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The economics of pot

Professor Stephen Easton of Simon Fraser estimates that the market value of marijuana produced in British Columbia each year is worth over $7b. What does he make of it? Government policy is foolish - it wastes resources in a futile attack on marijuana growers and foregoes the opportunity to realize over $2 billion in potential tax revenue. Why is the attack futile? As reported in The Globe and Mail, it's simple nuts and bolts economics:

"Police resources should be deployed elsewhere," the Simon Fraser University economics professor contended yesterday.

"Marijuana is too easily produced . . . and the return on investment sufficiently great that for each grow-up demolished, another takes its place. There is a perpetual, lasting supply of people willing to do it [grow marijuana]." ...

[A] "modest," 100-plant grow-op ... should produce 13 kilograms of marijuana sold in pound blocks "out the back door" at $2,600 a pound, amounting to a harvest of close to $20,000, he said.

"With four harvests per year, gross revenue is nearly $80,000."

He set production costs at about $25,000, yielding a return on investment of around 55 per cent.

BC police spend resources destroying about 3,000 grow-ops per year, but the legal consequences for offenders are minor: only 13 per cent of offenders are charged, and 55% of those receive no jail time. The consequence: grow-ops can be found in just about any area of BC, including "posh neighborhoods" in Vancouver. You can obtain a copy of Easton's report, "Marijuana Growth in British Columbia," here.