Topic: Cannabis

There is much discussion in the press about the legalization of cannabis for medical and/or 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. Be sure to answer the following questions in your analysis.

1. What will happen to existing supply avenues?
2. Will legalization significantly change demand? If yes, how? If not, why not?
3. Would one expect cannabis prices to change significantly? If yes, how? If not, why not?
4. What would be the costs and benefits to governments, both in changes in enforcement requirements and in potential tax revenue? Be sure to provide examples from states that have experienced changes in revenue as a result of legalizing cannabis for either medical use or recreational use.