Dopes with Dope

As our nation slowly puts the brakes on our decades-old habit of filling prisons with marijuana users, there is cause for celebration. Decriminalizing drug possession has long been pursued to end the (often racist) waste of lives and law enforcement and court resources.

Along with decriminalizing simple possession came the legalization of medicinal sales of a drug that some found useful to manage chronic pain and illness. Then the door began to creak open to allow the purchase, possession, and use of marijuana for recreational purposes.

The safety of recreational drug use, if age limits should be considered and how such use may affect emotional health, work, and driving will be debated for years. The same questions apply to alcohol use and many other types of drugs, but this is apart from legalization.

As of this writing, over 20 states have passed laws allowing the recreational use of weed.

One of the arguments for cannabis legalization had been the safety of the product when sold through licensed outlets. More importantly (to the governments) was the ability to oversee the distribution of a product that was out of their control, and of course, the expectation of millions of dollars in new taxes. A perfect plan, with everyone happy.

Except that something went wrong.

While the public has indeed had their pockets efficiently picked in states that legalized weed, the size of the revenue has been almost universally disappointing. California, for example, should be delighted with the taxable weed sales totaling $5.4 billion last year. But they are not, as they gaze wistfully at the estimated $8.1 billion sold illegally.

In a typically unplanned government result, California and other states’ legalization of weed may have boosted illegal distribution. This has happened for several reasons. High taxes are one problem. Governments had been hoping for nearly $30 billion a year in additional revenue off of weed. Projections include an amazing $23 per pound in Federal taxes alone. State taxes pile on to the cost, typically 3% - 10%, some have added 25%, and Alaska wins with a charge of $50 per ounce! When dope costs more than a wagyu steak, it’s time to do business in a back alley.

Trust also enters into this. Long-time users trust their local distributors. Is there any surprise that government sanctioned outlets are trusted less?

People who have purchased weed from local distributors for years are unlikely to pay extra to trust a new source, so they generally don’t switch.

Another reason legalization of recreational pot has boosted illegal distribution is that it has been patchwork process state by state. Differences in laws in some states boost illegal activities in others. In Oregon, legalization has generated a boom in marijuana growth. There are more marijuana dispensaries in the state than MacDonald’s restaurants. Three times more. Production is far more than the local market can absorb. Fortunately for the growers, nearby states like Idaho, where recreational weed use is illegal, have plenty of consumers eager to buy black market dope. An Oregon State Police Sergeant, Brandon Boice said, “Law enforcement is just inundated with illegal marijuana and exportation”.

One of the most bizarre outcomes of weed decriminalization has been…criminalization.

New York State has been frustrated with their inability to compete with unlicensed recreational marijuana outlets. Their response might have been lowering taxes or license requirements for businesses, or perhaps just allowing food and tobacco retailers to sell the stuff. Instead, they decided to create new laws to punish those who dare to compete with the state’s distribution of weed. Fines can reach $20,000 per day. Governor Kathy Hochul announced that the NY Department of Taxation and Finance will now be empowered to conduct inspections of businesses to make certain no one is selling weed without permission.

A popular business model was taking advantage of a perceived loophole in NY law to skirt the high cost of taxes and licensing is giving away weed with the purchase of something else. All over NY “sticker” shops have opened selling stickers and other gifts. As a thank you for your purchase the proprietor attaches a little weed. NY has begun raiding and shutting down these shops.

Some state governments do not want to simply regulate the sale of recreational marijuana, they want to be the only ones allowed to sell it. Pennsylvania is one of the few states that use Prohibition–based laws granting the state a near-monopoly on the sale of hard liquor. PA politicians have proposed legislation that would extend this monopoly model to the sale of recreational marijuana.

The Pennsylvania State Liquor Store provides the public with high prices and poor selection, while conveniently outlawing most competition. Although no one seems to know exactly how much this antiquated system has benefited nearby states, the loss in revenue and taxes to New Jersey, Delaware, and other states likely runs to hundreds of millions of dollars. A key indicator is how, prior to the pandemic, PA liquor sales were the only ones to have fallen in the area.  No doubt sister states will similarly benefit from a PA government monopoly on recreational marijuana.

For decades we have filled our prisons and ruined the lives of people accused of committing crimes that had no victims. This process is expensive, racist, and self-defeating. It squanders government resources, separates families, and awards the stigma of a criminal record to many thousands of people who committed the crime of wanting to smoke a joint.

Ending the criminalization of recreational (and medicinal) marijuana is a good move on the part of government, and long overdue. But attempting to raise massive new taxes, severely limiting sales outlets, and making sales licenses almost impossible to obtain has served to create a new class of criminals. Anyone who sells weed without a government license, refuses to charge an unreasonable tax, or makes a purchase of this product is a criminal.

State governments scratch their heads in wonder, why are our weed sales so low? Where are the massive tax revenues we expected? Why are we still arresting people for possession?

The answer is the government’s inability to relinquish control over people’s lives. What should have been a simple, positive move for decriminalization in our society has turned into a convoluted mess.

What role might Congress play here? That is hard to say. The 21^st amendment made the sale of alcoholic beverages legal across the county, but that is because it repealed the 18^th amendment, that criminalized it. And like Pennsylvania, states could create ever more idiotic laws to perpetuate criminalization.

The war on drugs, like the war on alcohol, has always been a war on citizens. The jails may be filled due to unintended consequences, but they are nevertheless full. We can only hope that the free market will eventually win as politicians realize that more government involvement produces unintended results.