A long-standing debate, in which I can see both sides.
On one hand…
Miron isn’t sanguine about the war on weed ending any time soon, but he believes that, in a free society, the government has no business protecting us from ourselves — especially when it makes arbitrary choices about which risks it’s going to prevent us from taking. […]
We could use those lost billions right now. Estimates of the combined savings from legalizing marijuana, and revenues from taxing it like alcohol or tobacco, range from $13.94 to $41.8 billion per year. That’s enough to pay for all or most of President-elect Obama’s proposed ten-year, $150 billion alternative energy investment. Or it could contribute roughly one-fifth to one-half of the $75 billion per year estimated cost of Obama’s proposal to extend health insurance to all.
But, what about this…
The mob did not disappear when alcohol became legal again. It turned to narcotics and also used violence to create competitive advantage in otherwise legitimate trades (gambling, for example). There is no reason to believe that drug legalization would have a vastly different effect today. […]
Despite the wishful thinking of its proponents, drug legalization would result in broader drug use, and for exactly the same reasons a legal narcotics market tends to reduce the size of an illegal one—lower prices, greater convenience, more reliable supply, and far more security in one’s transactions. A great number of weighty disincentives to drug use would disappear. Many people who do not currently know how or where to obtain drugs would continue to abstain, but many others would want to try them.
At this point, I think the proponents of legalization present a stronger case. The fiscal argument seems strong to me, especially in times like these.