In recent years, a growing number of states have legalized marijuana for recreational purposes. Sales of marijuana are subject to various state sales and excise taxes that add between 25% and 44% to the price. Previously, sales of marijuana in these states took place in the informal or underground economy, where taxes are avoided and there is a high crime rate. Which of the following is NOT a fiscal policy justification for legalizing marijuana?

a) There will be a reduction in drug enforcement costs.

b) The government will experience an increase in revenues.

c) There will be a decrease among some underground drug activity.

d) There will be an increase in the amount of potential marijuana users.

Question

Manuel Esparza

Business

6 June, 19:06

In recent years, a growing number of states have legalized marijuana for recreational purposes. Sales of marijuana are subject to various state sales and excise taxes that add between 25% and 44% to the price. Previously, sales of marijuana in these states took place in the informal or underground economy, where taxes are avoided and there is a high crime rate. Which of the following is NOT a fiscal policy justification for legalizing marijuana?

a) There will be a reduction in drug enforcement costs.

b) The government will experience an increase in revenues.

c) There will be a decrease among some underground drug activity.

d) There will be an increase in the amount of potential marijuana users.

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Answers (1)

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India Jones · Answer 1

Option B and C

Explanation:

In simple words, Because there is a substantial majority of the populace smoking weed, whether lawfully or unlawfully, the tax increase may be a significant stream of extra income for the country. The elasticity with such medications is usually known as inelastic.

Therefore, if the surcharge is brought up, there might be more earnings that the administration can receive after the intake has been legalized and also that income could lead to increased state expenditure in the nation.