The goal of regulating drugs is to reduce its overall cost to society. Right now there are 3 general social costs of drug use.
- The cost to the drug users themselves in terms of human failure, misery, and time spend behind bars for those who get caught.
- The cost of criminal activity associated with drug trafficking both in terms of the victims of crimes and the criminals themselves who are drawn in due to the tremendous profits.
- And finally there is the cost to society in terms of loss of productivity of the users and criminals, and the financial cost of law enforcement to fight drug activity and to prosecute and house the drug criminals.
Decriminalizing drugs will probably result in a larger number of drug users because drugs will be cheaper and more readily available. This will translate into a larger social cost in terms of loss of productivity for the users.
But it will decrease crime by reducing the profit potential. The savings from reduced criminal activity and law enforcement will be supplemented by income from direct taxes on drug sales. In addition there will be taxable profits from the new legal drug manufacturing and distribution industries, and income taxes from legitimate drug industry employees.
The bulk of the savings will be the reduced costs of drug enforcement and reduced criminal activity. That will free up resources to manage the health and social costs of drug use. In addition to the cost savings, there will be a cash flow from direct and indirect taxes on the drug industry.
Even though the new taxes may not cover the entire cost of drug regulation, the savings from eliminating the war on drugs will be substantial.
So the net effect will be a higher cost in terms of human suffering and misery for the drug users, but a considerable savings on the enforcement side, and an almost complete elimination of the criminal activity that illegal drug profits create.