Marijauna: Uruguay Si! Taxes No!

I’m to give a paper and talk on marijuana revenue policy in Rome at the International Society for the Study of Drug Policy meeting in May.  Here’s what I’m thinking (comments welcome).


State monopoly, Uruguay style, is the safest start for legalization of an intoxicant.  But it’s not easy.  Corruption and cronyism threaten.  Transparency and division (separation) of power are vital to keep trust.  Short terms for officers, even if renewable, and appointment by members of different branches of government or different parties may be worth exploring.  State production might provide unresponsive products, so the Norway/North Carolina alcohol model is worth a look.  That model lets private enterprise produce and supply product to a state monopsony, which is also a retail monopoly.

If monopoly is a nonstarter, as in the United States so far, tweaking the monopoly model to keep state control over location and price by assigning sales concessions to private contractors may be worth a try.

Taxation, Colorado and Washington style, is a second-best path, at least as long as tax rates are inflexible.  Bootleggers don’t hesitate, in part because they don’t deliberate.  They can change prices faster than a corner gasoline station, and they will fight a price war to win.  No Legislature can outmaneuver them.


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