Marijuana legalization is a controversial and complex issue. The prohibition of marijuana has been the subject of debate for decades, but now the discussions are moving from dorm rooms and dinner parties to state legislatures and federal hearing rooms. In May 2014, Vermont Governor Peter Shumlin signed a bill into law that required the Secretary of Administration to provide a report about the consequences of legalizing marijuana. We produced this document for the Vermont Secretary of Administration, and it reflects the insights and assessments only of the authors.

The report provides a systematic assessment of various alternatives to marijuana prohibition,...

It is not surprising that marijuana policy is a serious topic of discussion in Vermont. Vermont has one of the highest rates of marijuana use in the nation, particularly among young adults. Household surveys have found that 12 percent of Vermont’s population ages 12 and older—and nearly 30 percent of those ages 18 to 25—reported using marijuana in the past month (National Survey on Drug Use and Health [NSDUH], covering 2012–2013; see Substance Abuse and Mental Health Services Administration [SAMHSA], 2014a).

Because misleading or exaggerated numbers sometimes hijack legalization debates, this chapter aims to provide a factual...

The debate about marijuana legalization has been ongoing for many decades, and each point of view offers a variety of arguments (see MacCoun and Reuter, 2001; Caulkins, Coulson, et al., 2012). Some of the arguments involve what philosophers call deontological moral concerns—roughly, concerns about the inherent rights and wrongs of using a mind-altering substance (other than under medical direction) on the one hand and concerns about the propriety of paternalistic restrictions on personal liberty on the other. However, much of the debate revolves around what is known and unknown about the practical consequences of marijuana use and about marijuana...

One of the key elements of a plan for implementing legalization is determining how marijuana will be supplied. Specifically, what kinds of organizations will be allowed to produce and distribute marijuana? Historically, the answer under prohibition has been “none.” Now some states that allow the use of marijuana under medical recommendation allow production and sale for that purpose, while others allow production only for personal use. In November 2012, Colorado and Washington State made a dramatic break with past practice by voting to allow a for-profit commercial marijuana industry that is licensed and regulated somewhat like the alcohol industry.

But...

A state that legalizes marijuana by allowing limited private sales creates a privilege to sell it. That privilege is worth money, maybe lots of money. This chapter considers cases in which some of that money goes to private interests but looks at ways the state might keep some of it.

Taxes and fees are often thought of primarily as revenue-raising devices, but, in the case of marijuana, the collateral consequences, for good and ill—reduced heavy use and use by minors and reduced risks of export on the one hand and increased risk of in-state black-market activity on the other...

Regulation, like taxation, presents opportunities for shaping who consumes, what they consume, and how they consume. Regulation can influence prices, product variety, product consistency, product safety, and the information made available to consumers, as well as the extent of diversion in the form of illegal sales to minors and leakage beyond Vermont’s borders. Regulation can affect production, intermediary markets, and final retail markets. Regulation can reduce the opportunities for tax evasion, thus protecting revenue collection.

But regulations can also be costly to enforce, impose costs on those regulated, and create opportunities for evasion; the greater the incentive to break the...

The amount of tax revenue that can be collected by legalizing marijuana depends on the overall supply architecture of legalization (see Chapter Four) and a host of tax and regulatory parameters (see Chapters Five and Six, respectively).

Net revenues to the state will also depend on how much money is spent regulating the market. As discussed in Chapter Two, legalizing marijuana will reduce but not eliminate the burden of enforcing laws constraining producer and user behavior. The magnitude of the residual burden will depend on how much effort is devoted to going after producers who operate outside the regulatory framework...

The decision about whether to make marijuana available for lawful purchase without a medical recommendation—and, if so, under what conditions—involves multiple and possibly competing considerations, including the extent of illicit transactions and the costs of efforts to suppress them; the prevalence of substance-use disorders and the troubles they bring; personal liberty and the benefits of marijuana consumption for the majority of users who do not suffer from substance-use disorders; economic opportunity for lawful marijuana vendors; and tax revenue on the one hand versus administrative effort and expense on the other for the state government and local governments. No...