Reefer Revenue

Reefer Madness

The latest incarnation of “reefer madness” is the idea that the legalization of marijuana is the solution budget woes. I’m amazed how often students suggest legalizing marijuana as their answer on assignments about balancing the budget. So, I was intrigued when I saw that the folks over at “Nerd Wallet” had put together some analysis of potential state revenue from legalized marijuana (“Cannabis Cash: How Much Money Could Your State Make From Marijuana Legalization?“).

Nerd Wallet’s estimate assumes at 15% surtax on marijuana similar to the tax in Colorado on top of the Texas’ existing sales tax rate (they use 8.15%). Of course, it’s hard to estimate the size of a market for a product that is currently illegal. I’ll just have to take their word on their estimates of how many people under 25 are/will be using marijuana. In then end, they are very proud of their nation-wide estimate of $3.1 billion per year. I’ll leave others to point out how that compares to the federal deficit.

I’m focused on Texas. Nerd Wallet’s estimate for Texas is $166 million. They take pride in pointing out how their figures compare to the budgets of small state agencies. A more realistic way of looking at this is to consider how this compares to the Texas budget overall. The bottom line is that revenue from marijuana sales would total just under .3% of the Texas state budget. That does not take into account administrative costs of the state takes up the task of deciding who gets to sell marijuana and the costs of any regulation of the product itself.

It’s worth noting that this year Texas is expected to bring in just over one billion dollars from the alcohol beverage tax alone. There are lots of other sources of revenue that could produce as much money as a tax on marijuana. You’re not going to win over many conservative Texans unless you make a bigger dent in the bottom line.

There are lots of other reasons to consider decriminalization of marijuana. However, the idea the legalization of marijuana is some kind of budget balancing miracle is a bigger hallucination than the drug itself would ever induce.

Nerd Wallet Map


Texas Insurance Rates

Texas has ended up in the top 10 states again. In this case, the news is not good.

The Texas Office of Public Insurance Counsel (OPIC) reports that Texas has the third highest insurance rates in the nation. In fact, the OPIC compares the average rates paid by a homes valued between $175,000 and $200,000. Texan’s paid an average of $1,440. That’s 76% higher than the national average.

Screen Shot 2014-07-16 at 7.52.40 PMThe OPIC has a number of suspects in these high costs. Their analysis concludes (and emphasizes): “While catastrophe losses explain why premiums are high relative to other states, evidence suggests they are not the primary driver of recent premium increases.”

They ascribe some of the problem to “inefficient markets” and suggest that consumers spend more time shopping for different policies. That begs the question why the Texas market is more inefficient than those in other states and why company expenses, sales commissions, and company profits are higher in Texas than other states. OPIC is in a position to report these sources of higher premiums, but it is not in a position to regulate them.

The bottom line (for the moment) is that state regulation is not going to bring down rates. If Texans want chapter insure it’s up to consumers to shop around. OPIC suggests using tools online at or at


Is Texas ready to change its mind on marijuana?

A Texas Tribune story (“Expecting Pot Penalties to Decrease? Slow Your Roll“) explored whether of Texas is ready to change its policy on marijuana. Shortly after that, the Texas Tribune released  poll results on Texans’ attitudes about marijuana.


Only 23% of respondents support the current policy of marijuana being illegal in all cases. Almost half of respondents (49%) support legalize something like possession for personal use and another 28% support medical marijuana.

So, about 3/4 of Texans support some kind of change to the state’s drug policy. The question is whether or not change will come to Texas.

Gubernatorial candidate Wendy Davis announced that she supports medical marijuana. That does indicate some support for changing the law, but it’s  a long way from legal marijuana. Meanwhile, Greg Abbott does not support any changes to the drug laws.

Remember this if you’re thinking about Texas suddenly joining other states in decriminalizing or legalizing marijuana: Texas law allowed for life in prison for simple possession of marijuana until the 1970s. The state’s libertarian leanings  often lose out when they run into Texans’ social conservatism.

Change is going to be slow because the people most opposed to reforming marijuana laws are at the heart of the base of the Republican party. It’s a great example of how the rules of the game matter. A majority of Texans might favor changing the state’s marijuana laws. However, the majority of the primary voters  choosing the nominees of the majority party in Texas probably do not. Representative democracy is often about who shows up and most Texans do not show up for party primaries.

Income inequality in the states

The Center on Budget and Policy Priorities has put together a report (“Pulling Apart: A State-by-State Analysis of Income Trends“) that looks at differences in income inequality across the states.


There are a lot of causes behind this inequality that seem ripe for classroom discussion.

Immigrants on immigration

A few weeks ago I posted something about Jerry Patterson’s comments on immigration about how early illegal immigrants in Texas had names like his. Once again, Lalo Alcaraz has captured some of that immigration dilemma in his comic strip La Cucaracha.

La Cucraracha February 20, 2013

Many of Lalo’s comic strips and Facebook posts drive me crazy. However, I have to admit that he doesn’t flinch a bringing up some uncomfortable truths about immigration in America.

Where new Texans come from, where old Texans go

Governing magazine has a story (“See Where Residents in Your State Are Moving To, From“) with an interactive graphic that shows how people move from state to state.

Texas saw about 515,000 new residents in 2011 while about 405,000 moved out of the state. The biggest number of new arrivals was from California. California was also the biggest destination for departing Texans. Of course, California has the biggest population so it shouldn’t be any surprise that they’re number one in both categories.


More surprising is the large number of Texans leaving for Oklahoma. We saw about 31,595 Texans leave for Oklahoma while only 19,126 Oklahomans moved to Texas. Texas isn’t a net loser to that many states and the defection to Oklahoma is hard to explain.  You can check out other states using their interactive database.

Reframing the debate on illegal immigration

A few years ago when we put together the first edition of the textbook, about the only thing that got dropped from the first draft because of political controversy was some of my comments about immigration. I suggested that modern Texas was founded by illegal immigrants. I thought it was ironic that today’s Texas is the political creation resulting in part from Americans who illegally entered Mexico.

Geronimo--Show Me Your Papers

A little art from cartoonist Lalo Alcaraz.

Now, Texas Land Commissioner Jerry Patterson is making the same case. In a story on the Texas Tribune website (“State Records Shed Light on Texas’ Early ‘Illegals’“) Patterson said, “We have a long tradition of immigration and illegal immigration, and the first illegals were folks who look a lot more like me than they did some native Tejano.” Exactly who first snuck into whose territory is an ongoing debate. However, it should be pretty clear to today’s Anglo Texans that they were neither the first nor the last.

From my own experience I can tell the Land Commissioner that this is not what people want to hear. I don’t know how much Patterson cares. He’s an honest and blunt politician. His comments on the immigration status of early Anglo Texans may not help him win the Lt. Governor’s office but he is pointing us toward a more constructive understanding of immigration. People want to view immigration in very simple terms. In reality, the issue is immensely complicated and we need to have a serious discussion to make sure that the next round of immigration reform doesn’t create more problems than it creates.