Can legal weed win? The Basics of the Cannabis Economyby Robin Goldstein and Daniel Sumner (University of California Press, 232 pp., $24.95)
EIn the past, there was a lot of speculation about how legal weed would be. Analysts predicted market values of more than $100 billion. The expected tax revenue, state lawmakers say, is what state and local budgets need. But today, ten years into the legalization of marijuana, many pot businesses are in the red, marijuana-producing vehicles are flagged, and tax revenues are a loss. What’s wrong?
Can legal weed win?, the new book by UC–Davis agricultural economists Robin Goldstein and Daniel Sumner, tries to answer that question. The two have watched the marijuana market since before the law was passed, and have an economic perspective that is available to the media. Although Can legal weed win? It’s a good fix to feel good about the marijuana market, however, its commitment to certain types of drug addiction is blind to the biggest problem with the pot market: no one is stopping the illegal business.
To be clear, the legal weed market is growing, but it is replacing the illegal market. Three years after California’s legalization, Goldstein and Sumner determined, only about a quarter of the weed was imported from licensed dealers. In their analysis of “more than 30 million publicly reported US commercial weed prices,” they found that unlicensed prices were about 50 percent lower than licensed ones. “In many states,” they said, “it’s unclear whether the price of legal weed will compete with the price of illegal weed for most consumers.”
This is surprising because standardization has brought many common attributes to formal markets: vertical integration, diversification of products offered, and, in this case, high-quality agricultural production methods. . According to Goldstein and Sumner, in the pre-legalization era, one product dominated the marijuana market: an eighth of an ounce of the stuff, which cost $40. Today, consumers can get marijuana of various qualities and prices, innovations that would not be possible under prohibition. So why not move the population to the organized market?
Goldstein and Sumner’s answer: the main difference between legal and illegal weed is the legality. The two products are, after all, interchangeable – legal weed may have a better status, but marijuana consumers prefer to buy pot from the illegal market, so the quality is not a major concern. If the unlicensed market sells the same products without paying the costs of heavy taxes and regulations, they argue, it’s no wonder consumers prefer the licensed market.
The main theme of the book is that legal weed is the same as illegal and legal weed. It is complemented by an interesting exploration of Goldstein and Sumner’s data, a brief history of legalization in California, and a cross-state comparison of weed prices. Most of the policy proposals of the authors are to eliminate regulations and take away local decision-making power when the “NIMBYs” don’t want pot. In general, the book focuses more on framing the problem rather than presenting a comprehensive solution.
The real problem with Can legal weed win? the refusal to ask a clear question: How? Is the legal market cheaper than the legal market? Even if legal weed and illegal weed are close substitutes, the costs of prevention will be higher. The basic function of drug enforcement, after all, is to increase prices and reduce consumption in terms of scope (number of users) and intensity (number of uses). . An international comparison suggests that prices for marijuana are 50 percent higher in areas with strong enforcement than in areas with reduced rates; Another estimate suggests that enactment of the law would result in a more than 90 percent reduction in pre-tax wholesale prices. Prohibition stifles innovation and alienates the market. Before legalization, there was only one type of legal weed; Now, there are many—it is necessary to improve the legal market.
Why don’t these entry fees appear in the legal market? The simple answer is that there are many law enforcement agencies, and no one enforces the laws. Data from Washington and Oregon, for example, show that the implementation of marijuana laws fell short before they were passed. In general, possession of marijuana has been outlawed in many states since the 1970s, while federal law has not been a priority in legalizing states. since at least 2008. Supporters of legalization point to the high number of marijuana users each year—a reported 226,000. to the FBI in 2020—but most of those are suspect arrests, using detention to bring in criminals for other crimes. Even more important are arrests for selling marijuana: just 23,000 in 2020, about 1 percent of all arrests, and two-thirds since 2011.
Consider New York, which legalized weed in 2021. The state currently has no licensed dealers, but many marijuana dispensaries have emerged since legalization. According to Goldstein and Sumner, the government has been too slow to issue licenses. (It might be said that the focus is on “methodology.”) But many illegal businesses can operate with impunity because, as one Vox reporter put it, “no one wants the police to kill gray market shops and trucks and start a new business. drug-related incarceration.”
Goldstein and Sumner think so but reject the mandate, saying it “would serve the primary goals of many of the people who voted for ratification and the activists who fought for it, such as allowing non-violent poor people from prisons and reuniting themselves with their families. .” In other words, the unlicensed market is operating with impunity because it is considered racist and police pot is bad. Leave the argument that marijuana criminalization is the main cause of mass incarceration (it is not). What is being discussed is not to continue to ban marijuana but to demand that businesses comply with the law and ensure that those who do not do so are closed, their owners fined or prosecuted. , if there are many criminals.
The general public did not sign up for a free market in pot. The drug is very dangerous, and its use, especially in adolescence, is associated with loss of IQ, depression, anxiety, and the risk of mental illness. It is addictive and addictive for its serious users. It’s also bad to be around, and it brings other bad behavior—it’s banned from sale in three-quarters of the entire state of California for one reason or another. The public rightfully wants not just a marijuana market but a regulated market. However the authorities are very busy trying to stop the criminals from running illegal businesses to supply that market.
If we want legal weed to win—a big “if”—the solution is not to reduce it to a point where its risks are exacerbated. Instead, it ensures that those who ignore the new rules of the game will be excluded from it, just like any other business in America.
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