There is much discussion in the press about several states moving to legalize cannabis, either for medical use or for recreational purposes. Looking only at the economic impact of such changes in the laws, discuss how the existing system of supply and demand for illegal cannabis will be changed with the new legalization.

1. What will happen to existing supply avenues?
2. Will legalization significantly change demand? How?
3. Would one expect prices to change significantly? How?
4. What would be the costs and benefits to governments, both in changes in enforcement requirements and in potential tax revenue?