Monday, June 10, 2013

Seven Questions About Marijuana Legalization

RAND researcher nails it neatly.

I’ve been meaning to offer up the key points from an excellent column on marijuana legalization that appeared in April in USA Today. Beau Kilmer, a senior policy researcher at the RAND Corporation, lists the “new and tricky issues” that Colorado and Washington forgot to consider in depth before passing broad legalization statutes.

Both states are works in progress. What they have passed so far will undoubtedly be revisited. Without further ado, here are Kilmer’s “Seven Ps,” as I call them:

Production. Who gets to grow it, where do they get to grow it, and how much do they get to grow? Will the business model be Starbucks, Jack Daniels, or your local organic family farm? Will it be legal on large commercial operations, indoor growing rooms, backyard gardens? All of this matters economically, since it’s likely that legalization will force down the price of marijuana, as growers will be able to operate in the open, and middlemen won’t have to worry about arrest. Implicit in this category are things like product testing and product safety.

Profit. If the history of cigarette and alcohol regulation have any bearing on the matter (and they do), it’s likely that marijuana marketers will want to concentrate promotional efforts on the heaviest smokers. States might decide to limit production to mom-and-pop home producers—or try to, at least. Or they could throw the door open to marijuana in the free market, and attempt to regulate the for-profit corporations that flock to the new opportunity. Monopolistic practices, collusion, price-fixing, bribes, payoffs to government officials—the whole panoply of corporate malpractice would be available to Big Pot if things go that way.

Promotion. The California medical marijuana movement got itself in hot water straightaway by hiring sign pointers to stand on Los Angeles street corners and advertise the cheapest Ozs in the neighborhood. Not smart. States that legalize will likely need to pursue some form of restriction on advertising for institutions or storefronts selling marijuana. However, as the cigarette industry has shown in its successful effort to block mandatory graphic warnings on packaging, companies are availing themselves of 1st Amendment defenses as a way of demolishing attempts to restrict advertising and promotional activities. Since corporations are now officially people, it looks, so far, like a winning strategy in court.

Prevention. States will obviously enact some age restrictions, which haven’t been terribly effect with cigarettes and alcohol. In addition, the decades-old message to America’s schoolchildren about staying “chemical-free,” starting with the evil weed, will have to be revisited and revised. The pioneering states have expended much time and verbiage on the subject of how much to tax marijuana sales, and a good deal less time on whether any of that tax money will go for prevention efforts, or for addiction treatment. Yes, pot is addictive for some people, and pot smokers who are lucky enough not to have this problem cannot seem to summon much sympathy for those who do. This will have to change, as marijuana addiction and withdrawal enter the public sphere with legalization.

Potency. If you count butane hash oil, or “dabbing,” the potency of modern seedless marijuana ranges from about 15 per cent to as high as 90 per cent THC. Yes, that’s quite a bit higher than the shoebox full of Mexican from the good old days. Arguments rage in the research community over the effect of strong pot, and whether it increases cognitive deficits, general anxiety, panic attacks, and even mental illnesses. Beer, wine and alcohol have mandated strength levels, printed right there on the bottle. Something similar will likely have to be crafted for marijuana.

Price. How elastic is the price of pot? Could heavy taxation push the whole game back underground? What’s a fair market price for a quarter of Train Wreck? “Retail prices will largely be a function of consumer demand, production costs and tax rates,” writes Kilmer. “The way taxes are set will also have an effect on what’s purchased and consumed—that is, whether pot is taxed by value, total weight, THC content, or other chemical properties.”

Permanency. With legalization, we are likely to see a pioneer penalty: “The first jurisdictions to legalize pot will probably suffer growing pains and want to make changes later on,” Kilmer believes. He envisions a powerful lobbying organization putting the arm on legislators on behalf of a newly legal and seriously profitable line of business. It would be best if legislation comes with maximum flexibility to make future changes, so states can adapt their operations as the thing plays out on the ground for the first time.

I personally understand and sympathize with the drive for legalization. I also think that Colorado and Washington have jumped first, and plan to think later, sorting it all out in freefall. That seems like a possible recipe for disasters large and small. Moving a popular drug across the legal/illegal line is a bit like getting molecules through the blood-brain barrier: It can be done, but it had better be done with sufficient care and forethought.

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1 comment:

Dave said...

Beau has found that legalized marijuana "could" make it dramatically cheaper to produce. There are many factors that would actually drive up the price too. Taxes (income, excise, sales, payroll), labor law compliance, environmental law compliance, overhead costs that come with having a real store. These were all cost savings for illicit drug dealer, but will now have to be paid.

But a drop in price does rational, despite all the extra costs of a legal product. It makes commons sense. So lets think about this in a common sense fashion.

I consume marijuana and the price has really no effect on how much I consume. That is because it is already so cheap to use. For me (a casual user), it's a cheaper high than beer. And for both products my consumption depends on how "high" I want to get, not how much I can afford. It's no fun to have a hangover, so I regulate it based on effect. I don't smoke all day because I have work and other responsibilities.

So if marijuana drops from cheap, to extremely the cheap, the real affect will be that people have more money to spend on other products. They'll probably just order more toppings on their pizza when they get the munchies. I don't see the price drop as anything to worry about.

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