Photo: Flickr

Will legalizing weed increase the probability that people smoke weed? Yes. Duh. But it could still be a great idea, with the right taxe$$$.

Don’t take my word for it—take the word of this new paper by researchers in Australia, published in the American Economic Review. The paper takes a stab at quantifying what marijuana legalization would do to rates of marijuana use—that is, how many more people would smoke weed if it were legal and easy to obtain—and what impact government taxation of legal weed could have on usage rates. The new paper applies its model to Australia, but its findings could certainly be applied to legalization in the U.S. as well. Bolding ours:

Our results indicate that if marijuana were legalized in Australia and accessibility were not an issue the probability of use would increase by almost 50 percent to 19.4 percent. Obviously there would be an impact on prices due to the law change, and the results show taxes of 25 percent are effective to offset the increase in use due to the legal status change. The overall probability of use would be 40 percent higher than current levels (at 18.3 percent). Individuals under 30 would see a more modest increase in the probability of use of 28 percent on average, while the average probability of underage use would increase by 34 percent (to 33.7 percent from 25.1 percent).

The paper calculates that in order to offset all of the usage increase that would come with legalization, weed would have to cost $158 a gram—a figure that they note is ridiculous because it would just create a black market once again. But with a reasonable 25% tax on legal weed throughout an entire nation with the population of the U.S., the paper calculates that our government could raise $12 billion per year in taxes.

That, by the way, would be six times the annual budget of the DEA. Seems like a good deal.

[The full paper]