Report: Ending the War on Drugs Could Generate Over $100 Billion

The United States stands to gain hundreds of billions of dollars by ending the federal war on drugs. This is according to a new report released by the Cato Institute which found that the federal government could generate billions of dollars in savings and revenue by taxing and legalizing drugs across the board.

To come to this conclusion, the report author first estimated how much local, state, and federal authorities spend annually on drug enforcement. State and local government spend approximately $29 billion on drug enforcement annually, while the federal government spends approximately $18 billion; representing a total of $47 billion.

The author then estimated the amount of potential tax revenue that could be generated if the government legalized drugs. According to the report, state and local governments would reap $19 billion while the federal government would net approximately $39 billion; which totals to $58 billion.

When combined with the savings from ending drug enforcement, the U.S. would generate approximately $106.7 billion annually. Although the political will to legalize all drugs in the U.S. is virtually non-existent, this report does have some interesting implications for cannabis legalization.

According to the report, state and local government spend approximately $6.04 billion every year on cannabis prohibition. The federal government spends a little more than half of that figure, or $3.96 billion. In total, local, state, and federal authorities spend a combined $10 billion on cannabis prohibition alone.

If the U.S. legalized cannabis, the federal government could generate an additional $8 billion, while states would take in another $4 billion. When combined with the savings from ending prohibition, cannabis legalization could save/generate the government approximately $22 billion annually.

However, there is a caveat to that figure. Further down in the Cato report, the author found that states with legalized cannabis saw little reduction in law enforcement expenditures; despite the fact that there were fewer arrests. One possible explanation put forward is that the resources dedicated to cannabis enforcement were simply shifted elsewhere.

Regardless, even when you disregard the savings in law enforcement, the government still stands to gain an additional $14 billion in tax revenue if cannabis is legalized. Lawmakers may continue to ignore public opinion or the humanitarian crisis created by the war on cannabis, but one thing they won’t ignore is money, and legalizing cannabis makes a lot of dollars and sense.


William Sumner

William Sumner

William Sumner is a freelance writer specializing in the legal cannabis industry. You can follow William on Twitter @W_Sumner or on Medium.

One comment

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    David Millikan

    July 29, 2018 at 5:30 pm

    Holland is a prime example of legalizing all drugs. Crime dropped dramatically. Drug use dropped dramatically. Drug use by teenager’s dropped dramatically.
    Here is the United States politicians are too stupid and selfish to do what the American people want. Politicians like certain law enforcement including private prisons get a huge kick-back by arresting people and putting non-violent people into prison college while leaving REAL CRIMINALS FREE to run rampant. Look at how many ILLEGAL ALIENS and MURDERERS run free everyday. How many more GANG MEMBERS run free?
    Our prisons are filled up with OVER 70% of non-violent people for just possession alone. How STUPID is that?


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