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Options and Issues Regarding Marijuana Legalization

January 23, 2015 Comments off

Options and Issues Regarding Marijuana Legalization
Source: RAND Corporation

Marijuana legalization is a controversial and multifaceted issue that is now the subject of serious debate. Since 2012, four U.S. states have passed ballot initiatives to remove prohibition and legalize a for-profit commercial marijuana industry. In December 2013, Uruguay became the first country to experiment with legalization nationwide; the Netherlands tolerates only retail sales and does not allow commercial production. Voters in Washington, D.C., recently took the more limited step of passing an initiative to legalize home production and personal possession. All of these moves were unprecedented. The effects are likely to be complex and will be difficult to fully assess for some time. The goal of this paper is to review recent changes in marijuana policies and the decisions that confront jurisdictions that are considering alternatives to traditional marijuana prohibition. The principal message is that marijuana policy should not be viewed as a binary choice between prohibition and the for-profit commercial model seen in Colorado and Washington State; several intermediate supply options should be discussed. In addition, this piece addresses other key decisions that need to be made about taxation and regulations. It also walks through some of the potential consequences of legalizing marijuana, highlighting the massive uncertainty surrounding many of these consequences.

Federal Taxation of Marijuana Sellers, CRS Legal Sidebar (November 6, 2014)

November 18, 2014 Comments off

Federal Taxation of Marijuana Sellers, CRS Legal Sidebar (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

As several states have permitted the use of marijuana for medical and recreational uses, one question that arises is what are the federal income tax consequences for businesses that sell marijuana?

There is no question that income from selling marijuana is taxable to the seller, regardless of whether such sale is legal or not under federal or state law. The Internal Revenue Code (IRC) uses a very broad definition of income, and income is taxable whether it comes from legal or illegal activities. Further, it can be taxed even if the proceeds are forfeited to the government.

CRS — Cities Try, and Fail (So Far), to Prevent Federal Marijuana Enforcement, CRS Legal Sidebar (October 24, 2014)

November 6, 2014 Comments off

Cities Try, and Fail (So Far), to Prevent Federal Marijuana Enforcement, CRS Legal Sidebar (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

To paraphrase Mark Twain, reports of the death of federal marijuana enforcement appear to have been exaggerated. While federal authorities have created a perceived safe harbor for the operation of marijuana businesses in states that have legalized the drug, the Department of Justice (DOJ) is still punishing violations of the Controlled Substances Act (CSA) when a business’s activities threaten certain core federal interests, such as preventing the distribution of marijuana to children and combating the involvement of criminal enterprise. One tool the DOJ has used to close down offending dispensaries, grow facilities, and retail shops is civil forfeiture—a legal process by which the government may seize and liquidate a wide array of property “used or intended to be used to facilitate a violation of the CSA.” Once a decision to initiate a forfeiture proceeding has been made, there appears to be very little that states or localities, that actively support the operation of marijuana businesses, can do to prevent federal authorities from enforcing federal law.

Bankruptcy for Marijuana Businesses?, CRS Legal Sidebar (October 29, 2014)

November 3, 2014 Comments off

Bankruptcy for Marijuana Businesses?, CRS Legal Sidebar (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Much ink has been spilled about the disparity between state and federal marijuana laws and the resulting risks to individuals and companies in—or providing services to—medical and recreational marijuana businesses that operate legally under the laws of more than 20 states even while such activities remain unlawful under federal law. Recent bankruptcy court cases suggest that one such risk may be the ultimate unavailability to both debtors and creditors of the protections, benefits, and predictability of the U.S. Bankruptcy Code when state-regulated marijuana businesses fail.

CRS — Reauthorizing the Office of National Drug Control Policy: Issues for Consideration (September 30, 2014)

October 8, 2014 Comments off

Reauthorizing the Office of National Drug Control Policy: Issues for Consideration (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The Office of National Drug Control Policy (ONDCP) is located in the Executive Office of the President and has the responsibility for creating policies, priorities, and objectives for the federal Drug Control Program. This national program is aimed at reducing the use, manufacturing, and trafficking of illicit drugs and the reduction of drug-related crime and violence and of drug-related health consequences. The director of ONDCP has primary responsibilities of developing a comprehensive National Drug Control Strategy (Strategy) to direct the nation’s anti-drug efforts; developing a National Drug Control Budget (Budget) to implement the National Drug Control Strategy, including determining the adequacy of the drug control budgets submitted by contributing federal Drug Control Program agencies; and evaluating the effectiveness of the National Drug Control Strategy implementation by the various agencies contributing to the Drug Control Program. Authorization for ONDCP expired at the end of FY2010, but it has continued to receive appropriations. Congress, while continuously charged with ONDCP’s oversight, is now faced with its possible reauthorization.

Empirically Characterizing Domain Abuse and the Revenue Impact of Blacklisting

September 29, 2014 Comments off

Empirically Characterizing Domain Abuse and the Revenue Impact of Blacklisting (PDF)
Source: George Mason University Department of Computer Science

Using ground truth sales data for over 40K unlicensed prescription pharmaceuticals sites, we present an economic analysis of two aspects of domain abuse in the online counterfeit drug market. First, we characterize the nature of domains abused by affiliate spammers to monetize what is evidently an overwhelming demand for these drugs. We found that the most successful affiliates are agile in adapting to adversarial circumstances, and channel the full spectrum of domain abuse to advertise to customers. Second, we use contemporaneous blacklisting data to provide an economic analysis of the revenue impact of domain blacklisting, a technique whereby lists of “known bad” registered domains are distributed and used to filter email spam. We found that blacklisting rapidly and effectively limited per-domain sales. Nevertheless, blacklisted domains continued to monetize, likely as a result of high demand, non-universal use of blacklisting, and delay in deployment. Finally, our results suggest that increasing the number of domains discovered and using blacklists to block access to spam domains could undermine profitability more than further improving the speed with which domains are added to blacklists.

Perceived neighborhood illicit drug selling, peer illicit drug disapproval and illicit drug use among U.S. high school seniors

September 25, 2014 Comments off

Perceived neighborhood illicit drug selling, peer illicit drug disapproval and illicit drug use among U.S. high school seniors
Source: Substance Abuse Treatment, Prevention, and Policy

Background
This study examined associations between perceived neighborhood illicit drug selling, peer illicit drug disapproval and illicit drug use among a large nationally representative sample of U.S. high school seniors.

Methods
Data come from Monitoring the Future (2007-2011), an annual cross-sectional survey of U.S. high school seniors. Students reported neighborhood illicit drug selling, friend drug disapproval towards marijuana and cocaine use, and past 12-month and past 30-day illicit drug use (N = 10,050). Multinomial logistic regression models were fit to explain use of 1) just marijuana, 2) one illicit drug other than marijuana, and 3) more than one illicit drug other than marijuana, compared to “no use”.

Results
Report of neighborhood illicit drug selling was associated with lower friend disapproval of marijuana and cocaine; e.g., those who reported seeing neighborhood sales “almost every day” were less likely to report their friends strongly disapproved of marijuana (adjusted odds ratio [AOR] = 0.38, 95% CI: 0.29, 0.49) compared to those who reported never seeing neighborhood drug selling and reported no disapproval. Perception of neighborhood illicit drug selling was also associated with past-year drug use and past-month drug use; e.g., those who reported seeing neighborhood sales “almost every day” were more likely to report 30-day use of more than one illicit drug (AOR = 11.11, 95% CI: 7.47, 16.52) compared to those who reported never seeing neighborhood drug selling and reported no 30-day use of illicit drugs.

Conclusions
Perceived neighborhood drug selling was associated with lower peer disapproval and more illicit drug use among a population-based nationally representative sample of U.S. high school seniors. Policy interventions to reduce “open” (visible) neighborhood drug selling (e.g., problem-oriented policing and modifications to the physical environment such as installing and monitoring surveillance cameras) may reduce illicit drug use and peer disapproval of illicit drugs.

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