The Cannabis Black Market Has A Kill Switch, And We Know What It Is

We keep hearing over and over again that the black market for cannabis comtinues to persists despite legalization for several years in several states.  And we also are learning that this black market is selling notoriously tainted counterfeit THC vape products which are the primary cause of the "mystery" vaping lung illness now known as EVALI.  National legalization should really be a no-brainer at this point.

But why does the black market persist so tenaciously even in states like Colorado and Washington that have had legal recreational sales for over five years now?  The answer is overtaxation and overregulation, particularly in terms of retail licensing fees and quotas.  And the kill switch for the black market is thus really quite simple:

So what to do?  Cut the taxes on cannabis, yesterday, for at least a year or two before raising them again.  Consider a complete tax holiday for a few months, like Oregon did when legalization began there.  Ease up a bit on licensing regulations (and fees) for both producers and retailers.  Allow at least all liquor stores to sell weed alongside their booze, and further consider allowing any store that sells cigarettes to also sell weed as well, including grocery and convenience stores.  Lower the age limit to 18, yesterday.  Encourage current black market dealers to "go legit", by giving amnesty to unlicensed sellers and allowing them to obtain retail licenses.  And once these things are done, then crack down hard on what remains of the black market, particularly the illegal commercial growers and higher-ups in the illegal businesses and organized crime syndicates.

Problem solved.

And of course, fully legalize cannabis at the federal level as well.  Period.

Of course, once the black market is dead and gone, then by all means, tax away.  But now is NOT the time for overtaxation or overregulation.

So what should the tax on cannabis be?  To start with, we at Twenty-One Debunked believe it should be no higher that $10/ounce for bud and $2.50/ounce for trim at the production/cultivation level, with no other taxes aside from regular sales tax.  Consider a three-month tax holiday as well, like Oregon did in 2015.  Then, after the first year or two, the tax should be no higher than $50/ounce for bud and $15/ounce for trim, much like it is in Alaska today.  As for concentrates and edibles, those are best to tax based on THC content, e.g. 1 cent/milligram of THC.

Indeed, recent studies in both the USA and Canada do bear this out.  Allowing a legal alternative to the black market will out-compete with the latter, but only if the price of legal cannabis flower remains below about $14/gram.  Above that threshold, adult customers will readily switch back to the black market if it is the cheaper option, at least in the first few years post-legalization.

As for the price elasticity of demand for cannabis, that has been a controversial topic, but recent studies find that it is relatively inelastic at low prices, but becomes quite elastic at high enough prices, implying an "elastic zone" above some threshold (in one study, $15/joint, or about $30/gram based on the study's half-gram definition of a joint) for high-quality weed.

Interestingly, some other studies find cross-elasticity between alcohol, tobacco and cannabis among young people, such that raising the cigarette tax and even the beer tax can lead to reduced cannabis consumption.  Thus, any fears that falling cannabis prices will lead to more teen use can be addressed by simply raising the taxes on the other two substances in the meantime, before the cannabis black market is eradicated.  (Which will also decrease the use of alcohol and tobacco as well, by the way.)

Remember, there is really no good reason why cannabis needs to be regulated any more stringently than alcohol or tobacco.  After all, while it is not completely harmless for everyone, the fact remains that by just about any objective, rational, scientific measure, cannabis is safer than alcohol, tobacco, most prescription drugs, aspirin, and even Tylenol, while it is less addictive than coffee.  Thus our laws and regulations need to align accurately with reality, since facts > feelings, even in a "post-truth" society.

Americans Still Drinking Themselves To Death

With all the news about tobacco, vaping, opioids, and cannabis lately, Twenty-One Debunked had almost forgotten about the very substance that led us to our founding in the first place: alcohol.  And the news about alcohol these days is hardly anything rosy:  Americans are still drinking themselves to death, at an alarming and increasing rate.  And yet, such very bad news (among adults) is strangely banal and often seen as not particularly newsworthy.  As we like to say, it is our country's "pink elephant in the room".

Teen drinking specifically may be at or close to a record low now, as it is in many other countries as well, but the tragic truth is that Americans in general are currently drowning in the bottom of the bottle and paying a heavy price for it.

According to a recent article, there are indeed several proven strategies that can be implemented at federal, state, and local levels to help stem the tide and get a handle on America's drinking problem.  We KNOW how to do it, and have known for decades now.  And while they may not necessarily get at all of the deepest root causes, they are still known to work quite well in the meantime regardless:

• Raising alcohol taxes
• Restricting the number/density of alcohol outlets and/or the hours/days of sale
• Improving access to treatment
• Bolstering coping skills

And while the first two get the most "bang for the buck" in terms of cost-effectiveness, they are unfortunately a relatively tough sell in some places.  Nevertheless, all four of these strategies should be implemented yesterday--if only our "leaders" would have the intestinal fortitude to do so.

Notice also that there was no mention of the 21 drinking age in the article.  And that is probably because after maintaining such ridiculous and ageist laws in all 50 states and DC for at least three decades now, the supposed benefits of such laws are ringing more hollow than ever.  And if anything, it is becoming increasingly crystal clear now that the 21 drinking age is doing more harm than good by merely forcing young adult drinking underground and kicking the proverbial can down the road.

The Most (Cost-)Effective Ways to Reduce Alcohol-Related Harms

It has been three decades since the last state, Wyoming, raised their legal drinking age to 21 in 1988 under federal duress.  And since then, has it really led our culture to a healthier relationship with alcohol?  Hardly.  As Twenty-One Debunked has been noting for years now, the tragic truth is that Americans are drowning at the bottom of the bottle, and paying a heavy price for it.  It is the "pink elephant in the room" that no one wants to talk about, particularly for Americans over 21.  This despite the fact that alcohol continues to literally kill more people than the opioid epidemic, and yet the former has not been declared anywhere near a public health emergency the way the latter has been.  Gee, I wonder why?

And while teen drinking is currently at a record low (though not unique to the USA, so don't be so quick to give credit to the 21 drinking age), adult drinking is anything but.  What is most striking is how ageist (and cowardly) our culture's response has been to this epidemic of excessive drinking, essentially blaming young people for adult drinking problems.

As for what the most effective responses to America's drinking problem, the one that stands out as the lowest-hanging fruit of all in terms of both effectiveness and cost-effectiveness at reducing harm is raising alcohol taxes.  In fact a recent international study of 16 countries by researchers at the World Health Orgainzation (WHO) confirmed what we have basically known all along but for some reason have yet to implement fully despite reams and reams of research evidence supporting it.  Other close contenders in terms of the most "bang for the buck" include restrictions on alcohol advertising/marketing and hours of sale, but higher alcohol taxes/prices emerge as the most cost-effective measure of them all. Somewhat less cost-effective is tougher enforcement of BAC limits for DUI, but it is still highly effective as well.  And the least cost-effective, but still effective (and worth doing) albeit more expensive, measure is screening and brief intervention for alcohol problems by primary-care physicians.

And guess what was not mentioned at all?  You guessed it:  drinking age laws.   And for good reason:  the supposed "mountain" of evidence in favor of the 21 drinking age basically turned out to be a molehill all along, and a very shaky one at that.  But as an avid reader of Twenty-One Debunked, you already knew that, right?  One day we will all look at the pro-21 crowd the same way we do for flat-earthers and such.

So yes, we do need to implement these aformentioned measures, especially raising alcohol taxes.  Currently, in real dollars, alcohol is cheaper than ever in the USA.  Raising and equalizing all federal alcohol taxes to $24 per proof-gallon (i.e. the inflation-adjusted 1991 level for distilled spirits) would be a good idea, though even raising them to $16 per proof-gallon would still yield very large societal benefits as well.  That would not be much of a price hike to a moderate drinker, but to a heavy drinker it certainly would be.

And lowering the drinking age to 18 while implementing better and more honest alcohol education would most likely, at least over time, lead to a culturally healthier relationship with alcohol as well since it would no longer be a fetishized "forbidden fruit" that fosters a "go big or go home" attitude to drinking.  The status quo certainly hasn't helped America's drinking culture one bit.

Let America be America Again, and lower the drinking age to 18.  If you're old enough to go to war, you're old enough to go ot the bar.  'Nuff said.

The Public Health Crisis That Wasn't

One of our favorite journalists, Annie Lowrey, recently wrote an article titled, "America's Invisible Pot Addicts".  While she is clearly no friend of cannabis prohibition and in fact has repeatedly gone on the record supporting legalization, in this article the author addresses head-on the issue that many (but not all) legalization advocates have heretofore been loath to discuss at all:  cannabis addiction and its apparently growing trend in this country.

As she quotes various self-styled experts on the matter, we seem to get several different answers on the size of the problem and especially how to handle it.  But some facts are undeniable regardless of who says them:

• Some people can indeed become dependent on cannabis, to one degree or another.  And while cannabis is significantly less addictive than alcohol, tobacco, hard drugs, prescription painkillers and sedatives, and even caffeine, it can still become quite habit-forming when used too frequently and heavily.
• While cannabis addiction is usually not as severe as most other addictions, it can be for some people.  Cannabis may be relatively harmless for most of its users, but that does not make it completely safe for everyone.  Some may find that it can have quite a dark side when seriously abused.
• Since the early to mid-1990s and especially since the early 2000s, rates of "cannabis use disorder" (abuse, dependence, or both) as defined by DSM-IV criteria have increased markedly, as have the percentage of daily or near-daily (DND) users of cannabis (about half of whom are dependent).
• While some of those who technically meet DSM-IV criteria for abuse or dependence are pseudoaddicts or an artifact of social stigma and prohibition, others are indeed genuine addicts, and the exact proportion is not entirely clear.
• Likewise, many DND users are truly medical or quasi-medical users, but many are clearly not.
• These trends in heavy and/or dependent use began long before recreational legalization and even before medical legalization in most states, and there is no unambiguously prospective link between legalization and such trends.
• These trends have occurred primarily among adults rather than teenagers.
• Regardless, none of the above facts constitute a real public health crisis at this time, and all of this truly pales in comparison to the opioid epidemic as well as the "pink elephant in the room" that is America's alcohol problem.

So yes, Virginia, there really is a "there", there, but contrary to what some commentators may fear, it is unlikely that legalization is really anything to fear in terms of making it worse.  After all, prohibition clearly couldn't stop it from rising over the past quarter-century.  And us legalization advocates would do wise to stop the denials and face the problem head-on, without fear that it would weaken our movement one bit.  Do not fall into the trap of ceding the moral high ground to the anti- side.  At the same time, we must also tackle head-on the "tyranny of the weaker brother" that really has no place in a free society.

The message really needs to be that spending the majority of one's waking hours under the influence of any psychoactive substance is probably not a wise idea, unless of course one truly needs it for medical reasons.   Saying that cannabis is the safer choice is NOT the same as saying that it is absolutely safe for everyone.  Besides, when you are stoned all the time, it basically loses its fun eventually, and isn't the whole point of recreational use by definition to have fun in the first place?  As Dr. Andrew Weil notes, if it stops being fun or effective, the worst thing one can do is smoke even more weed or seek out stronger strains.  And if you're at the point where you can't even enjoy video games without being stoned, that is definitely a warning sign that you need to at least take a break or cut back significantly, if not quit completely.

It is utterly important to first name and define the problem before discussing it further, to avoid inadvertently reinforcing the lies and half-truths on either side of the debate. We are talking about problematic, chronic, heavy, very heavy, and ultra-heavy use of cannabis here, at ANY age.  We are NOT talking about casual use, use per se by people below some arbitrarily high age limit, or about the roundly debunked "gateway theory" either.   Toking up, say,  once a week (or less) is really NOT the problem here, it's more like toking up every day or nearly so, especially multiple times a day, and/or in very large quantities, that is the real problem.  And while slopes may be slipperier than they appear as one approaches heavier and heavier use, the vast majority of cannabis users still do NOT become chronic heavy users.  And among those who do, it doesn't usually last very long, though for some it unfortunately does.

Likewise, while there currently is no hard scientific evidence (and not for lack of trying to find it) that using cannabis at 18 is really any worse in practice than using it at 21, 25, or even 30 for that matter, there is nevertheless some evidence that using before 18 and especially before 15 may indeed be riskier overall, both in terms of potential harm as well as addiction potential.  It is quite nuanced and the studies still need to be fleshed out, for sure.  But we should note that the aforementioned chronic, heavy users that represent the real problem typically started toking before 15 and/or transitioned to heavy use before 18 as a rule.  And many, if not most, of those users have also used alcohol and/or tobacco at an early age as well, again especially before 15.

As for public policy within the framework of legalization, Lowrey notes that probably one of the best--if not the best--measures that policymakers can take is to raise the taxes on cannabis.  That would, by definition, hit the heaviest users the hardest, while casual users would barely even notice the resulting price hike.  Of course, it would be best to keep the taxes very low at first in order to destroy the black market, and then gradually but sharply raise them beginning a year or two after legal recreational sales begin in a given state.  Lowrey also notes other ideas as well, such as capping THC levels in products, dispensing public health information, and restricting advertising, which are likely good ideas.  But excise taxes, especially if they are proportional to THC content (and perhaps inversely proportional to CBD content as well), would probably have the largest effect size of all in terms of reducing cannabis-related problems.  As for the fear that higher cannabis taxes would drive users back to alcohol, well, we all know by now how to prevent that hypothetical from happening:  simply raise the taxes on alcohol as well.

In other words, freedom has nothing to fear from the truth.  That, and don't fear the reefer--but DO treat it with the respect it deserves nonetheless.

Do Alcohol Taxes Still Work to Save Lives?

Avid readers of our blog would note that Twenty-One Debunked supports raising the tax on alcoholic beverages almost as wholeheartedly as we support lowering the drinking age to 18.  And there are reams and reams of research evidence over many decades--locally, nationally, and internationally--that find that higher alcohol prices (and thus taxes) save lives both on and off the highways as well as reduce crime, violence, and other alcohol-related problems.   In contrast, the ageist abomination that is the 21 drinking age has not consistently demonstrated similar effectiveness in that regard, no matter what sort of pseudo-consensus exists in the minds of its most ardent supporters, and the best evidence thus far has exposed the specious claim of saving lives as little more than a mere statistical mirage all along.

That said, for the specific endpoint of alcohol-related traffic fatalities, among the reams of evidence there have been a few outlier studies that seem to cast doubt on the lifesaving effect of alcohol prices/taxes as well.  The most recent one in 2017 by McClelland and Iselin of the Urban-Brookings Tax Policy Center studied the effects of the Illinois alcohol tax hikes in both 1999 and 2009, and found no long-term lifesaving effect from either one in terms of drunk driving deaths.  In contrast, a previous 2015 study by Wagenaar et al. had found a fairly large drop in alcohol-related traffic deaths following the 2009 Illinois tax hike, even after controlling for the effects of the Great Recession.  The biggest difference between the two studies was that McClelland and Iselin used the Synthetic Control Method (SCM) while Wagenaar et al. did not, and while a good method, like all methods it too can have its own share of pitfalls.

As for the other outlier studies, most of those are dissected and discussed in a 2015 replication review by David Roodman, which still concludes that a true lifesaving effect is likely.  One such outlier study is by Dee (1999), whose control for state-specific time trends apparently removed too much useful variation in state-level beer taxes.  And while Roodman did not discuss our all-time favorite study by Miron and Tetelbaum (2009), we should note that this study in fact began by replicating Dee (1999) using more years of data and including Alaska, Hawaii, and DC, and in contrast to Dee they did apparently find a fairly strong inverse correlation between beer taxes and 18-20 year old traffic deaths even after adjusting for state-specific time trends.

Granted, it is true that for the specific endpoint of DUI deaths, the price of alcohol may not be quite as important as it once was.  Drunk driving is far less common and far less socially acceptable than it was a generation ago, and legal sanctions against it are much stiffer now as well.  And with alcohol prices currently at a record low in relative terms, and alcohol taxes generally being a small portion of the overall price, the link between the two may not be as salient or noticeable as it once was due to being swamped or masked by other factors.  But that does not mean that it is ineffective, given the fact that several more recent studies continue to find such effects, and the numerous studies that continue find fairly large benefits in terms of reducing non-traffic deaths and harms as well (cirrhosis, unintentional injuries, cancer, crime, violence, STDs, etc.).

Thus, the overwhelming weight of the evidence still continues to support the idea that raising alcohol taxes/prices is an effective (and especially cost-effective) public health policy in terms of saving lives both on and off the highways as well as reducing alcohol-related problems in general.  And if it is high enough, it is also justified on Pigouvian grounds as well.  So what are we waiting for?

Is Alcoholism on the Rise for Women?

A recent article in Prevention discusses a recent study by NIAAA, that finds that alcoholism (or clinically speaking, "alcohol use disorder") among women has apparently been on the rise lately, having nearly doubled since 2002.  And while at least some of what the NIAAA has to say (especially their rather low definition of "binge" drinking) should be taken with at least a grain of salt (if not a whole pound), there does unfortunately seem to be at least some truth here.

So why is this happening now?  The article does speculate that deteriorating work-life balance, increased stress and anxiety, and increasingly aggressive alcohol marketing towards women should take at least some of the blame.  And all of that is certainly true to one degree or another.  But truly the pinkest elephant in the room is that excessive drinking (and related consequences) has been increasing overall for both women and men during that timeframe, and while the gender gap has indeed narrowed, men continue to greatly exceed women in terms of alcoholism and alcohol-related problems, as they always have (despite some improvement in decades past until very recently).

Americans of all ages and genders are literally drinking themselves to death as we speak.  About 88,000 per year, in fact, die from alcohol-related causes (vs. 65,000 per year for opioid and all other drug overdoses combined), a number that has been increasing in recent years.  And that number, though staggering in itself, is merely the tip of a very large iceberg of injury, illness, crime, violence, motor vehicle crashes, family breakdown, addiction, and other social costs linked to this deadly yet ubiquitous substance.  Meanwhile, the powers that be are unfortunately--no, shamefully, responding to this epidemic with a collective shrug for the most part.

Fortunately, we know now after decades of reams of research evidence that there is in fact a very simple solution for reducing the death rates and other harms of excessive drinking.  And that solution is raising alcohol taxes.  The higher the price of alcoholic beverages, the fewer deaths and other alcohol-related problems occur, all else being equal.  Even modest increases seem to have a significant impact.   We know this, yet not only have the powers that be generally let the alcohol taxes lag behind inflation, but have actually moved to lower such taxes as a lesser-known part of the recent Republican tax bill.  This at a time when the relative price of alcohol is at an all-time record low already and still falling, while alcohol-related casualties continue to rise.

Also, we really need to legalize the safer choice, yesterday.  Cannabis is overall safer than alcohol, and generally tends to substitute for it.  Many studies strongly suggest that when one advances, the other retreats, albeit with some nuance of course.  Cannabis may even take a major bite out our nation's deadly and devastating opioid epidemic as well, according to some studies.  There's really no good reason to keep it illegal.  Zip. Zilch. Nada.

One thing is for sure.  Raising the drinking age to 21 in the 1980s, and increasing enforcement from the 1990s onward, appears to have done NOTHING to stem this tide, at least not for this most recent increase in alcohol-related problems, particularly among women.  Yet you can bet that the powers that be will predictably double down on this very ageist abomination and greatest alcohol policy failure since Prohibition.  Because reasons.  Or something.

The One Thing That Philip J. Cook and Wayland Ellis Both Agree On

Sometimes an idea comes along that is so compelling that even polar opposites of a particular ideological or public policy spectrum are willing to at least grudgingly embrace.  And sometimes that idea is not only not a new one, but has existed since practically forever yet has been largely underutilized all the same despite all the evidence in its favor.

Take the following two authors and researchers:  Philip J. Cook (author of Paying the Tab:  The Costs And Benefits of Alcohol Control) and Wayland Ellis (author of Abolish the Drinking Age:  The Conservative Case Against Alcohol Regulation).  The two can be considered to be each other's foil in many ways in regards to alcohol.  Cook is American, pro-21, pro-regulation, leans a bit more liberal than conservative, and leans more communitarian than libertarian.  In contrast, Ellis is British, anti-21, anti-regulation, conservative by British standards, and leans quite libertarian even by American standards.   

And yet, there is one thing that they both agree on:  the single most effective public policy measure to reduce alcohol-related harms is higher alcohol prices, such as through higher alcohol taxes.  Cook arrives at that conclusion enthusiastically while Ellis arrives at it perhaps a bit grudgingly, but the conclusion is the same regardless despite their otherwise polar opposite views on the drinking age and alcohol regulation in general.  Now that really says something!

And it pans out, given the reams upon reams of research evidence that arrive at that same conclusion in a wide variety of times, places, demographics, and functional forms.  Twenty-One Debunked generally agrees more with Cook than Ellis on most of the topics under discussion with the notable exception of the drinking age of course.  Especially since Cook's own 1984 study with Tauchen was one of the now-outdated studies that convinced the feds to force states to raise the drinking age to 21 in the first place.  We agree with Cook on some things, Ellis on others, and clearly agree with both on the issue of alcohol taxes.  Alcohol prices relative to inflation and income are currently at a record low in the USA, in no small part because taxes are at at a record low as well.  And there really is no overarching benefit to society for alcohol to be that cheap, while there is plenty of proven and serious harm from the excessive drinking (among all ages) that such cheap alcohol encourages.

Twenty-One Debunked supports lowering the drinking age to 18, while also raising and equalizing the federal alcohol taxes across the board to $24/proof-gallon, equal to the inflation-adjusted 1991 level for distilled spirits.  That would be a little more than an extra dollar for a six-pack of beer or an extra dollar on a fifth of liquor.  That could be done more gradually by first raising it to $16/proof-gallon and then to $24 a year later. Additionally, we would also be fine with (though not necessarily wedded to) the idea of setting a minimum price of $0.50-0.75 per standard drink or at least banning the practice of retailers selling alcohol below cost (already banned in many states).   Cook would support the latter idea of a price floor while Ellis would most likely not, but both would at least support higher alcohol taxes.

So what are we waiting for?

Would A Price Floor for Alcohol Be A Good Idea?

With the issue of alcohol taxes now coming to the forefront lately, there is also another policy measure designed to reduce the problems and externalities associated with excessive consumption of alcohol:  minimum unit pricing.  That is, a setting a minimum price per standard unit* of alcohol, which like excise taxes would increase the price of the cheap stuff (that is favored by heavy drinkers) but unlike taxes would have no effect on beverages whose price is already higher than the new minimum.  After all, the effect of taxes operates through the mechanism of higher prices, so the public health benefits should be similar for both taxes and a price floor, or some combination of the two.  The biggest differences would be in efficiency (who bears the costs) versus revenue (who gets it)--though even for taxes alone, the largest effect size, at the margins, would be on the heaviest drinkers as well, for obvious reasons.

One can see the effects of a price floor on both cheap alcohol in general as well as in bulk quantities.  Take a 40 oz. bottle of 8% ABV malt liquor that now costs $2.99.  That contains a whopping 5.3 standard American drinks*.  If the price floor was then set at $0.75 per standard drink, for example, the price would go up to $3.99, a small but significant jump that really would add up for a heavy (and/or very young) drinker.  A six-pack of 12 oz. cans of say, Budweiser (5% ABV) that sells for $5.99 per six-pack, already above that hypothetical price floor at $1.00 per standard drink--and that is a low-ball price for a six-pack in the USA--would be unaffected.  A 12-pack of the same product selling for $9.99 would still be unaffected, and an 18-pack could be sold for as little as $13.50.  But that 30-pack now on sale for $14.99?  Well, the price for that would go up to $22.50.  And that 15.5 gallon keg that currently sells for $100 or less, excluding deposit?  Well, that contains about 168 standard drinks, so the minimum price for that would jump to $126 per keg.  And those prices for bulk quantities would really add up for anyone who frequently throws or attends keggers or other large drinking parties--leading to somewhat fewer such occasions and/or less beer to go around at such parties.  And now combine that with even a modest tax hike and you get a marginal effect size that is greater than either measure alone.

What about the hard stuff?  Well, we see that while most of it would remain unafffected by a price floor, the cheaper end of the scale would be nonetheless be affected as well in a similar manner to beer.  Take a "handle" (i.e. a 1.75 L bottle) of the cheapest vodka, whiskey, or whatever that currently costs $12.99 in some places.  That contains about 40 shots of 1.5 oz each, so at 80 proof that would equal roughly 40 standard drinks per bottle.  If the minimum price were set at $0.75 per standard drink, that bottle would now cost about $30.  Even a mere $0.50 per drink floor price would raise the price of the cheap booze to around $20 or so.  So while distilled spirits would be the least affected category overall, they would in fact be even more affected than beer at the lower end.   And this would also lesssen the yawning disparity between on- and off-premise prices, thus reducing the urge to "pre-load" or "front-load" with cheap booze before going out to the bar, pub, or club.

So yes, Twenty-One Debunked would be fine with a price floor of $0.75 per standard drink, just as we would be fine with raising alcohol taxes across the board to as high as $24/proof-gallon for all beverage types.   A combination of both would also be good as well.  Given how moderate and responsible drinkers would barely be affected at all by either measure as noted (as long as the thresholds are not set much higher than the ones above), they hardly qualify as blunt instruments and are in fact highly efficient in practice.  That's a small price to pay for liberty.

* One "standard American drink" or "standard unit" of alcohol is equal to one measure of the following:  one 12 ounce can/mug/glass of beer at 5% ABV, one 5 ounce glass of wine at 12% ABV, or one 1.5 ounce shot of distilled spirits at 80 proof (40% ABV).  This is known as alcohol equivalence.  Contrary to popular opinion, these all contain the same amount of alcohol.  So keep this in mind if or when you drink.

Of Death And Taxes, Part Deux

While the opioid epidemic has recently been declared a public health emergency, what if we were to tell you that there is another drug epidemic that kills even more people (a whopping 88,000 per year vs. 65,000 per year for opioid and all other drug overdoses combined), a number that has actually been increasing in recent years?  And that number, though staggering in itself, is merely the tip of a very large iceberg of injury, illness, crime, violence, motor vehicle crashes, family breakdown, addiction, and other social costs linked to this deadly yet ubiquitous substance.  Meanwhile, the powers that be are responding to this epidemic with a collective shrug for the most part.  I think the reader would figure out by now that we are talking about alcohol.

And aside from its overall banality, what is particularly notable about the alcohol epidemic is how ageist our response has been.  While the epidemic clearly affects all ages, the powers that be have been focusing in laser-like fashion on people under 21 while largely ignoring people over 21, despite the fact that people over 21 make up the vast majority of this epidemic.  Not only does this scapegoat young people for largely adult problems, but it also hinders any real solutions to such problems as well.  It's basically the "pink elephant in the room".

Fortunately, we know now after decades of reams of research evidence that there is in fact a very simple solution for reducing the death rates and other harms of excessive drinking.  And that solution is raising alcohol taxes.   The higher the price of alcoholic beverages, the fewer deaths and other alcohol-related problems occur, all else being equal.  Even modest increases seem to have a significant impact.   We know this, yet not only have the powers that be generally let the alcohol taxes lag behind inflation, but have actually moved to lower such taxes as a lesser-known part of the new Republican tax bill.  

So what should the ideal alcohol tax be?  According to researchers, the externality costs of alcohol are estimated to be around $45-58 per proof-gallon, yet the federal tax on distilled spirits is $13.50 per proof-gallon, and for wine and beer it varies but tends to hover between $4 and $5 per proof-gallon.  And while state and local alcohol taxes vary, they are also generally very modest in most states, especially for beer.  So there is a very wide range by which such taxes can be raised while still being socially efficient.

Of course, those figures are now effectively even lower now that the Republican tax bill has lowered such rates even further for roughly the first 100,000 proof-gallons of all alcoholic beverage categories across the board.  But the aforementioned rates still remain the top rates above the respective thresholds in the now-tiered system.  Beer was always tiered with a reduced rate for the first 60,000 barrels, but now that reduced rate is even lower still, and for the first time ever distilled spirits now enjoy a reduced rate for the first 100,000 proof-gallons.  The rate structure is not inherently bad in itself, of course, but both the new and old rates are simply too low.

Twenty-One Debunked believes that, along with lowering the drinking age to 18, that alcohol taxes should be raised significantly.  Specifically, we support raising and equalizing the federal tax on all alcoholic beverages to the inflation-adjusted 1991 level for distilled spirits, which would be $24 per proof-gallon in 2016 dollars.  It should also be simplified by getting rid of all credits and lower tax rates, with perhaps the exception of ones for the first X number of proof-gallons produced by very small domestic producers.  At the state level, it would also be good to equalize alcohol taxes across all beverage types, while allowing localities to levy their own alcohol taxes (including sales and gross excise taxes) as they see fit.  The latter is especially important for college towns.

Even a smaller hike, such as to $16 per proof-gallon across the board, would likely save thousands of lives per year according to researchers.  And of course it would also raise more revenue.  As for job losses, the best research suggests that the net effect is actually neutral or even positive with respect to jobs overall.  So it should be a no-brainer.  A win-win-win situation for everyone but the alcohol industry, basically.

Oh, and by the way:  craft breweries (both macro and micro) not only exist in high-tax Canada, but actually appear to be thriving over there.  Ditto for even higher-tax Iceland as well.   Keep in mind that the tax hikes we propose would still leave American beverages cheaper than Canadian beverages.  So even if we raise such taxes dramatically without reduced rates or credits for small producers, they will likely continue to thrive here as well (at least if such tax hikes are phased in somewhat gradually).

Don't get us wrong, Twenty-One Debunked does not believe that alcohol is inherently evil or anything like that.   We are certainly not in league with the neo-dry lobby!  But when we as a society fail to appreciate that alcohol has a very real dark side for all ages, there are very serious consequences to doing so.  History speaks for itself.  So what are we waiting for?

Cannabis Taxes: Start Low, Go Slow

With several states having legalized cannabis now, and taxing it, what lessons have we learned thus far?  It would seem that the biggest one of all is, "start low, go slow" when it comes to taxes.

As Rear Admiral Luther E. Gregory found out after the repeal of alcohol Prohibition, the black market does not vanish right away, and setting the tax rate too high at first will keep the black market in place, while setting it low to start with will undercut it.  And once the black market is gone, it will not return easily, so then one can raise the tax rate quite high without worrying about the black market making a comeback.  Of course, there is still such a thing as "too high" in that regard, but the threshold for significant black market formation and persistence is much higher afterwards than it is in the very first year or two post-prohibition.

Fast-forward to cannabis legalization in 2014, Colorado and Washington found out the hard way what happens when cannabis excise taxes are too high.  Though otherwise successful, their legalization success was hampered by a fairly persistent black market, albeit smaller than the pre-legalization one.  So they both ended up having to cut their tax rates as a result.  

So why did they start out with such high taxes?  Well, the promise of much-needed revenue certainly helped sweeten the deal for the fence-sitters.   But also, there was a widespread belief that before-tax prices would plummet by at least half, and perhaps even 80% or more, upon legalization or very shortly after.  And yet, that did not happen.  If anything, prices went up at first due to higher demand in the short term, and with or without the taxes the prices three years later still have not dropped very much compared with the status quo ante.  And while the price elasticity of demand for cannabis remains controversial to this day, it is generally thought to be relatively inelastic overall, though estimates vary dramatically.

Still, the long-term trend in cannabis prices does seem to be downward, both in legalization states and nationwide.  And contrary to what the fearmongers claim, that is not necessarily a bad thing, given how cannabis is overall safer than alcohol and generally tends to substitute for it.  Many studies strongly suggest that when one advances, the other retreats, albeit with some nuance.  Cannabis may even take a bite out our nation's deadly and devastating opioid epidemic as well, according to some studies.  Thus, cheaper weed, especially if it is legal, may very well be a net public health and safety benefit on balance.   And there is also no hard evidence that teen cannabis use has increased as a result of legalization--on the contrary, the latest NSDUH data find that cannabis use among 12-17 year olds nationally has dropped to a 22-year low, even as it has risen among both 18-25 year olds and those 26 and over since 2008.

As for specifics as to what the the tax on cannabis should be, it seems that an initial rate of 30% or more on final retail sales like Colorado and Washington originally had is too high to eliminate the black/gray market, and 10-25% is now what most legalization states are aiming for.  Alaska chose a flat $50/oz., which based on the average price of $250/oz. would be about 20%.  There are pros and cons to either method, ad valorem or by weight, and California is apparently combining both types of taxes.  And once the black market is gone after a year or two, then jack the rate up to a level just shy of what would cause a significant black market to return.   But to start with, Twenty-One Debunked recommends a rate of 10% and/or $10-20/oz. for the first year or two before raising it any higher, and perhaps even a "tax holiday" for the first three months of legalization like Oregon did.

Also, once the kinks are worked out, we think it would be a good idea to have the tax rate be at least somewhat proportional to THC levels and perhaps even inversely proportional to CBD levels as well.  For now, though, a simple single rate (whether ad valorem or by weight) will likely be the most workable starting point for any states that are new to legalization.  And if they wish to incentivize THC not being too high or CBD too low, the regulators are free to cap THC levels and/or set a floor for CBD levels.

As for California's idea of having a combination of different taxes (a $9.25/oz. cultivation for flowers, $2.75/oz. for leaves, and a 15% ad valorem tax on retail sales, plus any additional taxes levied by municipalities if they so choose), that's fine.  But both the state and municipalities really might want to consider reducing their rates for the time being, as the combined rates  may be as high as 45% in some parts of California by the time it reaches the consumer.  Ouch.  And unlike in Colorado and Washington, medical cannabis will soon be taxable in California as well, so that's a double ouch.   Best advice?  Municipal taxes shouldn't be too much of an issue, since one can just go to the next town.  But the state should aim for a retail excise tax of 10% and $10/oz. for flowers at the cultivation level.  Ten and ten.  The lower rate for leaves makes sense too, given their generally far lower THC content.  "Start low, go slow."

Of Death And Taxes

While the opioid epidemic has recently been declared a public health emergency, what if we were to tell you that there is another drug epidemic that kills even more people (a whopping 88,000 per year vs. 65,000 per year for opioid and all other drug overdoses combined), a number that has actually been increasing in recent years?  And that number, though staggering in itself, is merely the tip of a very large iceberg of injury, illness, crime, violence, motor vehicle crashes, family breakdown, addiction, and other social costs linked to this deadly yet ubiquitous substance.  Meanwhile, the powers that be are responding to this epidemic with a collective shrug for the most part.  I think the reader would figure out by now that we are talking about alcohol.

And aside from its overall banality, what is particularly notable about the alcohol epidemic is how ageist our response has been.  While the epidemic clearly affects all ages, the powers that be have been focusing in laser-like fashion on people under 21 while largely ignoring people over 21, despite the fact that people over 21 make up the vast majority of this epidemic.  Not only does this scapegoat young people for largely adult problems, but it also hinders any real solutions to such problems as well.  It's basically the "pink elephant in the room".

Fortunately, we know now after decades of reams of research evidence that there is in fact a very simple solution for reducing the death rates and other harms of excessive drinking.  And that solution is raising alcohol taxes.   The higher the price of alcoholic beverages, the fewer deaths and other alcohol-related problems occur, all else being equal.  Even modest increases seem to have a significant impact.   We know this, yet not only have the powers that be generally let the alcohol taxes lag behind inflation, but are currently trying to lower such taxes.  

So what should the ideal alcohol tax be?  According to researchers, the externality costs of alcohol are estimated to be around $45-58 per proof-gallon, yet the federal tax on distilled spirits is $13.50 per proof-gallon, and for wine and beer it varies but tends to hover between $4 and $5 per proof-gallon.   And while state and local alcohol taxes vary, they are also generally very modest in most states, especially for beer.  So there is a very wide range by which such taxes can be raised while still being socially efficient.

Twenty-One Debunked believes that, along with lowering the drinking age to 18, that alcohol taxes should be raised significantly.  Specifically, we support raising and equalizing the federal tax on all alcoholic beverages to the inflation-adjusted 1991 level for distilled spirits, which would be $24 per proof-gallon in 2016 dollars.  It should also be simplified by getting rid of all credits and lower tax rates, with perhaps the exception of ones for the first X number of gallons produced by very small domestic producers.  At the state level, it would also be good to equalize alcohol taxes across all beverage types, while allowing localities to levy their own alcohol taxes (including sales and gross excise taxes) as they see fit.  The latter is especially important for college towns.

Even a smaller hike, such as to $16 per proof-gallon across the board, would likely save thousands of lives per year according to researchers.  And of course it would also raise more revenue.  As for job losses, the best research suggests that the net effect is actually neutral or even positive with respect to jobs overall.  So it should be a no-brainer.  A win-win-win situation for everyone but the alcohol industry, basically.

Oh, and by the way:  craft breweries (both macro and micro) not only exist in high-tax Canada, but actually appear to be thriving over there.  Keep in mind that the tax hikes we propose would still leave American beverages cheaper than Canadian beverages.  So even if we raise such taxes dramatically without reduced rates or credits for small producers, they will likely continue to thrive here as well (at least if such tax hikes are phased in somewhat gradually).

Don't get us wrong, Twenty-One Debunked does not believe that alcohol is inherently evil or anything like that.   We are certainly not in league with the neo-dry lobby.   But when we as a society fail to appreciate that alcohol has a very real dark side for all ages, there are very serious consequences to doing so.  History speaks for itself.  So what are we waiting for?

How to Quash a Black Market in Five Easy Steps

A black market (or underground economy) typically occurs when the legitimate market for a particular good or service is either nonexistent, out of reach, or otherwise far too insufficient to meet the demand for that good or service.  Black markets are by definition illegal to one degree or another, while informal markets that are technically legal or quasi-legal are known as gray markets.   While the usual proximal cause for a black market is prohibition of a good or service (and thus no legitimate market existing), a black market can also occur (albeit to a much lesser extent) when the taxes and/or other government fees on or surrounding the product or activity are excessively high relative to what consumers are willing to pay (and relative to the informal economy).  Sometimes taxes can be so high so as to be considered "prohibition by price", though the relative price difference is typically far more important than the absolute price.

Twenty-One Debunked believes in raising alcohol taxes significantly in conjunction with lowering the drinking age to 18.  The level we suggest ($24/proof-gallon, equalized for all alcoholic beverages), though significantly higher than now, would still be too low to encourage a significant amount of moonshining and bootlegging.  But what about cannabis, which is currently being legalized in more and more states, many of which started out with fairly high taxes and/or licensing fees?  Though a positive development overall, in some of such places, the black market still exists to one degree or another, albeit much less so than when cannabis was illegal.  And of course we all know that places like NYC with extremely high cigarette taxes have their share of black markets in untaxed, out of state, counterfeit, and/or stolen cigarettes as well.  So how does one solve such a problem?

Enter Rear Admiral Luther E. Gregory.  In the 1930s, Prohibition was repealed, and Washington State along with other states were now faced with the task of shutting down the well-established bootleggers and speakeasies that persisted even after Repeal.   Admiral Gregory was asked to head the state's Liquor Control Board, and given carte blanche to come up with a solution, one which worked surprisingly well in fact:

1. End Prohibition, first of all.
2. Give amnesty and issue licenses to anyone willing to play by the state's rules, whether former bootleggers or otherwise.
3. Set the alcohol taxes as low as possible at first, the lowest in the country in fact.
4. Punish sellers who don't play by the rules, with an iron fist--i.e. blacklisting scofflaws from ever selling liquor in the state again.
5. After holding down alcohol taxes for three years, abruptly raise taxes to the point where they're now the highest in the nation.

Problem solved.  The legal market proved to be competitive with what was left of the black market, and drinkers preferred the former over the latter, driving the latter out of business.  And the black market never came back even after raising taxes dramatically.  Looking back, it should have been so obvious indeed.

Substitute "cannabis" for "alcohol", and there is no reason why this strategy would not work in this day and age.  And instead of holding down taxes for three years, merely one year should be sufficient to get the same results, even if the hike is automatically scheduled.  Doing so would minimize the greatest risk of the strategy, namely, that the fledgling legal cannabis industry would then become so powerful that they would resist and successfully quash any attempt to raise taxes in the future.  They would not become that powerful in just one year, and probably not for several years, but the black market could be easily quashed in that timeframe all the same.

As for cigarette taxes, both NYC and NYS should implement this strategy as well.  And of course, the low-tax states such as Virginia should also raise their cigarette taxes (within reason) so as to not be such a source state for cigarette smuggling to other states.  And of course, lower NYC's age limit back to 18 as well.  Same for cannabis in legalized states as well.

In fact, this strategy would work for just about any type of black market.  That's because it is based on the hard facts of economics, not half-baked wishful thinking.  Unlike prohibition or unrealistically high age limits, taxes are not a "blunt" policy instrument, but rather a razor-sharp, double-edged sword.

So what are we waiting for?

What Would The Optimal Vice-Tax Policy Be?

Ever since the invention of taxation thousands of years ago, there has always been much controversy about it.  One of the oldest (if not the oldest) types of tax is the excise tax, which is an indirect tax on specific goods and services.  Common examples in the USA and most other countries include taxes on things like alcohol, tobacco, and gasoline/diesel fuels.  Though originally intended primarily to raise revenue, and highly effective in that regard, such taxes can also have a Pigouvian logic to them:  they help offset negative "externalities" related to the consumption of such goods/services, and also help to reduce such consumption and externalities as well.  Of course, such reasoning only adds to the controversy surrounding the idea.

We at Twenty-One Debunked believe that such taxes are a good idea on balance, and are infinitely preferable to prohibition, including "selective prohibition" for young adults under 21.  We have noted in several previous posts how such taxes are far more efficient than the blunt sledgehammer of prohibition, not to mention cost-effective as well.  In most cases, the taxes already exist and it is simply a question of raising and/or tweaking them, they raise revenue rather than cost it, and they don't violate anyone's civil rights either.

After reviewing the literature and thinking very hard about it, Twenty-One Debunked has come up with the following recommendations about various vice and fuel taxes.

Alcohol

• Raise and equalize the federal taxes on beer, wine, and distilled spirits to the real (inflation-adjusted) 1991 level for spirits:  $24/proof-gallon in 2016 dollars.  (Note how it's proportional to alcohol content)
• Beer of 6% ABV or less should be allowed to treated as a flat 5% ABV per barrel for tax purposes.
• Microbrewers should be exempt from any such tax hikes, at least on the first two million barrels per year.
• Adjust all taxes for inflation annually from now on.  Fix it, and forget it.

Tobacco 

• States with cigarette taxes less than $1.00/pack should raise them to between $1.00-$2.00.
• States with cigarette taxes greater than $2.00/pack should cut them to between $1.00-$2.00.
• Don't raise the federal cigarette tax any further, except to keep pace with inflation.
• All taxes on tobacco products should be equalized across types of tobacco products, and collected at the producer rather than the retail level.
• Adjust all taxes for inflation annually from now on.  Fix it, and forget it.

Cannabis

• Legalize and tax recreational cannabis at a rate of $10-50/ounce on average, adjusting it up or down proportional THC content.
• Collect such taxes at the producer level rather than the retail level.
• Medical cannabis should be exempt from such taxation.

Fuel

• Raise the federal gas tax (and diesel tax) by a penny per week until it is $0.50/gallon higher than now.  (Or $1.00/gallon higher than the status quo if we remain without a carbon tax-and-dividend).
• Call it "A Penny for Progress".
• Give a modest "prebate" to all licensed and registered vehicle owners over the age of 21 (or 25).
• Adjust it for inflation annually from now on.  Fix it, and forget it.

Road Tax 

•  As more and more electric and alternative-fuel vehicles replace gas and diesel ones, a new source of highway infrastructure funding will be necessary.
• Pro-rate vehicle registration fees (road tax) by the number of miles traveled in the past year.  Record odometer readings at each annual safety inspection, and adjust registration fees up or down accordingly.

So what are we waiting for?

Gas Prices Down, Traffic Deaths Up in 2015

While cheaper gas is generally good for the economy and the average person's wallet, unfortunately it also seems to come at a fairly high cost:  more traffic fatalities.  The latest data suggest that was the case in 2015.  After stubbornly hovering between $3.50 and $4.00/gallon from 2011-2014, gas prices on average plummeted to around $2.00 from the second half of 2014 into 2015, and even dropped below $2.00 in early 2016--a seven-year low.  And traffic deaths apparently rose to a seven-year high in 2015, nearly 8% higher than the previous record-low reached in 2014.  Additionally, preliminary data for the first half of 2016 in several states also show that traffic deaths are likely to be the same or higher than they were in 2015.

None of this should really come as a surprise.   As we have noted in a previous post in 2010, it has been known for quite some time now that there is a significant inverse correlation between gas prices and traffic crashes, including fatal ones.  And the link is especially true for younger drivers.  Carefully controlled studies have found this to be true, suggesting a true causal relationship.  Contrary to popular opinion, the price elasticity of gasoline is not zero, or even close to zero, and it seems to rise dramatically when prices go above $3.00/gallon.  Longer-term elasticities are about twice as strong, suggesting the effect builds over time.

The effects on fatalities are not limited to reduced vehicle miles traveled; while that drops too, even controlling for this we can see a decrease in deaths with higher prices.   "Discretionary" driving declines the most when gas prices rise, and most fatalities occur from this type of driving.  Speeding and aggressive driving also decline in an effort to save fuel and money.  Thus, the price elasticity for gasoline demand actually understates the effect on fatalities.  And while non-alcohol related crashes may be more affected by changes in gas prices, alcohol-related ones would be affected as well.

By that logic, it seems that one of the best ways we can reduce traffic fatalities (both alcohol and non-alcohol) would be to raise the gas tax.  Of course, that would make a lot of people mad.  But if it saves even one life, it's worth it, right?  Isn't that what groups like MADD have said about things like the 21 drinking age?  Judging by the lack of enthusiasm about raising the gas tax, it appears that the pro-21 crowd doesn't practice what they preach.  Or maybe it's all about liberty for "just us," not all.

If we know higher gas prices save lives, not to mention the planet, what are we waiting for?

The Evidence Is Clear: Taxation Works Better Than Prohibition

I've said it before, and I'll say it again:  I believe that alcohol taxes should be raised significantly, and the drinking age lowered to 18.   The overwhelming weight of available evidence strongly suggests that alcohol taxes are far more effective, cost-effective, and socially efficient in reducing alcohol-related problems than the 21 drinking age can ever be.  And in the past few years we have even more evidence to show for it.

I have noted in the past that the landmark Miron and Tetelbaum study of 2009 has not only thoroughly debunked the idea that the 21 drinking age saves lives, but it also had a more subtle finding as well.  Namely, it also quietly confirmed the long-accepted finding that raising the beer tax actually does save lives, even if modestly.  And ironically, that was found when they tweaked the pro-21 Dee (1999) study that at first seemed to cast doubt on the beer tax--adding Alaska, Hawaii, and DC as well as more years to the model completely reversed Dee's original findings in that regard, as the original model apparently didn't have enough useful variation or statistical power to detect such results when state-specific trends were added to the regression.

Also, Ponicki et al. (2007) found that while there is supposedly a modest lifesaving effect of the 21 drinking age, high enough beer taxes can actually make that effect irrelevant as the two policies apparently act at cross-purposes.  When one is increased, the other becomes less relevant as a result, for obvious reasons.

Fast forward to newer studies on the effects of alcohol taxation and pricing.  Even pro-21 researcher Alexander Wagenaar appears to be a huge fan of raising alcohol taxes these days.  In 2009 and 2010, Wagenaar did two large meta-analyses on the effects of alcohol taxation on drinking as well as alcohol-related mortality and morbidity, respectively.  In both, the effects were clear:  it is quite effective indeed as a public health measure.  When alcohol taxes/prices go up, problems and deaths go down.  More recent studies also confirm such results as well.  No wonder Mark Kleiman famously said that, "Any sentence about drug policy that doesn't end with "raise alcohol taxes" is an incoherent sentence".

Thus, raising the alcohol taxes, even doubling or tripling them, should be a no-brainer.  So why aren't we doing it?   Clearly, the alcohol industry opposes any attempt to raise such taxes, and they always threaten a loss of jobs if they pass.  But there is really not much if any evidence that such a thing happens, and the industry consistently fails to produce any robust evidence in that regard.  As for the idea that alcohol taxes are regressive and hurt poorer folks and "responsible" drinkers, that is also not really true either:  the economic burden would fall mostly on heavier drinkers and wealthier folks, while moderate drinkers really wouldn't pay very much.  While I do not advocate extremely high taxes like they have in the Scandinavian countries, there is really no good reason not to raise and equalize all alcohol taxes back to at least the 1991 level for distilled spirits, adjust it for alcohol content, and index it for inflation from then on. Microbrewers, on the other hand, should be exempt from any tax hikes.

It is true that Thomas Jefferson said, "No nation is drunken where wine is cheap".  But that was then.  Nowadays, beer, wine, and even hard liquor have apparently become too cheap for our own good.  And far cheaper than back then or even a few decades ago, at least relative to most people's incomes.  Yet the social costs of excessive drinking have not gone down much, so there is a problem of increasing "externalities".  And unlike most policy measures, raising alcohol taxes would also raise revenue rather than cost it, and there would be no loss of individual rights either.  Clearly, it's a win-win-win situation for everyone except the heaviest drinkers and the merchants of death that profit from them (along with funeral directors, of course). 

For once, MADD is correct about something:  if it saves even one life, it's worth it.  I guess even a stopped clock is right twice a day.

Would a Price Floor Be a Good Idea Here?

Recently, UK Prime Minister David Cameron has begun to support the idea of setting a minimum price per unit of alcohol, which currently does not exist in Britain.  The rationale is that it would cut down on excessive drinking and related problems.  Clearly, Britain’s binge-drinking culture (affecting all ages, not just youth) is nothing short of outrageous, even by American standards, though it has improved somewhat in the past decade.   The alcohol taxes in the UK have actually risen faster than inflation in recent years, but supermarkets continue to get around that by selling cheap alcohol at a loss (aka "loss leading") to attract more customers, in a race to the bottom that the overtaxed and declining pubs can never possibly win.  So a price floor seems like a great idea, at least in the UK.

Would that also be a good idea on this side of the pond as well?  Certainly the proposed price floor of 0.40-0.50 pounds per British unit of alcohol (which would be $1.12-$1.42 per American standard drink) would be a bit steep, at least for off-premise alcohol.  A case of 24 beers would be at least $27, similar to the price in Ontario, Canada, and about double the current price for the cheapest beer in much of the USA.  Not only would that idea be unlikely to fly in this country, it may not even be necessary to make set the floor that high to reap significant public health benefits.  Alcohol prices are currently significantly lower in the USA than in the UK (mostly due to our very low alcohol taxes), and the cost of living is lower in the USA as well.  American teenagers and young adults are also significantly poorer than their British counterparts, at least those in the bottom 90%. 

Twenty-One Debunked currently supports (and has always supported) raising and equalizing the alcohol taxes to $21 per proof-gallon for all alcoholic beverages, the same level as the distilled spirits tax was in 1991 adjusted for inflation.  That would push up the price of beer by about $1.20 per six-pack and $4.80 per case, wine by $1.00 per 750-mL bottle, and liquor by $1.00 per 750-mL bottle.  Microbrewers would be exempt from any such tax hike, since their products are already pretty expensive and as small businesses they would be the least able to absorb a tax hike.   A price floor would probably be a good complement to such a policy, and $1.00 (at most) per standard drink would make sense for non-bulk alcohol.  For bulk alcohol (more than an 18-pack of beer or more than 1 gallon of wine or more than 750 mL of spirits), a floor of $0.50-$0.75 would be better, especially since we support keeping the purchase age at 20 or 21 for bulk alcohol while lowering it to 18 otherwise.  This combination of policies is really not all that different in principle from the main idea discussed in Kenkel (1993), yet far more practical and equitable overall.  And bars and restaurants would likely benefit, since pre-gaming with cheap off-premise booze would be reduced.