This was a blog I posted in January, but the shorter version was here on OS... here's the longer version that was living over at wordpress. At the end of the piece is a CNN clip of Economist Jeffrey Miron last week. 

The Marijuana Bailout

January 29, 2009 - Chris Goldstein

Call it Pot Porn or Prohibitionist Propaganda, the CNBC Report Marijuana Inc carried one unavoidable message: As the domestic and international financial markets continue their dismal decline, one homegrown economy is thriving. It’s Cannabis.

Offering one of the USA’s finest domestically produced agricultural commodities the market is underground, but it could offer a lifeline. The domestic American cannabis supply and existing consumer base represent some of the best business marketplaces in the world. It is a multi-billion dollar industry already having a positive impact. It very well may be one of the few things holding our country together and where many Americans could be finding some work.

Marijuana production and consumption are ubiquitous, yet the market is very difficult to define. Researcher Jon Gettman’s well-known 2006 report illustrated that marijuana is the nation’s #1 cash crop. Using the amounts of marijuana that law enforcement seized or eradicated in 2005 he estimated the market to be $35.8 Billion. That was then…

In 2007, the Drug Enforcement Administration's Domestic Cannabis Eradication Program claimed more than 7 million marijuana plants killed. There were 47, 000 pounds of bulk marijuana seized during the same federal operations targeting outdoor and indoor cultivation. The government estimate is that a single plant will yield about 3/4 of a pound of useable marijuana. Adding it all up, the program took almost 5.5 million pounds of marijuana off the market.

At the same time the National Drug Intelligence Center (NDIC) released their 2009 assessment for marijuana stating that " … 25,085,000 individuals aged 12 and older used marijuana in 2007…” Here is where things get interesting.

Let’s say every single one of those 25 million Americans was consuming 1/4 of an ounce of cannabis every single week; then the required supply would be about 18 million pounds per year. Did the DEA's Eradication program wipe out more than 1/3 of the marijuana market in 2007?

Of course not.

According to the government’s own data, marijuana remained the most available, most widely used drug in America. Almost a decade of steady pricing on retail cannabis sales across the country hint at a consistently well-supplied market… but how much is that market worth?

The DEA estimates an annual domestic cultivation supply in excess of 22 million pounds. That amount alone could make for a retail market in domestic cannabis at around $50 to $85 billion. But, looking above you can see how such a limited supply would barely cover 25 million consumers.

So, let’s follow along with the speculations of some law enforcement and pro-regulation activists that eradication data reveals only about 10% of all this fine cannabis being grown. Under that assumption, there could have been a domestic marijuana supply around 60 million pounds in 2007.

Again, there may have been 60 million pounds of quality marijuana grown within the borders of the United States in 2007.

That would be enough for 80, 000, 000 (80 million) Americans to smoke ¼ ounce of cannabis PER WEEK, all year. Now that is a pretty amazing number, considering most moderate cannabis consumers are actually consuming less. Sixty million pounds of cannabis could also retail for well over $230 billion dollars, and that is a market comparable to auto manufacturing and big oil.

Consider that in California when Mendocino County commissioned a study to look at thier own pot market they happened upon a $1 billion marijuana economy just in their own county. The national marijuana market could already far exceed our speculation here of $230 billion.

It must be pointed out that the domestically grown marijuana supply does not meet the full market demand, as product continues to enter the country though our borders. The United Nations reports that Americans are the highest consumers of marijuana in the world. The NDIC states, “The amount of marijuana available--including marijuana produced both domestically and internationally--in the United States is unknown.”

Yet, I’m just a radio host with a calculator who can see that our marijuana market is a massive one.

We do know that about 90% of the marijuana consumed domestically is indeed produced domestically. Looking at this topic made me realize that we may have arrived at a critical moment for marijuana in America. If taxation and regulation do not quickly come into play, the government may miss out on a realistic economic opportunity. This is not some far-off hippy pipe dream; the marijuana market is already a serious part of our overall economy, in the now.

It is conceivable that as the cannabis market continues to increase exponentially then marijuana Prohibition could end simply because of critical mass. The ultra-free market capitalist in me thinks that might be pretty cool, but the American patriot in me – whose heart is aching for our economy – yearns for the democratic end to prohibition and proactive regulation of our lucrative cannabis market.

Regulated cannabis, in all its forms, opens up a treasure chest of economic opportunity for every part of the country.  Everyone from a 1972 Presidential Commission to economists like Milton Friedman saw the possibilities. The sea-change in our national political atmosphere should let us recognize them again.

Marijuana instantly boosting the Stock/Ag Markets

· Cannabis and hemp would be traded on the Agricultural Futures Market

· Cannabis and hemp businesses publicly traded

· Medical cannabis will be a nationally utilized product

· The cannabinoids in the plant will boost the menu for existing pharmaceutical industry while creating new companies built around isolated cannabinoid medications

Marijuana creating jobs:

· Domestic cultivation will become a regulated industry allowing for cannabis to be grown by hobbyists, artisans and factory-farms

· Thousands of businesses created in every town in America to accommodate the tens of millions of regular cannabis consumers

· Medical cannabis supply, management and distribution will be needed in every state

· Prepared Products supply for consumers and medical patients will employ thousands

· Hemp industries on their own will be a boost to rural farming communities especially

Of course there are massive added economic incentives realized with a peaceful end to the War on Marijuana at home and abroad. Chief among them, stopping the arrest of over 870, 000 Americans annually. The positive effects that would quantify through our justice system and society by regulating marijuana have been recognized my many scholars and elected officals.

There is an opportunity during this time of change, for a structured end to marijuana Prohibition.

We have this precious chance to comprehensively move the cannabis market above ground, bringing hundreds of thousands of existing workers and new jobs with it; instantly pumping billions of dollars of tax revenue into all levels of the economy and government.

President Obama said, “I inhaled [marijuana] frequently…that was the point.”

There are obviously tens of millions of Americans who get that point, all of whom would enthusiastically be taxed right now for the greater good of our country.

Cannabis Prohibition will inevitably end, why not do it by design? Let’s get an economic bailout from marijuana right now, when we really need it.

*NOTES

Jon Gettman 2006 Report

http://www.drugscience.org/Archive/bcr2/exec.html

NDIC 2009 Assessment

http://www.usdoj.gov/ndic/pubs31/31379/marijuan.htm#Overview

2007 DEA Eradication Data

http://www.albany.edu/sourcebook/pdf/t4382007.pdf

Prohibition Costs

http://prohibitioncosts.org/

NORML

www.norml.org

YouTube of “I inhaled frequently”

http://www.youtube.com/watch?v=cpBzQI_7ez8

The Math

1 Cannabis Consumer at ¼ ounce per week

1 Ounce per month

12 ounces annually or 0.75 pounds

DEA Estimate from the Crime Statistics Source Book

Total Marijuana Seized or Eradicated in 2007

7, 034, 037 plants and 47, 728 pounds of bulk marijuana

7, 034, 037 plants at ¾ a pound per plant = 5,275,527 pounds

6 million pounds as 10% of 60 million pounds or 960, 000, 000 ounces /80 million ounces available per month - (1 ounce = 1 consumer’s 1 Month supply) ¼ ounce per week makes 60 million pounds = annual supply for 80, 000, 000

22 million pounds x 16 = (352, 000, 000) 352 million ounces

176, 000, 000 ounces x $400 (high grade) = $70, 400, 000, 000

176, 000, 000 ounces x $80 (low grade) = $14, 080, 000, 000

So 22 million pounds (10,000 metric tons) could sell retail for about $84 billion dollars

60 million pounds = 960, 000, 000 ounces

480, 000, 000 ounces x $400 (high grade) = $192, 000, 000, 000

480, 000, 000 ounces x $80 (low grade) = $38, 400, 000, 000

60 Million pounds could sell retail for $240 billion by the ounce, or more

Jorge Cervantes's Diamonds - Image: Danny Danko/High Times

The Marijuana Bailout: A Realistic Financial Lifeline by Chris Goldstein is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License. Based on a work at freedomisgreen.wordpress.com. Permissions beyond the scope of this license may be available at http://www.activevoiceradio.com.

Jeff Miron on CNN 3/24/09