Although the 2009 Oregon State Legislative session is now over, the problem of the shrinking budget is not.
Around the nation, the idea of legalizing or decriminalizing adult marijuana use has been gaining traction among mainstream circles in recent months. Pro-marijuana bills have been introduced by such prominent politicians as Reps. Barney Frank, Ron Paul, and Sen. Jim Webb. A California legislator introduced a bill that would legalize it in the golden state. Even recent polls from the Associated Press and Zogby suggest more than 50 percent of Americans support the plant's legalization.
As current scientific research continues to debunk much of the fear and hysteria that dominated the marijuana legalization debate in past decades, many current reformers are focusing on one thing – revenue.
It is estimated that marijuana is the biggest cash crop in America. According to the Office of Management and Budget, the entire U.S. marijuana market is worth about $112 billion – none of which is taxed. In Oregon, that could mean money for the state's current budget deficit.
Lawmakers will be meeting in February 2010 to discuss the $2 billion gap in the state budget. During the spring 2009 session, lawmakers approved an increase in taxes on the top 2 percent of wage earners – those earning $250,000 or more a year -- and increase in the corporate tax.
Opponents are challenging the tax increase and are currently working to gather enough signatures to put both tax proposals to a vote on Jan. 26 – just weeks before the legislature plans to reconvene in February.
Steve Buckstein, senior policy analyst and founder of the Cascade Policy Institute, says there are quite a few different ways to balance the budget. Reducing spending is one of them, legalizing and taxing marijuana is another.
"We have to reduce the size of government," Buckstein said. "The last biennium, during boom years, the budget grew by 20 percent. How much did they spend? The answer is every penny. They never learn the importance of thrift."
Many prominent conservative economists, including Milton Friedman and Jeffrey Miron, have come out in favor of drug legalization in order to save on law enforcement money, increase tax revenue and restore many of the civil liberty violations they see taking place under current drug prohibition.
In a 2005 study, Miron takes a conservative approach – much more conservative than the Office of Management and Budget's guess – to determining the cost of marijuana prohibition nationally. Miron estimates legal cannabis production would bring in $6.2 billion in tax revenue. He believes that $7.7 billion would be saved on marijuana enforcement costs alone. He does not include the economic impact of arrests. In 2007, 872,721 Americans were arrested for possession of marijuana, the highest number ever recorded.
Other reformers think Miron's numbers are far too low.
Jon Gettman, former president of the National Organization for the Reform of Marijuana Laws and PhD of public policy, says Americans would generate about $31 billion in tax dollars every year if marijuana were legal. He reaches his figures by calculating the average business taxes, payroll taxes, income taxes, sales taxes, corporate taxes lost as a percentage from the $112 billion trade.
Many economic estimates are based on user numbers gathered by the government, which makes Oregon NORML President Madeline Martinez skeptical.
"I believe it's much higher," she said of the 375,000 residents in Oregon who use marijuana. She said many users are probably not telling the truth, given the fact that the government continues to arrest hundreds of thousands of people each year.
California Assemblyman Tom Ammiano estimates that his legalization bill could bring California more than $1 billion each year. Proportionately, Martinez estimates that legal weed could bring Oregon about $100 million in tax revenue each year.
Oregon NORML is supporting the Oregon Harm Reduction Act, which would legalize and regulate adult marijuana consumption and create the Oregon Cannabis Control Commission. That commission would verify the quality, purity and type of marijuana and be in charge of licensing growing facilities. The Act specifically criminalizes use by minors, public use, designates taxes and penalties for violations.
Because of Attorney General Eric Holder's commitment to not raid medical marijuana users or growers, Martinez is confident that the federal government would respect a state's rights to regulate a drug that nearly 50 percent of Americans admit having tried.
'Hemp for Victory'
Besides being a medical and recreational substance, the cannabis plant also provides a wide variety of industrial uses, and Oregon's legislature just passed a law that could bring the state to the forefront of that industry.
Currently, the Drug Enforcement Administration restricts Americans from growing hemp plants – a variety of the cannabis plant that produces minute amounts of THC, the substance needed to produce a psychoactive effect on the brain. Products made from hemp – including food items, clothing, rope, fuel, construction materials and more – must be imported from countries such as Canada and the European Union where hemp farming is not illegal. Hemp has long been used as an industrial product in America before 20th century drug policies and was even farmed by George Washington.
Although the legislature passed SB 676, which allows Oregon farmers to be licensed to grow the plant, they aren't going the way of medical marijuana and circumventing federal law.
"We wanted to send a message along with 17 other states (who have passed hemp farming bills)," said a spokesperson from state Sen. Floyd Prozanski's office, a co-sponsor of the bill.
Until the Drug Enforcement Administration changes its legal designation of industrial hemp, the Oregon Department of Agriculture will not be issuing any licenses. But the DEA's stance on hemp has been weakened in recent years. The agency lost a court case in 2001 that invalidated their rules on hemp-based food and other products.
Two North Dakota farmers, North Dakota State Rep. David Monson and seed breeder Wayne Hauge, have sued the DEA, contending that the agency has no jurisdiction on the hemp plant, since it is genetically distinct from varieties that produce high enough quantities of THC to be considered "marijuana."
Sen. Prozanski's office said a major selling point for the legislation came from the Living Harvest company, whose company has grown significantly in the past several years.
"The interesting part is that the U.S. is the only industrialized country that has lumped them (marijuana and hemp) together," said Hans Fastre, president and CEO of Living Harvest.
Having to import nonviable hemp seeds to use in their products – oils, protein supplements, milk and ice cream – affects Fastre's business model in a "significant way."
"Being able to grow industrial hemp in the U.S. would reduce 10 to 15 percent off our prices," he said.
Compared to similar soy products, the cost of hemp milk or hemp ice cream is significantly higher. Fastre says the U.S. market is expanding, technological innovation is helping to bring prices down and more people are switching from soy because of allergies or other health and environmental concerns.
"With Oregon passing this legislation and with the economic situation we have, and governments spending lots of money trying to do something about the sustainability of our planet, we'd be crazy not to legalize hemp," Fastre says.
