What was the most important outcome of yesterdays election? Surprisingly, it probably wasnt Barack Obamas reelection. The most important things happened in Colorado and Washington. Voters in both states dramatically scaled back marijuana prohibition. While they did not embrace wholesale legalization for production and sale of any amount of marijuana, voters in these states nonetheless chose to make it legal to possess and grow marijuana. This was a critical blow to the already-crumbling foundations of drug prohibition.
As I have written before, drug prohibition is (literally) a textbook example of a policy with negative unintended consequences most visible in the extensive criminal underground and widespread violence associated with prohibition. What can we expect from legalization, and what could we expect from further liberalization of drug laws?
- Less Crime. Moving drug cultivation and commerce out of the shadows and into the legitimate marketplace will mean that participants in the market can resolve their disputes without resorting to violence. This will also deal a blow to international drug gangs by raising the supply of marijuana from competitors and by lowering its price. Since the demand curve for drugs is fairly inelasticand I see no reason to think marijuana is an exceptionthis will reduce drug dealer revenue.