The Social Impacts of Legalization in South Africa

Now that the positive economic impacts have been outlined, we can shift our attention to social issues. While it is clear that legalization can provide a substantial economic stimulus, what could be the social benefits afforded by this increase in tax revenue? There is no point in generating this revenue and then not using it to improve the lives of the population. This is especially true in the South African context, as we have a plethora of social problems that need to be addressed. Once again we will look at Colorado and see if the same mechanisms that are being used there can apply to South Africa. There are two ways to asses these social impacts: firstly, by looking at some social indicators of well-being (such as crime and drug use), and, secondly, by tracking how tax revenue from sales is being spent.

Colorado – Social Indicators

There is always a concern that once a previously illegal substance is legalized a spike in crime will follow. This argument states that due to the fact that it is now easier to acquire the drug, an increase in drug related crimes is likely to follow, as people on drugs commit more crime. The most common way to respond to this argument is to point towards the effects of the drug in question. In this case, one could argue that marijuana has a relaxing effect, and that a person in this state of mind would not be motivated to commit crime. While this line of reasoning may work for some, it is not enough to sway a true sceptic. Empirical data is what is needed to support any claim, and fortunately there is evidence out there which correlates with the idea that the recreational use of marijuana has very little influence on crime. Marijuana related crime makes up less than 1% of all crime in Denver (the capital of Colorado), and went down from 0.58% in 2012 to 0.42% in 2015 (Hilkey et al, 2016).

Another concern is that once a drug is made legal there will be a massive increase in the amount of users (and abusers), leading to a decrease in overall societal well-being. More specifically, there is the paternalistic concern that easily influenced groups, such as young adults and adolescents, are the most susceptible to addiction. Once again the evidence points to the contrary, as 21% of Colorado high school students stated that they had used marijuana in 2015, a decrease from the 20% reported in 2013. Furthermore, when compared with alcohol and tobacco, daily marijuana use is nowhere near as prevalent, with 6% of adults stating that they make use of marijuana daily, compared with 22% for alcohol and 16% for tobacco (Hilkey et al, 2016).

Colorado – Tax Revenue

In 2016, the cannabis industry in Colorado generated 1.3 billion US dollars in profit (up from $699.2 million in 2014 and $996.2 million in 2015), which equates to nearly 200 million in tax revenue (Entrepreneur, 2017). So what did Colorado do with this substantial amount of revenue? Here’s a list:

  • The first $40 million collected every year goes into a fund known as BEST (Building Excellent Schools Today), which backs construction projects looking to improve or replace dilapidated public schools.
  • $18 million went to the Department of Health and Environment. $7 million of this went towards the Marijuana Education Campaign, an initiate that encourages the youth to think about how their goals will be easier to achieve without Marijuana. $6.7 million was distributed to other substance abuse prevention programmes (not strictly limited to marijuana abuse).
  • $3 million was given to the Department of Agriculture for pesticide control and inspection services.
  • $8.4 million was received by the Department of Education, which it used to fund anti-bullying and dropout reduction campaigns (Colorado Office of State Planning and Budgeting).

As can be seen form the above, a substantial amount of revenue was re-invested in programmes that would promote social well-being. Is there scope for similar projects in South Africa?  

South Africa

Something that needs to be considered is whether there is a market in which to extract tax revenue from in the first place. According to data from the United Nations Office on Drugs and Crime, it is estimated that close to 9.1% of the South African population use marijuana (Steyn, 2016). This high number implies that tax revenue from legalization would be substantial, and could furthermore be used towards funding social initiatives in line with the successful programmes being used in Colorado.

Another aspect to consider is the cost of the “war on drugs” in South Africa. The immediate and long-term costs from 2014-2015 were estimated to be about R6.74 billion. For the sake of comparison, this is equivalent to the construction cost of 63 500 RDP houses (Steyn, 2016).

South Africa is thus in a position in which legalization would offer clear economic and social benefits. If channelled properly, revenue tax could be used to alleviate many social ills that currently plague our country.

 

Sources Consulted

Colorado Office of State Planning and Budgeting, “Marijuana Tax Cash Fund Appropriations and Actual Expenditures” [Online]. Available: https://drive.google.com/file/d/0B-GHuI9KBfjVQ0h4U2dOMGxZYWc/view [2017, July].

Entrepreneur, 2017, “Here’s Where Colorado Spends Its Skyrocketing Pot Tax Revenue”, [Online]. Available: https://www.entrepreneur.com/article/289613 [2017, July].

Hilkey, S., Smith, J. M., English, K., 2016, “Marijuana Legalization in Colorado: Early Findings”, [Online]. Available: http://cdpsdocs.state.co.us/ors/docs/reports/2016-SB13-283-Rpt.pdf [2017, July].

Steyn, Lisa, 2016, “’Cannabusiness’ is worth billions”, [Online]. Available: https://mg.co.za/article/2016-12-15-00-cannabusiness-is-worth-billions [2017, July].

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