Freakonomics Drug Legalization Q&A

The guys over at the Freakonomics blog are host to an interesting Question and Answer with their readers providing queries, and Daniel Okrent, the author of Last Call: The Rise and Fall of Prohibition providing answers. Here's an answer, but the entire engaging piece is over at the blog. 


A:The obvious parallel between Prohibition and the war on drugs is their shared futility, establishing that you just can’t legislate against human appetites. There’s also the consequent enrichment of those who would try to satisfy those appetites outside the law: the bootleggers of the 1920’s and the drug syndicates of today.


But the common aspect that suggests, to me, that our drug laws will be changing radically over the next few years is the government’s inability to derive revenue from the sale of liquor then, drugs today. No factor played a larger role in the repeal of Prohibition than the government’s desperate need for revenue as the country fell into the grip of the Depression. Before Prohibition’s advent, a substantial amount of federal revenue came from the excise tax on alcohol. As the collection of income taxes and capital gains taxes plummeted between 1930 and 1933, politicians realized that the return of liquor and beer could help shore up federal finances. In fact, in the first post-repeal year, 1934, fully nine percent of federal revenue came from the revived alcohol tax.


In today’s political climate, where no one seems to be willing to raise income-tax rates, both state and federal governments are turning increasingly to excise taxes, use taxes and other levies that could easily be applied to marijuana. Californians will be voting on such a measure — it’s actually called the “Regulate, Control and Tax Cannabis Act” – this November.