AAKASH NARANG | III

TRIMESTER | ECONOMICS

NATIONAL LAW INSTITUTE UNIVERSITY, BHOPAL

PROJECT ON:

IMPACT OF LEGALIZING MARIJUANA ON

THE INDIAN ECONOMY

SUBMITTED TO:
Mr. C. Rajasekhar
Assistant Professor of

SUBMITTED BY:
Aakash narang
2010BALLB-34

Economics

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AAKASH NARANG | III

TRIMESTER | ECONOMICS

TABLE OF CONTENTS

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INTRODUCTION
WHY MARIJUANA IS ILLEGAL
EVOLUTION OF BUSINESS
BENEFITS TO THE CONSUMER
ERADICATE POVERTY
BIBLIOGRAPHY

INTRODUCTION
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Marijuana (grass, pot, weed) is the common name for a crude drug made from the plant Cannabis
sativa. The main mind-altering (psychoactive) ingredient in marijuana is THC (delta-9tetrahydrocannabinol), but more than 400 other chemicals also are in the plant. A marijuana
"joint" (cigarette) is made from the dried particles of the plant. The amount of THC in the
marijuana determines how strong its effects will be. The type of plant, the weather, the soil, the
time of harvest, and other factors determine the strength of marijuana. The strength of today's
marijuana is as much as ten times greater than the marijuana used in the early 1970s. This more
potent marijuana increases physical and mental effects and the possibility of health problems for
the user. Hashish, or hash, is made by taking the resin from the leaves and flowers of the
marijuana plant and pressing it into cakes or slabs. Hash is usually stronger than crude marijuana
and may contain five to ten times as much THC. Pure THC is almost never available, except for
research. Substances sold as THC on the street often turn out to be something else, such as PCP.
This powerful plant is legal but highly regulated in India. It is sold in some cities for religious
purposes and rituals in the form of Bhang. However marijuana in its plant form is not yet legal in
India. Possession of under 500 grams of marijuana and 5 grams of hashish amounts to a
minimum of 6 months in prison. Possession of over that amount is considered dealing and
amounts to a minimum of 10 years in prison. However, India is a very corrupt country, and small
bribes are sufficient to ensure freedom. Bhang, the leaves of the cannabis plant, is legal in all
states of India except Gujarat, where it is legal only on the day of Holi. This is due to it being
considered holy in Hinduism.
Further I would like to elaborate on the impacts marijuana would have on its legalization
particularly on the Indian economy.

WHY MARIJUANA IS ILLEGAL:

HISTORY

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AAKASH NARANG | III

TRIMESTER | ECONOMICS

Many people assume that marijuana was made illegal through some kind of process involving
scientific, medical, and government hearings; that it was to protect the citizens from what was
determined to be a dangerous drug. The actual story shows a much different picture. Those who
voted on the legal fate of this plant never had the facts, but were dependent on information
supplied by those who had a specific agenda to deceive lawmakers. Youll see below that the
very first federal vote to prohibit marijuana was based entirely on a documented lie on the floor
of the Senate. Youll also see that the history of marijuanas criminalization is filled with:

Racism

Fear

Protection of Corporate Profits

Yellow Journalism

Ignorant, Incompetent, and/or Corrupt Legislators

Personal Career Advancement and Greed

These are the actual reasons marijuana is illegal. For most of human history, marijuana has been
completely legal. Its not a recently discovered plant, nor is it a long-standing law. Marijuana has
been illegal for less than 1% of the time that its been in use. Its known uses go back further than
7,000 B.C. and it was legal as recently as when Ronald Reagan was a boy. The marijuana (hemp)
plant, of course, has an incredible number of uses. The earliest known woven fabric was
apparently of hemp, and over the centuries the plant was used for food, incense, cloth, rope, and
much more. This adds to some of the confusion over its introduction in the United States, as the
plant was well known from the early 1600s, but did not reach public awareness as a recreational
drug until the early 1900s.Americas first marijuana law was enacted at Jamestown Colony,
Virginia in 1619. It was a law ordering all farmers to grow Indian hempseed. There were
several other must grow laws over the next 200 years (you could be jailed for not growing
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hemp during times of shortage in Virginia between 1763 and 1767), and during most of that time,
hemp was legal tender (you could even pay your taxes with hemp try that today!) Hemp was
such a critical crop for a number of purposes (including essential war requirements rope, etc.)
that the government went out of its way to encourage growth.The United States Census of 1850
counted 8,327 hemp plantations (minimum 2,000-acre farm) growing cannabis hemp for cloth,
canvas and even the cordage used for baling cotton.

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AAKASH NARANG | III

TRIMESTER | ECONOMICS

THE EVOLUTION OF A LEGAL BUSINESS OPERATION

Legalizing marijuana is a hot topic that continues to burn. From an economic standpoint, there
would be numerous benefits to legalizing marijuana. A new industry could emerge that would
allow people to buy and sell marijuana without being incarcerated. The illegal pot dealer that is
currently making their dirty money under the table, and possibly living on welfare or other
government aid, could possibly start a profitable business. They would already have a client
base, which is a key component in a sales environment. A marijuana distributing business could
be created with a small amount of capital thanks to the Internet.

Marijuana could be shipped

out to customers, since drug trafficking would no longer be illegal.

EMPLOYMENT AND GDP

Legalizing marijuana would create desperately needed jobs across the country. It would also
help increase our Gross Domestic Product (GDP), since more goods would be created/grown and
sold. Current drug sales make a noticeable difference in our unofficial GDP, even though they
are not part of our official GDP. According to the United Nations Office on Drugs and Crime, in
2003, illicit drugs accounted for 1% of the worlds GDP. A mere percent sounds minute, but this
small amount is higher than 88% of all countries GDPs in the world. Individuals participating
in the legal marijuana industry would finally have a steady and more importantly, legal stream of
income that would be taxed and go towards the ungodly budget deficit that has accumulated.

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BENEFITS TO THE CONSUMER

Keeping in mind the fact that there are numerous places where weed / marijuana can be sold
legally it can be said that the competition in the field would aggrandize at a very fast rate. Which
as we have read in micro economics as the supply increases the prices of the goods fall down.
Similarly in this case as the database of the suppliers of marijuana increases it would result in the
price of marijuana falling down. Since the current consumer is purchasing marijuana illegally, a
higher price is charged for the risk and also for the low amount available. These consumers that
are currently spending top dollar would have more disposable income to save, invest, or spend
directly into the economy. Since the consumer is buying goods legally, there is no doubt a sales
tax would be involved, once again leading to more money for the government. Overall, more
people would be paying in to the system, rather than being supported by it.
As we are aware of the fact that, possession of under 500 grams of marijuana and 5 grams of
hashish amounts to a minimum of 6 months in prison. Possession of over that amount is
considered dealing and amounts to a minimum of 10 years in prison. If marijuana is made legal
the people in possession of it would not have to face its ill effects and the consequent penalties.

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TRIMESTER | ECONOMICS

LOWERING THE AMOUNT OF POVERTY

Virtually all drug peddlers are part of the lower socioeconomic spectrum. It is pretty evident that
people or professionals like lawyers, doctors or businessmen would be not seen selling weed or
marijuana as it is called ethically. Even as seen in movies like Blow and Mr. Nice it was seen
that the main peddlers didnt belong to a very high stratum of the society but as they kept their
stones rolling they kept minting money and ended up as billionaires. It is not expected for real
life peddlers to become millionaires but atleast they would have enough money to gather food
clothes and shelter.
Most of these people are just trying to make ends meet while struggling with poverty. Having
the opportunity to run or to be a part of a legitimate business is part of the entrepreneurial spirit
that drives the Indian Dream. People who are selling marijuana illegally now could become
respectable and accepted individuals in our society. If they pursued their business venture with
enough effort and motivation they could raise their position in society and create a better, more
positive future for their children.
A good analogy could be drawn from the example of the father of green revolution- Norman
Barlaug. When famine occurred in India, it was this great man who came to the rescue. He was
responsible for introducing a variant to the existing crop, which ensured a better growth. This in
turn helped the poor farmers to recover from their deprived state. Likewise if Marijuana is made
legal, it would help develop that stratum of society which forms a part of the lower socioeconomic spectrum

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AAKASH NARANG | III

TRIMESTER | ECONOMICS

BIBLIOGRAPHY

http://hubpages.com/hub/The-Economic-Effects-of-Legalizing-Marijuana
http://www.cultureshockkk.com/articles-directory/new-articles/article-1-effects-of-legalizingmarijuana.html
http://audio.wrko.com/a/38586160/the-economic-impact-of-legalizing-marijuana-jeffrey-mironharvard-economist-and-senior-fellow-at-the-cato-institute.htm
reuters.com

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AAKASH NARANG | III

TRIMESTER | ECONOMICS

10 | P a g e