Reject the Centennial Institute’s Claims on the Costs of Legalized Marijuana

Elected officials in Illinois should follow voters in dismissing the Centennial Institute’s claims. Here’s why.

In a new report, the Illinois Economic Policy Institute and the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign find that legalizing marijuana is an economic opportunity for Illinois, creating nearly 24,000 new jobs and generating more than $500 million in new tax revenues.

Marijuana Legalization Graphic

Despite this economic opportunity, some opponents of legalization are citing a recent study by Colorado Christian University’s Centennial Institute that suffers from poor policy analysis. The report claims that Colorado spends “$4.50” to mitigate the effects of marijuana legalization per dollar gained in tax revenue. However, the authors do not include cost estimates for years prior to legalization. Because the authors fail to attempt to isolate the impact, no peer-reviewed academic journal would consider the findings credible.

A true cost-benefit analysis would include all the benefits of legalization– not just state tax revenues. These include added local tax revenues, income taxes, reduced incarceration costs, and decreased policing costs. Similarly, the report fails to estimate the impact of public investments made using new tax revenue from legalized marijuana, such as school construction projects.

Most glaringly, the authors fail to include the impact of legalization on economic activity, or gross state product, on the benefits side of the equation. Residents and visitors spent more than $760 million on legal recreational marijuana in Colorado in the 12 months between July 2017 and June 2018. Ignoring this economic activity altogether is another blemish in the Centennial Institute’s analysis.

Moreover, the authors erroneously consider certain items “costs” when they should instead be listed as “benefits.” For example, the authors report that taxpayer expenditures on marijuana-related arrests fell from $14.8 million in 2012 before legalization to $7.2 million in 2017 post-legalization. Yet the authors inexplicably use the 2017 figure of $7.2 million and call it a “cost” of legalized marijuana despite the fact that costs have gone down by $7.6 million per year since legalization. This should obviously be listed as a benefit, not a cost.

The Colorado Department of Public Health & Environment has reported that “marijuana use has not changed since legalization either in terms of the number of people using or the frequency of use among users.” Because marijuana consumption does not significantly change following legalization, researchers fail to find any correlation between legalization and many of the purported social costs. For example, a peer-reviewed study compared motor vehicle crash fatality rates in Colorado and Washington to similar states without recreational marijuana and found that they were not statistically different. Research does, however, find that legalized cannabis mitigates opioid use and abuse.

Ultimately, Illinois voters reject the dubious claims made by the Centennial Institute and widely support legalizing, regulating, and taxing recreational marijuana. A 2017 Southern Illinois University poll found that 66% of registered voters in Illinois support marijuana legalization, including bipartisan majorities of Democrats (76%) and Republicans (52%). Additionally, in the March 2018 primaries, 73% of voters in the City of Chicago supported legalizing marijuana; support was at least 59% in all 50 Wards.

PaulSimon1

Elected officials in Illinois should follow voters in dismissing the Centennial Institute’s claims. Legalizing and taxing recreational marijuana would spur economic activity, create jobs, improve the state’s budget situation, help address the opioid epidemic, and reduce incarceration and law enforcement costs for taxpayers.


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