Ahead of the recent ballot initiatives in Colorado and Washington, the Colorado Center on Law & Policy estimated that legalization would yield $60 million in state and local revenue and savings by 2017, and perhaps double thereafter. And Washington's Office of Financial Management estimated that a "fully functioning" marijuana industry could bring in nearly $2 billion in revenue over the next five years.
"Fully functioning." Therein lies the rub.
Both the Colorado and Washington estimates came with caveats explaining the obvious: Any revenue projection is contingent on the federal government not enforcing the laws that still render possession of an ounce of marijuana illegal -- even in Colorado and Washington.
University of Virginia law professor Richard Bonnie, co-author of "Marijuana Conviction: A History of Marijuana Prohibition in the United States," said it's a tricky equation.
"There is something attractive about saying you've got this underground market that's not going away, that you're missing a tax opportunity," he said. "The amount of tax revenue you're going to derive from it is going to depend on what your regulatory approach is going to be."
Bonnie was part of the commission that futilely recommended marijuana decriminalization to President Richard Nixon in the 1970s, but he is quick to emphasize that states must step gingerly if marijuana is legalized.
There were many problems with regulating alcohol post-Prohibition, and there still are today. More than a third of eight-graders say they've used alcohol, and almost three-quarters of high schoolers have gotten drunk.
"You have to have a model that doesn't seem to actively encourage use in ways that are harmful to society and the individual," he said, noting the modern regulation of cigarettes provides an admirable model.
Though the Tax Policy Center reports state and local governments collected $17.3 billion in tobacco taxes in 2010, cigarette use, especially among youngsters, has dropped almost 33% since 2000, according to the Centers for Disease Control and Prevention.
Looking into the crystal ball
When alcohol Prohibition was lifted in 1933, regulation was left to the states. Oklahoma stayed dry until 1959, Mississippi until 1966.
Bonnie said he sees marijuana legalization advocates leaning toward a similar model. But, he warns, "there is a social cost to a regulatory regime that taxes and becomes dependent on the revenue."
Overtax it, and you create another dilemma: black markets and the smuggling of marijuana from state to state, a la post-Prohibition. Canada and Sweden learned that lesson with cigarette taxes in the 1990s.
All of this is putting the roach before the joint, of course. Marijuana, no matter what Colorado and Washington say, remains illegal at the federal level.
Experts are reluctant to forecast when that might change. Aldrich predicts federal legalization by 2017, but he concedes that in 1969 he predicted the federal government would relent by 1979.
Judge Kane said he foresees marijuana following a similar path as alcohol. Toward the end of Prohibition, judges wantonly dismissed violations or levied fines so trivial that prosecutors quit filing cases, he said.
While he sees marijuana laws that target kingpins, traffickers and those who engage in violence remaining in place, he believes possession laws are endangered, he said.
"The law is simply going to die before it's repealed. It will just go into disuse," Kane said. "It's a cultural force, and you simply cannot legislate against a cultural force."