Budgets/Taxes/Economics

As part of a massive just unveiled state budget, New York Gov. Eliot Spitzer (D) is proposing to require anyone who buys, sells, transports, or possesses "all marijuana and controlled substances" to have a "tax stamp" for the illegal substance. Spitzer's provision proposes a $3.50 per gram tax on marijuana, but a whopping $200 per gram tax for cocaine.

Iowa drug tax assessment, submitted anonymously by a Chronicle reader -- click to enlarge in separate window

Under the proposal, the tax would be paid in advance of purchase by the "dealer," who would buy stamps from the state Department of Taxation and Finance, which he must then affix to the packages of drugs to show the tax has been paid. In the foreseeable event that dealers do not rush down to the tax office to pay up, the bill requires state police agencies and prosecutors to report any dealers who haven't paid their drug taxes to the department, unless reporting them would jeopardize a pending criminal investigation.

The governor's office said the tax would generate $13 million in the 2008-09 fiscal year, and $17 million a year after that. The revenues would be deposited in the state general fund. To be enacted, the move must be approved by the legislature.

In a Wednesday press release, Ethan Nadelmann, executive director of the Drug Policy Alliance, said he had his doubts about the bill. While Spitzer's proposal might be superficially appealing, New Yorkers would be better off taxing and regulating marijuana, he said.

While the idea of taxation is reasonable, he continued, "these tax stamp bills and laws smack of the gratuitous piling on of punitive sanctions that permeates the overall drug war." In addition to arrest and imprisonment, drug violators already face all sorts collateral consequences, and imposing the drug tax as yet another burden would "end up causing more harm than good," he said. Nadelman went on to point out that Spitzer could save far more money for New York taxpayers by following through on his campaign commitments regarding reform of the Rockefeller drug laws.

And he took the opportunity to push for fundamental reform of the marijuana laws. "[Q]uite frankly, New Yorkers would most benefit from a serious proposal to tax, control and regulate marijuana more or less like alcohol is today," he said. "Even though New York decriminalized marijuana possession in the 1970s, it still arrests people for that offense more frequently than most states that never decriminalized it. New Yorkers spend many tens of millions of dollars per year for this foolish excess, when instead the state could earn even greater amounts from taxing this ever popular consumer product. Overall consumption would likely rise only modestly given the widespread and easy availability of marijuana today notwithstanding its illegality. Virtually all New Yorkers -- both those who like marijuana and those who have no interest in it -- would benefit."

Bizarrely, Sen. Martin Golden, a former NYC police officer and a Republican from Brooklyn, criticized the drug tax from the opposite direction. Golden told the New York Post, "another pie-in-the-sky idea that really has no legitimacy, and hopefully is not a first step toward legalizing drugs."

Verenda Smith, government affairs associate at the Federation of Tax Administrators, told the New York Times that states need to create an at least theoretical opportunity for drug sellers to pay the tax legally, such as anonymous purchase, for it to be constitutional.

According to the Spitzer administration, 29 states have already passed laws imposing drug taxes. But several of those laws have been challenged, most recently in Tennessee, where a state appeals court ruled last September that the state's drug tax law was unconstitutional because the state cannot tax something it declares illegal.

The Office of National Drug Control Policy's (ONDCP) National Youth Anti-Drug Media Campaign took a major hit as Congress finalized the fiscal year 2008 budget this week, and the District of Columbia won the right to spend its own money on needle exchange programs, but when it comes to drug war law enforcement, Congress still doesn't know how to say no. Instead, it funded increases in some programs and restored Bush administration budget cuts in others.

less of this next year

"It's a mixed bag for sure," said Bill Piper, director of national affairs for the Drug Policy Alliance (DPA). "They cut the anti-marijuana commercials, but at the same time they gave a lot of money to law enforcement. There was some trimming around the edges, but Congress didn't do anything about fundamentally altering the course of the drug war."

The Justice Department budget was the source of much, but not all, of the federal anti-drug law enforcement funding, including:

• $2.1 billion for the Drug Enforcement Administration (DEA), a $138 million increase over 2007, and $53 million more than the Bush administration asked for.
• $2.7 billion in state and local law enforcement crime prevention grants, including the Byrne Justice Assistance Grants, which fund the legion of local multi-jurisdictional anti-drug task forces. That's $179 million less than in 2007, but the Bush administration had asked for only about half that.
• $587 million for the Community Oriented Policing Services (COPS) program, $45.4 million more than last year. The Bush administration had proposed cutting the program to nearly zero.

US Capitol, Senate side

"It seemed all year that the Democrats would try to restore some of the cuts from previous years, and they did," said DPA's Piper. "On the one hand, the Democrats say they want to quit locking up so many people, but at the same time, they're passing out money like candy to law enforcement, and that only perpetuates the problem," he added, citing the Justice Policy Institute's recent report showing that the more money that goes to law enforcement, the more people get arrested for drug offenses, and the greater the proportion of black and brown people locked up for drug offenses.

The funding cut for ONDCP's widely ridiculed media campaign was a bright spot for DPA, which, along with the Marijuana Policy Project (MPP) has been lobbying for the past three years to kill the program. The two groups were joined on the Hill this year by Students for Sensible Drug Policy (SSDP), and all of them hailed the at least partial victory on media campaign funding.

In repeated federal studies, the media campaign has been found to be ineffective -- and sometimes even perverse, in that some studies have found exposure to the campaign make teen drug use more, not less, likely. Among those are a series of reports by Westat commissioned by the National Institutes on Drug Abuse and a Government Accountability Office review of the Westat studies.

"It's $60 million more than the program should be getting, but it is a significant reduction, and we're really happy with it," said Tom Angell, SSDP government relations director. "The federally funded evaluation shows it actually causes teens to use more drugs, not less. In the most objective analysis, the program is simply not working. We shouldn't be spending a dime of taxpayer money on that," he said.

"That's a step in the right direction," said Bruce Mirken, communications director for MPP. "The drug czar's ad campaigns have been largely based on misinformation and exaggeration, and anything that reduces that is a good thing. Since the drug czar has shown he has no interest in doing appropriate and factual drug education, the ideal funding level would be zero, but we're getting closer," he said.

"At its height, the ad campaign was getting $200 million a year, and now we've got it down to $60 million," said DPA's Piper. "Thankfully, Rep. Serrano and the other Democrats had the courage to cut this stupid and ineffective campaign. We've been lobbying to kill it outright, but it's really hard just to cut a program, let alone kill it in one fell swoop. We have to do it in baby steps," he said.

Congressional concern over ONDCP media operations also manifested itself in another section of the appropriations bill that restricts it and other federal agencies from producing video news releases (designed as "prepackaged news stories" for local TV news programs) unless they are clearly labeled as being funded by that agency. In a GAO report examining ONDCP video news releases, the government watchdog agency qualified them as "covert propaganda."

Also as part of the omnibus appropriations bill, the District of Columbia has won the right to spend its own money on needle exchange programs, which it had been barred from doing by congressional conservatives. But Congress did not go so far as to undo the 1998 rider authored by then drug warrior Rep. Bob Barr that blocked the District from enacting a medical marijuana law approved by the voters.

All in all, as Piper said, "a mixed bag." Drug reformers win a handful of battles, but the drug war juggernaut continues full ahead and federal money rains down on drug war law enforcement like a never-ending shower. And those federal funds seed the state and local drug war machine where most of the action takes place.

"Congress needs to stop paying the states to do bad things," said Piper. "The drug war perpetuates itself because the states don't have to pay the full costs; the feds subsidize it, so the states have little incentive to reform. But the vast majority of drug arrests are by the states, and they should have to pay the full cost for police and prisons and all those expenses associated with the drug war. Until that happens, it's going to be hard to get reform at the state level; that's why it's so sad the Democrats are undoing some of those cuts that Bush made."

Last week, the Chronicle reported on yet another record high number of marijuana arrests, with more than 800,000 people busted for pot last year. This week, a leading researcher put a price tag on marijuana prohibition: $41.8 million a year in law enforcement spending and lost tax revenues.

According to public policy and economic development analyst Jon Gettman of Drug Science, author of the report, Lost Revenues and Other Costs of Marijuana Laws, governments at all levels spend $10.7 billion on arresting, prosecuting, and punishing marijuana offenders. At the same time, by maintaining the policy of marijuana prohibition, those governments are forgoing an estimated $31.1 billion a year in lost tax revenues by keeping the $113 billion a year marijuana industry in the underground economy.

Gettman's analysis is based primarily on official government figures on US marijuana supply, prices, and arrests. Perhaps even more surprising than the costs associated with pot prohibition is the huge size of the domestic marijuana market, which Gettman pegs at more than 31 million pounds.

"This report documents a massive waste of taxpayer dollars in pursuit of eradicating a government-forbidden plant, and the financial waste hit all-time high levels last year, as the FBI just reported there were a record 829,627 marijuana arrests in 2006," said Rob Kampia, executive director of the Marijuana Policy Project. "Prohibition has done nothing to reduce marijuana use, which remains at about the level it's been for decades, but prohibition has created a massive underground economy that's completely unregulated and untaxed. The parallels with Alcohol Prohibition in the 1920s, including the needless violence and a huge underground economy, are eerie."

Meeting at its annual convention in Los Angeles late last month, the US Conference of Mayors passed an historic resolution putting America's chief elected municipal officials on record urging a fundamental rethinking of the country's drug policies. The mayors called for a public health approach to drug use and abuse and "a new bottom line" in assessing how and whether drug policies reduce harms associated with drugs and society's effort to deal with them.

The US Conference of Mayors represents more than 1,100 mayors of cities with a population over 30,000. The non-partisan group plays a significant role in advocating for and setting national urban policies. Resolutions passed at its conventions become official policy.

The drug policy resolution, "A New Bottom Line in Reducing the Harms of Substance Abuse," was introduced by long-time drug reform advocate Mayor Rocky Anderson of Salt Lake City. It was adopted after debate at the convention.

After a long series of "whereases" in which the resolution recites a now-familiar litany of drug war failures and excesses -- the huge number of drug war prisoners, the lack of spending on drug treatment, the failure of expensive law enforcement programs to affect drug price and availability, differential racial impacts, the ineffectiveness of the drug czar's office, massive marijuana arrests in the face of rising violent crime -- the resolution gets down to business:

"The United States Conference of Mayors believes the war on drugs has failed and calls for a New Bottom Line in US drug policy, a public health approach that concentrates more fully on reducing the negative consequences associated with drug abuse, while ensuring that our policies do not exacerbate these problems or create new social problems of their own; establishes quantifiable, short- and long-term objectives for drug policy; saves taxpayer money; and holds state and federal agencies accountable," the mayors resolved. "US policy should not be measured solely on drug use levels or number of people imprisoned, but rather on the amount of drug-related harm reduced."

The mayors identified a number of specific policy objectives they supported, including:

• Provide greater access to drug abuse treatment on demand, such as methadone and other maintenance therapies;
• Eliminate the federal ban on funding sterile syringe access programs;
• Establish local overdose prevention policies; and
• Direct a greater percentage of drug-war funding toward evaluating the efficacy and accountability of current programs.

While the mayors did not explicitly call for an end to the drug prohibition regime or even for an end to imprisoning drug users, the resolution identified the large number of drug law offenders behind bars and the racial disparities created by drug law enforcement as examples of "drug-related harm."

"The mayors are clearly signaling the serious need for drug policy reform, an issue that ranks in importance among the most serious issues of the day," said Daniel Abrahamson, director of legal affairs for the Drug Policy Alliance.

The drug prohibition regime appears increasingly hollow and rotted from within. The resolution adopted last month by the US Conference of Mayors is one more indication that what once was fringe thought is now going mainstream.