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Marijuana valuations in California are hallucinations

The first time I heard the claim that marijuana was California’s biggest cash crop, I thought nothing of it. Nor the second time, or the third.

Round about the 15th time, when it became evident that the claim had gained the status of received wisdom, I took notice. Two things immediately occurred to me. One: Sez who? Two: Whoever it is, what is he smoking?

Valuations of illicit activity, whether it’s drug sales, street crime or porn distribution, are notoriously fantasy-ridden. After all, it’s hard to track cash businesses disinclined to release timely financial results.

Yet the media accept such figures as gospel. In the last few months, marijuana’s supposed top rank in California agriculture has appeared in newspapers across the country, including this one, and been cited on CNN and NBC. Often it’s accompanied by other turbocharged stats, to the effect that the value of the state crop is $14 billion, part of a nationwide marijuana trade worth more than $100 billion a year (including imports).

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I’m sure it’s coincidental that these figures are appearing just when the pot lobby has discovered that the fiscal argument for legalization has acquired real traction among cash-strapped state legislatures. In Sacramento, where a legalization bill has been introduced by Assemblyman Tom Ammiano (D-San Francisco), state officials say that taxing weed could bring in more than $1 billion a year.

Here’s my view on the right approach to all such statistics: Forget you heard them.

“We’re talking real broad strokes here,” Jon Gettman, a former president and national director of the National Organization for the Reform of Marijuana Laws (NORML), told me last week.

Gettman’s words should be heeded. He’s the man who, in a 2006 study, first anointed marijuana as California’s king crop. In the paper he essentially piles one guesstimate upon another to obtain a number that looks, but isn’t, factual.

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Let’s start, as Gettman did, with a standard quantification of U.S. domestic cultivation today: 10,000 metric tons, or 22 million pounds. This figure has a curious history. It first appeared in a 2003 report by the Bush White House. Yet, as Gettman observed, that was nearly triple the estimate of 3,500 metric tons the feds had been using for years.

Why the sudden change? No one is sure. Maybe crop estimating techniques suddenly entered a golden age. Maybe marijuana growers all decided to grow three plants where they had grown one. Or maybe anti-dope zealots in the White House thought the old number looked too paltry.

The government backpedaled in 2007, when the Justice Department estimated the domestic crop at 5,650 to 9,417 metric tons. That’s a huge margin -- like saying the distance from L.A. to New York is between 1,000 and 6,000 miles.

The agency, it seems, added up the total amount of marijuana reported seized by law enforcement agencies and guessed at the percentage of the total crop the cops had found. Its analysts figured the ratio was 30% to 50%, but didn’t say how they came to that conclusion or, for that matter, why it might not be 10% or 90%.

In his paper, Gettman used a ratio of about 10%, a rule of thumb he validated partially by observing that it translated the 1,215 metric tons seized in 2001 into a figure for total cultivation “consistent with the federal government’s widely reported estimate of 10,000 metric tons.” So it seems he accepted one conjectural number in part because it validated another conjectural number.

Gettman acknowledges that concrete information is exceedingly scarce in this field. “When you drill down, the only hard fact is they seize a lot of plants,” he said.

The “soft facts” include the size in dollars of the U.S. marijuana market. Gettman’s 2007 estimate of $113 billion is in the stratosphere compared with some others. In a 2001 report, the federal government pegged the black market at $10.5 billion, a discrepancy that suggests either that we became a nation of total potheads over the following few years, that pot prices experienced an inflation rate that would make the rise in college tuition look sick or that somebody’s numbers are way off.

We should keep in mind that purveyors of statistics about illicit activity often inflate them -- whether to claim legitimacy for the activity, or (if they are law-enforcement agencies) to frighten voters into supporting funding for more officers, guns and helicopters.

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Indeed, one goal of Gettman’s 2006 paper was to prove that prohibition was a waste of money by showing that the war on drugs hadn’t prevented the pot crop from growing explosively. That would give him an incentive to both low-ball the seizure ratio and high-ball the total crop. I’m not saying he did so, only that we shouldn’t be entirely shocked that the figures he settled on happened to support his position.

On the basic issue of whether marijuana should be legalized, there are reasonable arguments on both sides. Prohibition does place a huge burden on all levels of government -- tens of billions of dollars a year squandered on arresting, trying and jailing sellers and users -- not to mention the lives ruined for what is largely a victimless crime.

But the toll from dependency on the legal drugs of alcohol and tobacco is also heavy. Legalization advocates argue that regulating rather than criminalizing pot would give us tools to combat underage use, a precursor to lifelong drug abuse. On the other hand, allowing the master marketers at, say, Philip Morris and Anheuser-Busch to hawk yet another mind-altering product wouldn’t be a great way to encourage “responsible” use. (That’s why UCLA public policy expert Mark Kleiman, for one, advocates limiting any legal market to nonprofit consumer co-ops.)

The real danger is that voters, overcome by pot-inspired visions of dancing dollar signs, will make their judgment about the legal status of the drug without fully considering these pros and cons. The truth is, no one really knows how much money legalization might earn for the public purse, or whether the gains would outweigh the costs. If you’re proffered the argument that the best reason to legalize marijuana is that it’s a guaranteed budgetary windfall, my advice is: Don’t inhale.

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Michael Hiltzik’s column appears Mondays and Thursdays. Reach him at michael.hiltzik@latimes.com and read his previous columns at www.latimes.com/hiltzik.


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