Economics isn't the first issue that comes to mind when talking about illegal drugs, but perhaps we can talk about the economic aspects of marijuana without tempers flaring. Let's talk numbers first, and then bring a little economic theory into the discussion.

The $105 million figure comes from a study by Boston University economist Jeff Miron. Miron put together two numbers: the savings to government from not locking people up for marijuana-related offenses, and the increased revenue from taxes we could collect if marijuana were treated just like coffee or chocolate.

Most of the money, about $88 million a year, comes from the reduction in law enforcement costs.

Locking people up is expensive. About one in 20 arrests in Washington is for marijuana use or sales. Using this number and the average cost per arrest for police, prosecution and incarceration, Miron computed Washington marijuana enforcement costs to be about $88 million. Of course, many marijuana busts are incidental to arrests for some other violation. In such cases the marijuana arrest doesn't really cost anything extra -- the arrest was going to happen anyway -- so Miron did the best he could to exclude any cost savings from these "two offense" arrests.

The rest of the $105 million comes in the form of collecting taxes on the production and sale of marijuana. This $17 million is a softer number than the $88 million because there isn't good state-by-state data on marijuana production and consumption. So $17 million is a conservative guesstimate. There's some evidence that marijuana use is a little higher in Washington than the national average. If so, state revenue might pick up another $5 million a year. However, tax revenue could be even higher. Miron assumed a standard sales tax level in his estimate, but Washington imposes very high "sin" taxes on tobacco and alcohol. If we did the same for marijuana, tax revenue might well increase by $35 or $40 million, rather than "only" $17 million.

Turning from numbers to ideas, the key to understanding what economic theory tells us about marijuana legalization is the word "substitution." When we prohibit marijuana, people make one of three decisions: they use marijuana anyhow and risk getting caught; they spend the money that would have gone for pot on something relatively innocuous, like chocolate or lattés or booze; or they spend the money on harder drugs. In other words, people "substitute" something else in place of marijuana use.

The question is, if we chose to make marijuana legal again, what would pot replace? An intriguing possibility is that if we legalized marijuana while keeping the rules against meth and crack, a fair number of people might get the feeling they want from pot -- which is pretty safe -- and stay away from really dangerous drugs. Call the substitution of marijuana in place of harder drugs a "reverse gateway" effect.

My two most faithful readers are my teenage daughters. The first reason I tell my girls to stay away from marijuana is that when you buy pot you risk associating with people who sell some much nastier things. Not every casual dope seller is an evil fiend, but if you buy dope regularly you're eventually going to end up around some not-real-high-class folks.

An extra $100+ million would be nice for the state budget. But an even better economic argument for legalizing marijuana is that it would move the legal line, so that relatively safe drugs like caffeine, alcohol and marijuana are all on one side of the law and the truly dangerous drugs, such as crack and meth, are on the other.

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Dick Startz is Castor Professor of Economics and Davis Distinguished Scholar at the University of Washington. He can be reached at econcol@u.washington.edu.