006, showed up to endorse the legalization of cannabis at a news conference convened by Shively.

Fox, who served as a vice president of Coca Cola in Latin Amerca before his political career, is a business man to the core. If Vicente Fox, who prosecuted the US politically motivated war on drugs in Mexico (which accelerated to more than an estimated 120,000 deaths in Mexico under his successor Felipe Calderón) during his term in office, is now advocating for marijuana legalization, it will not be long before more business-minded leaders start to advocate for the green dollars that will flow with the end of the prohibition era of pot.

Seeing things in dollars and cents starts to get the attention of a publication such as Barron's – and ultimately the business class that pulls the strings in DC.

(Photo: 24oranges.nl)