The Consequences of Legalising All Drugs in the United States of America

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The legalisation and deregulation of the drugs industry in the United States of America would unquestionably have considerable global ramifications in an economic, social and ethical facet. During this essay, we will delve into the effects of drug legalisation for both the United States and the developing countries whom are largely responsible in producing and supplying illegal drugs, as they are surely going experience the detrimental knock on consequences further down in their economy. Current prohibition of drugs in the US causes black markets to develop, which induces violence and economic uncertainty and hence, legalisation would take the incentive of cartels away, crime should diminish, and subsequently, this could encourage sustainable economic growth. Furthermore, legalisation will enable the government to decrease their expenditure on drug enforcement and instead, gain new flows of income from an upsurge in tax revenue. Concurrently, however, every benefit comes with its own opportunity cost and therefore, the intake of currently illegal drugs would be projected to rise considerably. Unfortunately, this would create more difficulties in itself as this could potentially strain the healthcare systems in terms of resources, which might require additional spending in order to cope with a greater influx of patients becoming addicted to harmful substances and potentially abusing or, worse still, overdosing from them.

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Since the first drug decree was passed in 1875, the US has forbidden certain drugs in the country. In 1971, this was magnified by President Nixon’s announcement that drugs were ‘public enemy number one.’ Nonetheless, in the twenty-first century, public and government insight has definitely been re-sculpted and become more appreciative to the numerous advantages which drugs can bring about (mainly due to huge advancements in scientific and technological fields), with marijuana being used for medicinal purposes and being legalised in numerous states across the USA such as Vermont and Oklahoma. In fact, a 2017 Gallup poll showed that 64% of Americans support legalisation, in comparison to 1969 when just 12% of people did. This attitude towards recreational drugs is likely to develop further. Therefore, if the U.S. is already on the path to legalising recreational drugs it could be viewed that the next, but significant step forward would be to legalise and decriminalise all drugs. This would serve as one alternative solution to the banning of all drugs.

Portugal is a prime illustration of a nation that taken a lead in successfully legalising and decriminalising all drugs in the country. It decriminalised all drugs in 2001 amid a heroin addiction crisis and escalating numbers of drug-related AIDS infection deaths. Possessing small amounts of illicit substances is now considered as a public health problem. Rather than facing jail time, drug users who are apprehended must meet with medical experts, social workers, and psychologists who evaluate their situation and often guide them toward treatment or other rehabilitative services. The results of this policy have been nothing short of astounding. Drug use has declined across all age groups and more still, overdose deaths have plummeted to only four per million adults (the second lowest rate in the European Union behind Spain). For comparison, the drug overdose death rate in the U.S. is an overwhelming 188 per million adults. Portugal’s drug-related HIV infections have tumbled by 94% since 2001 and promisingly, the number of people arrested for criminal drug offenses has declined by over 60%, which has allowed Portugal to channel finance once invested on arresting and imprisoning addicts toward more effective treatment programs which overall shows that this system has drastically improved the country’s efficiency in this sector.

Uruguay adopted a similarly radical policy to Portugal, when in 2013, they fully legalized marijuana and also decriminalised cocaine and heroin. While it is too early to determine its long-term effects, the new policy has helped Uruguay focus law enforcement resources on drug smuggling. The country’s government even operates a scheme that sells cannabis for just $1 per gram, making it challenging for black markets to thrive and monopolise the drugs trade.

Of course America is a completely different country to both Uruguay and Portugal in terms of population and also socio-economic status but clearly there are models which the US chose implement aspects from in order to theoretically create a new program which works for their nation.

However, there are some major concerns as to the complications of legalising all drugs in the U.S. as the culture and study of irrationale human behaviour in the instance of ‘herd behaviour’ all illustrate that drug consumption would in fact increase overall. Researcher’s for the University of California predict that legalising and decriminalising all drugs would not eliminate demand and the cost of interdiction would fall disproportionately on them – this is a very scary prospective if the U.S. government decides to legalise drugs across the while of the country.

Under legalisation, basic economics indicates the drug market would improve both its total capacity and productivity, due to more competition for producers. This should result in a reduction in prices (compared to the black market) and subsequently demand should therefore rise. Additionally, demand should become more price elastic as greater competition will cause consumers to become increasingly sensitive to price fluctuations. However, consumption of individual drugs is likely to respond differently. To examine the likely effects of legalisation on consumption, it is crucial to split drug users into four categories, according to the type of drug they use, though in reality these categories will overlap.

  1. Recreational (e.g. marijuana)
  2. Hallucinogens (e.g. LSD)
  3. Wealthier Users (e.g. cocaine)
  4. Hard drug addicts (e.g. heroin)

With recreationals, consumption is expected to increase. Prices are already low since there is sufficient supply. But, it will become easier for users to buy drugs directly from shops, rather than negotiating with drug dealers and warren the risk of being arrested by the police. This is accompanied with society becoming more tolerant of recreational drug use.

In categories 2 and 3, consumption should also augment since the quality and safety of these drugs is constantly under inspection. Dealers and producers can dilute the drugs and the user either won’t realise or has no comeback. However, with government regulation and a transparent market, producers ought to improve purity. Simultaneously, prices should reduce (assuming tax rates don’t bring prices above the black market) and therefore users will have an incentive to buy more.

However, strong class A drug (category 4) consumption may fall. Typically users are usually using more damaging substances so under current prohibition they have to hide their addiction, in dread of being imprisoned. After legislation, users will be able to come forward more easily and receive assistance. Additionally, substitutes could be developed in a whole new market (entrepreneurship and innovation will thereby be stimulated a new mannerism in the U.S. economy at the same time), which could help break their addictions as well.

In contrast, when alcohol’s prohibition was repealed, alcohol usage returned rapidly to the pre- banning levels. This suggests that in the long run drug usage might not rise significantly above current levels. Nevertheless, alcohol was only barred for 13 years, therefore it was improbable that the culture or the norm had altered and so the majority of people continued to drink alcohol illegally. In contrast, the drug market today has been largely illegal for over a hundred years and so a social opprobrium may have developed with certain drugs, therefore current drug consumption could expand more than alcohol consumption did, post prohibition.

Overall drug consumption is likely to increase. Though the consumption of more harmful drugs could reduce as users cure their addictions. This has less of an impact considering consumption of more popular drugs is likely to increase. It was noted that there were approximately 948,000 heroin users in the USA in 2016. This is very low when in contrast with marijuana and cocaine, which had 37,570,000 and 5,071,000 users respectively. The World Bank estimates cocaine use would double if it became legal in America. Drugs can be dangerous and highly addictive, and there is concern that legalizing drugs would lead to a major public health crisis—but that is not necessarily the case. (Arguably, the real drug crisis in America revolves around legal, prescription drugs.) Legalisation allows for a more nuanced approached than discouraging drug use through criminalising possession and sales. For example, cocaine is often not addictive and users tend to be price sensitive. That means taxing cocaine may be an effective deterrent. Regulation can also ensure quality and that drug users get the product they want. Nobel Prize winning economist Gary Becker speculates that drug prohibition increases addiction because it makes users reluctant to seek out treatment. Therefore, it would leave food for thought for officials if deciding whether it is more important to reduce the number of heavily addicted drug users or promote the overall number of drug users in the country due to the fully legalisation of substances which have been treated with disgust and apprehension for such a long period of time.

Legalising all drugs would have an enormous impact on the budget of the USA. A study in 2011 suggested the government could reduce expenditure on drug enforcement and gain a new tax revenue. Expenditure saved would be around $41billion each year and additional annual tax revenues around $47billion. This results in a positive effect of around $88billion per year. It must be taken into consideration however that any initial benefit could be counterbalanced by surplus healthcare costs if a significant increase in consumption strains the system. The ONDCP estimated the healthcare costs caused by drug abuse in 1998 were around $13billion, therefore it is likely this figure would increase. However, healthcare costs might not increase substantially as some aspects of drug abuse will become safer. For example, the shared use of contaminated syringes should reduce substantially. This subsequently should reduce the spread of harmful diseases such as HIV, which infected around 40,000 US citizens in 2016.

Another potential impact is on unemployment. An article in the Wall Street Journal suggested that jails are breeding grounds for prisoners to ‘develop better skills at criminal activities.’ Concluding that those who go to jail are more likely to commit more dangerous crimes in the future. Additionally, ex-offenders receive pay discrimination; research found that ex-offenders are paid 10-20% less than non-offenders. Receiving a lower salary forces ex-offenders to seek extra income, and since jails causes them to ‘develop better skills at criminal activities’, illegal methods of earning money may look attractive. Currently, drug offences account for around 46% of inmates in federal prisons. If all drugs were legal these individuals would potentially be productive for the economy, especially if they develop skills positively as opposed to in criminality

Overall the budget is likely to react positively. Although, healthcare costs may increase, it’s unlikely to be more significant than the benefits from increased employment, increased tax revenue and reduced expenditure on drug enforcement.

Another aspect of drug legalisation to be considered is the impact on populations of prisons, as drug offences will reduce to zero. Impacting prisons significantly as around 46% of the population of federal prisons are due to drug offences, amounting to about 79,000 people.

Impact on Developing Countries

Developing countries which produce illegal drugs are considerably affected by global anti-drug policies. Current prohibition induces organised crime, which undermines political and economic stability. If the USA legalised all drugs, it would likely lead to drug producing countries to follow suit, as the USA is the major player in the drug market and a very strong world influence. If we assume these developing countries legalise all drugs, the ramifications are likely to be a significant reduction in violence, which could spur economic development and increase living standards for society.

To examine these potential consequences in more detail consider Mexico.

Since 2006, Mexico has seen around 200,000 deaths from the Drug War. And in 2016 Mexico’s homicide rate increased to 16.8 per 100,000 and the peace index deteriorated by 4.3%. Legalisation should cause cartels to disperse and as a result violence should reduce across the country. By comparison, when alcohol prohibition was repealed, the murder homicide rate fell by 40%. Although, in the short run turf battles may still exist between cartels, in the long term this is likely to decrease as the heart of the cartels’ business will be gone.

Secondly, the reduction in violence should lead to the economic climate improving significantly. The economic impact of violence in Mexico was estimated at $167billion – about 18% of GDP. This demonstrates that violence not only has a social impact but it also adversely impacts the economy and standards of living. Citizens won’t be at the mercy of drug cartels, which should allow them to expand their economic opportunities by creating a safer environment to live and trade. This in turn should encourage FDI, which could spur economic growth.

In addition, specific groups are also likely to benefit, such as farmers producing illegal drugs. Currently, these farmers are at a significant disadvantage by the current supply chain. Therefore legalising all drugs will be a game-changer for these farmers. It will allow them to take a higher share of the profits combined with augmented security. In reality if prices decline due to global competition, it may force them to grow something else. Alternatively they establish a comparative advantage, if the opportunity cost for farmers to grow drug crops is significantly lower; added with direct routes into the USA and good climate could make Mexico an ideal location in the production and distribution of drugs.

Overall, the reduction in violence should improve peace across these countries, benefiting both the welfare of society and allowing the economy to break free from the shackles of organised crime and develop in new exciting ways.


Legalising all drugs would likely lead to consumption increasing considerably, encouraging non-users to start using substances. This could put financial pressure on the healthcare system. However consumption of more harmful drugs is likely to fall so additional healthcare costs may not in fact rise significantly. I can perceive that legalisation would expand economic opportunities in the USA and developing countries. The interconnectedness of the drug market would mean the desirable effects of less organised crime should lead to a significant reduction in violence, joint with increased employment should spur economic development globally.

Personally, I believe that America isn’t at the stage to completely legalise all drugs because there are many factors which can cause potentially more damage than is currently being exposed. There a potentially factors which are haven’t even been recognised yet or will only become apparent once drugs are officially legalised and a country the size of America will simply not put their economic in such a precarious position. Furthermore, America, being a global superpower which many countries aim to emulate in terms of success and wealth can’t afford to breed a new culture of ‘being cool’ and ‘indulging in unlimited drug heaven’ which it is social acceptable and utterly sanctionless – this is certainly not the message America would be trying to publish on a global front but sadly, if drugs are legalised, this message will probably be skewed and interpreted in a twisted way.

Rather than legalising all drugs at once, it may be more feasibly to implement it in phases. At the moment, the softening attitude towards marijuana is causing many politicians to support legalising it. In the future this could develop further with more harmful drugs, as they too could be gradually accepted among society if the effects are less damaging than previously thought.

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