The Financial Consequences of the War on Drugs in the United States

Categories: MarijuanaWar On Drugs

As the second decade of the 21 century is coming to a close, the United States' policies on many drugs are shifting. While it appears this country is slowly moving towards more reasonable laws surrounding the possession and use of drugs like marijuana and cocaine, there are still many political battles to be fought and won if any progress is to be made. Let's talk turkey. The main reason why we really need to reform drug laws is money. More specifically, there is a lot of money to be made, and a lot more money being spent.

First off, let's talk about the money we can save. To talk about what we can save, we must first consider what we are losing.

With current estimates of marijuana possession arrests being over 650,000 arrests each year, and estimates for the annual cost of housing an inmate being around $31,268 in taxpayer's money for most of the United States, we are paying a little over 20 billion dollars each year to house inmates.

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Not only are we ruining people's' lives with felony charges of possession, but we are also paying billions in tax dollars to do so.

The people being arrested for these charges are having their lives ruined, and also causing us to lose money. With 650,000 less workers in the workforce each year, and the average American citizen making just over $46,000, and considering each arrested person as a single individual for tax brackets, the estimated loss is just shy of $7.5 billion. Even if we assume that every one of these individuals is in the lowest tax bracket possible at the average income, the estimated loss is still about .

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5 billion. Let's go even further beyond that. Let's assume these people are annually making the highest dollar figure in the lowest tax bracket of 2015, which is approximately $18,450. The estimated loss in that situation is still around $1.2 billion.

Not only are we losing money from these people being unable to work while being in prison, but we are losing similar amounts of money due to being unable to attain a high-paying job after being labelled a "felon" for the rest of their lives. People are moving from the average tax bracket to lower tax brackets. The difference in the annual figures from the amount that we are losing to people being unable to work while in prison in the average income tax brackets and the amount we are losing to people being unable to work while in prison in the lowest income tax brackets, which is about $6.3 billion. While this is a relatively extreme drop, this is not the largest possible drop in tax revenue with respect to all income tax brackets in America. The largest possible calculable drop is $118.4 billion, while the smallest possible calculable drop is around $600,000 million. The scary part about these losses is that these are irreversible losses, and these figures compound each year. In the average case, the United States is losing around $6.3 billion each ear for the rest of an individual's life after the individual is arrested for felonious marijuana possession charges, and this has already happened with hundreds of thousands of people.

Now that we have covered our losses, what about our gains? Well, since there are already four states who have legalized the recreational and medical uses of marijuana, we have ballpark figures, off of which we can base estimations. Given Colorado's tax data so far this year, all forms of marijuana sales have generated about $60 million in tax revenue. If we assume that the other three states, Alaska, Washington, and Oregon, have all generated similar amounts of revenue, this brings us to $240 million so far this year we have actually made. However, this value does not consider how much we could make. If all states generated that same amount of tax revenue up to this point in the year, we could have made $2.76 billion more this year in revenue. This figure also leaves out the revenue generated so far over the past month, and the revenue that will be made this month. The $60 million is only the amount collected up to October 2015. These figures are on pace to make at least $81 million for all of 2015. If every state made $81 million each year in tax revenue, that would be $4 billion every year that the United States would be making.

The profit possibilities expand even further beyond marijuana sales. The coca leaf, the leaf from which cocaine is extracted, is a valuable cash crop in South America. In the United States, however, it is a Schedule Il drug, and will also lead to felony arrest charges. The coca leaf, however, is a mild stimulant very similar to coffee. The United States' market for coffee, something that about 50% of Americans consume annually, makes about $18 billion in revenue. 'Tea, on the other hand, is an even more common drink, as it is the most commonly served beverage in the world. Over 80% of Americans have tea in their homes in one form or another. That being said, it is not hard to imagine that coca tea, made with the coca leaves, would sell in high demand very similarly to coffee, if not extending beyond coffee sales. If 50% of America consumes coffee annually and that generates $18 billion in revenue, then 80% of America drinking coca tea would proportionally generate around $28.8 billion.

When all's said and done, the United States is missing out on billions of dollars each year that could be used to stimulate our economy, while spending billions more to hurt it. And over what? Marijuana, a drug widely accepted as a valid treatment for residual side effects of chemotherapy in cancer patients? Or coca, the leaves from which cocaine, a general anesthetic still used by practicing medical professionals, is derived? Both of these drugs are scheduled highly and are banned in our country, while we are missing out on both their valuable uses and, more importantly, while we are slowly letting our economy drain.

Updated: May 29, 2023
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The Financial Consequences of the War on Drugs in the United States. (2023, May 29). Retrieved from

The Financial Consequences of the War on Drugs in the United States essay
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