The push to legalize Marijuana is going Gangham style. In the past several months, 55 percent of voters in Colorado and Washington approved a ballot measure making it legal for medical and nonmedical uses, and a slew of polls indicate that a majority of Americans now support making Marijuana as legal as cigarettes and alcohol.
Changing public attitudes is a big reason why the drive to let people legally “toke” up is gaining traction. But the question on the minds of politicians and business leaders is how much money can be made from this new industry?
Earlier this month Fortune magazine ran an unusual cover story attempting to answer this question. The article featured a group of West Coast Cannabis entrepreneurs who are seeking investments from prominent venture capital firms. These entrepreneurs want to produce and market products that will make smoking pot easy, sexy, and appealing. What’s their selling point? Cannabis could represent a $47 billion industry opportunity.
A broader selling point is that legalizing marijuana could help state governments cut their enforcement budgets and generate tax revenue. Since 1970, state and federal authorities have spent billions enforcing marijuana laws, but pot continues to be ubiquitous. Police have not reduced production, and laws are applied inconsistently across the spectrum of socioeconomic and minority populations.
The economic argument carries great weight for proponents. As revelers lit up last weekend to mark 4-20, the annual celebration of all-things weed, it’s tough to argue that consumer demand isn’t there. Legalizing an already booming black-market industry means the potential for job creation and a fresh source of income for state treasuries scrambling in the age of the sequesters.
However, once you clean the bong, this line of thinking goes up in smoke.
First, just because public opinion and economic arguments indicate otherwise, Congress must ask some hard questions before it changes 50-years of national drug policy. Questions like: why has marijuana enforcement failed? Is the Controlled Substances Act of 1970 fundamentally flawed? And if so, what can be done to reform it?
Finding the answers to these questions is not at the top of the political agenda. Attorney General Eric Holder testified recently about federal policies in relation to the newly passed Colorado and Washington initiatives, and Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) promised that the panel would discuss federal policies in light of the country’s patchwork of state marijuana laws. But there has been no concerted push for broad scale reform similar to the activities associated with the Affordable Care and Patient Protection Act of 2009 or the Tax Reform Act of 1986.
Second, legalizing cannabis for profit is simply a bad idea. It flies in the face of social responsibility. The acquisition of profit is driven by self-interest, not the common good. Business decisions are made based on how the outcome will improve the bottom line.
It wouldn’t be long before marijuana companies – likely backed by big tobacco, with its in-place marketing and distribution teams – started aggressive efforts to win consumers. They’ll develop attractive packaging, new and interesting flavors and strains, optimal paper to enhance the smoking effect, and compelling advertising campaigns all designed to get consumers hooked.
There will be messages appealing to long-time pot smokers and new pot smokers. There will be brands for youths, college kids, minorities, the poor, women, and urbanites. Smokers will come to believe they can’t live without their daily “wake & bake” just as they believe they can’t live without their smartphones or iPads. The mass-market consumption of marijuana will bring with it the same negative and ubiquitous effects we’ve seen with alcohol and cigarettes: health problems, driving under the influence, and addiction.
Once the industry gets rolling, those celebrated tax revenues will probably evaporate. Just in the last few days, Colorado State University released a study indicating that the tax revenues expected from the Centennial State’s newly legal industry will not pay for its regulation. Nor will it bring in a windfall of money proponents promised would pay for new school construction and other social benefits.
Even if the tax projections do pan out, as the industry grows in size and influence, lobbyists will exert pressure on politicians to lower taxes and loosen regulations, just as the tobacco industry has done in the past, to maximize profitability. This is the nature of the interplay of business and politics; for the most part, business has the upper hand.
Other advocates point to the potential of a diminished drug trade – growers, particularly Mexican drug gangs, will no longer have as lucrative a demand for their wares, and dealers won’t be engaging in criminal activity because their sales have dried up. But this too doesn’t factor in the flip side of business: where one market opportunity ends, another one begins. Drug lords may see a short-term curtailment of their revenue upon legalization, but they’ll branch out to sell other illegal substances, like some new designer drug or some drug that has been out of vogue.
Legalizing marijuana isn’t a simple, creative way to fill up the government’s depleted bank account or strike it rich in a new industry. It will only add to the cacophony of big businesses jockeying for your dollar and competing for politicians’ favor. The public needs to take a long-pause before it starts clamoring for the legal right to buy marijuana at the local 7-Eleven. Social responsibility dictates caution.
Source: Topix LLC
Author: Jamie P. Chandler and Palmer Gibbs
Date: April 23, 2013