Free Market Marijuana


For millions of Americans, the word “marijuana” is hard-wired to the part of their brain that divides the human population into those who went to Woodstock and those who went to Viet Nam. The peculiar result is a largely left-wing movement fighting hard (alongside some corporate billionaires) to create a multinational corporation and a largely conservative movement fighting to stop the advance of capitalism and the private sector.

 

This will be tough for baby boomers to hear, but the current generation of Americans doesn’t know Woodstock from chicken stock and understands the Viet Nam War about as much as they do military action in the Crimea. If the U.S. legalized marijuana today, those now fading cultural meanings would not rule the day, capitalism would. Cannabis would seen as a product to be marketed and sold just as is tobacco. People in the marijuana industry would wear suits, work in offices, donate to the Club for Growth and work with the tobacco industry to lobby against clean air restrictions. The plant would be grown on big corporate farms, perhaps supported with unneeded federal subsidies and occasionally marred by scandals regarding exploitation of undocumented immigrant farm workers. The liberal grandchildren of legalization advocates will grumble about the soulless marijuana corporations and the conservative grandchildren of anti-legalization activists will play golf at the country club with marijuana inc. executives, toast George Soros at the 19th hole afterwards and discuss how they can get the damn liberals in Congress to stop blocking capital gains tax cuts.

 

I think Keith makes a reasonable point. After all, this has been the case for cigarettes and beer and other legal drugs since the days of prohibition. The big beer corporations dominated the market for decades and we were left with bland, unremarkable beer because of it. There’s a legitimate concern for marijuana legalization activists that a similar trend would happen with marijuana. But I’m not sure it’s entirely correct, and a lot depends on the laws and regulations we write for the marijuana industry.

 

The many post-prohibition laws that remained in place after alcohol was re-legalized helped create the oligopoly in the beer market. It was illegal to sell homebrew, making it much more difficult for new entrants to come into the market. There was also basically no knowledge base for the homebrew craft. This remained true until Carter made it legal to sell homebrew. Soon after, the craft brew industry exploded. Now craft brews are siphoning off more and more of the market from the big corporations, despite the many remaining legal restrictions against small brewers. Beer has never been better.

 

The same set of factors will apply to a legalized marijuana market. Will Big Tobacco basically take over the production of sales and distribution of pot? It’s quite possible, especially if the government imposes barriers to entry, such as making it illegal for consumers to grow their own. You see, marijuana is a weed, and it’s quite safe and simple for people to grow their own crop. Simpler, even, than making their own beer. That makes it really, really easy to siphon off customers from Big Marijuana corporations. Which means, of course, that Big Marijuana will work as hard as possible to push “safety regulations” making it as impossible as they can for competitors to enter the market, including those competitors who are simply growing their own plant for their own use.

 

Recent history shows that even those tie-dyed hippies running dispensaries in California operated this way. When Prop 19 went down, its failure was aided in part by California dispensary operators who didn’t want to see a flood of new competition cutting into their bottom line. As the wildly diverse craft brew industry illustrates, more competition leads to more diversity and higher quality. In a truly free market marijuana would be exactly the same, with many people growing their own and many more getting it from local growers and co-ops. Others would probably buy the Coors version from Big Tobacco, but many wouldn’t bother, and unless the legal barriers to entry were constructed to crowd out small growers, the big corporations would never get such a huge share of the market to begin with.

 

Sometimes less is more. Often as not, more regulations and more laws lead to less quality, competition, and diversity. Unfortunately, lawmakers tend to work for the guys with the deepest pockets, not the little guy. So the odds are always against a truly free market from emerging. In that sense, Keith is probably absolutely right. But it isn’t the market that’s the problem, and it isn’t the “natural” state of affairs either. Big Marijuana will be a creature of the state, not the markets. If the producers of legalized marijuana act the way Keith describes, it will be because they have no true competitors nipping at their heels, and a friendly regulatory state protecting their backside.

 

Originally posted by ForbesClick Here to view original article.