The media is buzzing with stories about the legalization of marijuana. But what does this have to do with the price of pot? Everything.

Politics and money dominate the news coverage. Marijuana legalization advocates seem to be winning the political battle. That’s one story. The other story is how companies are making money – or will make money – and how governments are collecting taxes – or will be collecting taxes in the future.

To most Americans marijuana’s legalization means two things: First, people don’t get arrested for using marijuana. Second, people who buy marijuana can buy it from a legitimate business. In other words, no one gets arrested for using or selling marijuana.

But marijuana’s legalization has deeper significance. 

The costs of prohibition, financial and social, are too great to bear and they must be ended. While only about 5% of marijuana users get arrested each year, for example, this still adds up to 700,000 to 800,000 arrests annually. That has to stop.

In terms of the ability to buy and sell marijuana, legalization is not going to amount to much of a change. People will continue to use marijuana and people will continue to sell it. And yet marijuana’s legalization will be a significant change in American culture. What will change?

What changes depends on how well advocates and stakeholders understand what is at stake and how successfully they pursue their social and political objectives.

Marijuana is not a dangerous drug. Most people who use marijuana are fully capable of making responsible decisions about their behavior. People who make poor decisions about their marijuana use do not need a nanny state to protect them from themselves.

Does marijuana need to be regulated? Of course. Every industry needs rules. Do these rules need to result in tighter controls than the government applies to the manufacture, sale and use of alcohol and tobacco? Of course not. Marijuana’s legalization should mean regulating cannabis the same way we regulate alcohol and tobacco – based on principles of responsible behavior by individuals and businesses. Regulations should be used to raise modest levels of tax revenue and promote individual and corporate social responsibility.

The premise of prohibition is that marijuana is a very dangerous drug and that people are not capable of making rational decisions regarding its use. This fallacy is used to justify strict controls by the state. Now the same argument, again, is being used to enact a new set of strict controls by the state. Having lost the battle to prohibit marijuana, the new authoritarians want to use marijuana’s legalization as a pretext for enhanced social control.

The new authoritarians argue that the price of marijuana has to be kept artificially high to discourage use. They argue that most marijuana users only have a high school education and must be protected from manipulative advertising. They argue that the illicit marijuana market must be nationalized, with government taking over from the drug cartels as the dominant profit-taker. Alternately, they argue that the government must limit the number of firms who are allowed to grow and sell marijuana, guaranteeing these corporations lucrative profits in exchange for keeping the price fixed near current levels.

Under prohibition, we saw a predatory market producing inflated prices that transferred a tremendous amount of wealth from marijuana users to marijuana sellers. The new authoritarians now want government to have that money. They don’t want to reduce the cost of marijuana to the consumer, they just want to divert those inflated and predatory profits to their own accounts. And the justification for this money grab is the same one used to justify prohibition – marijuana is a dangerous drug and people are not capable of making rational decisions about its use.

The significance of marijuana’s legalization is that it is a revolt against the predatory economics of prohibition. Prohibition resulted in marijuana users being ripped off by the market and the public being ripped off by the government. The legalization of marijuana must end both practices. There is nothing wrong with the government taxing marijuana sales. However, using legalization as an opportunity to perpetuate the economics of prohibition is poor policy, bad politics and an unacceptable injustice.

For all these reasons, advocates and consumers need to recognize the deeper significance of legalization is its potential impact on their personal finances. It’s all about how much consumers should have to pay for marijuana. Legalization means consumers do not have to pay hundreds of dollars to buy an ounce of pot.