Caulkins JP, Kilmer B, Kleiman MA. Marijuana legalization: What everyone needs to know. New York: Oxford University Press; 2016. Legalization of recreational marijuana reduces demand for expensive prescription drugs through the state`s Medicaid programs, according to an analysis by a Cornell researcher and a staff member. In terms of cannabis growers` profit, legalisation and proper taxation would quickly reduce the revenues and profits of existing cannabis producers by more than 50% after the initial price bubble disappears, everything else remains constant. However, after taking into account the input cost reduction effect of legalization, we found that legalization would bring tremendous benefits to producers and tax revenue to local government. That is, while legalization could increase the producer`s surplus by increasing overall market sales in a legalized state, any farm household would be hampered by declining profits unless technological development or government support was present. In summary, legalizing recreational cannabis would increase market sales in a legalized state, but would likely hinder other states with large market sizes. Nevertheless, flexible intergovernmental transport conditions would significantly increase the total volume of demand. Still, it would likely hurt cannabis growers` profits in the short term, unless it follows a technological development in terms of cost reduction. Anyone with whom you share the following link can read this content: The legalization of cannabis requires that cannabis be legally produced, sold, possessed, or used under that country`s or state`s legalization law (Caulkins et al.
2016). This means that supply-side developments should be taken into account for an accurate assessment of policies. Caulkins et al. (2016) argue that legalization would replace production and distribution in the illicit market with a global industry, emphasizing the importance of cannabis supply and demand. Importantly, and not coincidentally, one of the arguments for the lack of strong evidence of efficacy as well as the mixed results of previous research on cannabis legalization is that supply is often overlooked in research and policy-making (Hunt and Miles 2015). Cambron et al. (2017) and Hunt and Miles (2015) even point out that the silence of previous supply-side research has contributed to the difficulty of distinguishing between legal medical markets and illicit recreational markets. The legalization of marijuana creates a wealth of economic ideas. When a substance is no longer illegal, the usefulness, number of buyers and appeal of a black market substitute change as demand for complementary products increases. In addition, taxation comes into play.
Notable increases in post-legalization use can also be seen in Washington and Oregon; In fact, Oregon had the second-highest rate of use in the country in 2017-2018, with 20% of adults using marijuana at least once in the past month. In contrast, national use grew only slowly, from 7.1% in 2011/2012 to 9.8% in 2017/2018. Long-term trends suggest that daily marijuana use by all adults has remained relatively stable and at low levels since 2000; Some subgroups set daily rates of less than 3%. About 40 states have legalized medical marijuana, which must be prescribed by a doctor. So far, about 20 states have legalized cannabis for personal use for all adults, but that number is likely to rise. In these states, Raman and Bradford found a significant change in the demand for drugs to treat sleep and anxiety disorders, but no real effect on the drugs used to treat nausea. However, the results cannot give a precise indication of the extent of consumption that could change in response to a change in pricing policy or liberalization. In our current understanding of the effects of price on marijuana use, a number of limitations remain.
First and foremost, although a fairly robust literature has emerged analyzing the impact of price on the prevalence of marijuana use (last year or month), very few studies carefully examine the impact of price (and its complete components) on the amount consumed, which depends on consumption. This is a major limitation in efforts to determine the impact of marijuana legalization on overall use and its impact on harms, as these harms are most likely associated with continued regular or intensive use, not occasional use. Similarly, tax revenues from sales are more affected by the change in the total amount consumed by current consumers than by the proportion of the population that chooses to use marijuana. Results from the alcohol and tobacco literature suggest that the amounts consumed by existing consumers are sensitive to changes in the monetary and non-financial components of prices52,56-58, and it is the changes in these existing consumers that are probably most relevant to understanding the impact on total consumption (and thus on total turnover). But without an understanding of the magnitude of consumption that would change in response to price changes, any estimate of the impact of consumption due to a change in legalization will grossly underestimate the impact on overall consumption. Cannabis is the most commonly used illicit drug in the world (Caulkins et al. 2016), and its legalization is unsurprisingly one of the controversial issues that has sparked wider interest among policymakers and voters in the United States. The goal of the policy to legalize cannabis for medical and recreational purposes is to increase social welfare by preventing illicit activities and cannabis-related drug abuse (Kamin, 2016). Nevertheless, concerns continue to be raised about the negative effects of cannabis legalization, such as the adverse health consequences of drug abuse and increased social costs (Volkow et al., 2014).
Hall and Lynskey (2016) list deaths and injuries in car crashes and the prevalence of regular cannabis use among youth in the criminal justice system as some of the potentially harmful consequences of cannabis legalization policies in the United States. As a result, studies have focused on establishing perceptions of cannabis use and effective and efficient legal designs for the future (e.g., Caulkins et al., 2019; Davenport, 2019; Kilmer 2014 et al). However, there is no strong evidence as to whether a less restrictive cannabis policy would lead to positive or negative consequences (Cambron et al., 2017). Medical or social controversies aside, legalizing recreational cannabis would hurt local growers and retailers by lowering prices in the short term (Hunt and Pacula 2017). For example, cannabis producers in Colorado and Washington have seen their prices plummet since state governments legalized recreational cannabis in 2014. Therefore, it is necessary to predict how the volume of the cannabis market and the corresponding profits would evolve, taking into account Oklahoma`s legal status, so that we can predict the change in producer surplus caused by the legalization of recreational cannabis.
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