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The only thing I think about legalizing drugs is that, to benefit the state 'hard' drugs would have to be outlawed or production/growing of 'soft' drugs would need to be outlawed. I think alcohol and tobacco are different from marijuana simply because of a production issue. While I believe people would still buy marijuana from retailers if it was legalized, I think many would simply grow it. Marijuana is extremeley easy to grow and has high yields, especially since most people wouldn't smoke the equivalent of two packs of ciggarettes worth everyday. I know the plant turn around takes a while so, of course people would still need to buy it for convenience sake.
The problem with that is to have people buying it prices would drop dramatically for even weed. Which last time I checked was like between $20-30 /gram between $300-$600 /oz (quality) etc. Now if a plant can yield 1/2 lb fully grown, you are lookin at 8 oz or around 2000 dollars street price probably (could be a lot higher, its been about 5 years). Point being, for it to be worth people buying weed at stores, it would have to be around cigarrette prices, or maybe double that. Problem is that most people aren't going to smoke 20 joints in a day, (some obviously may) so you wouldn't have the volume like cigarettes.

Basically the government would have to do what they did with liquor, and that is ban production. Distillation is illegal last time I checked, for an individual to do (though you can ferment stuff and make beer, wine [ive done it, and it takes a while and isnt cost effective]). Now if the government wants to legalize cocaine/heroin/meth etc. Then that would be cost effective for people because of the amount of processing (although there are a lot of meth labs). I just don't see Marijuana bringing in a ton of revenue as a high taxed item, unless they outlaw growing.

I'm all for it being legal though, but if it is legal how can we use drug money to fund guerillas and death squads?