What Should the Pot Industry Look Like?

Why didn't we just legalize it, and leave it alone?

Gary, my old college buddy from Illinois, is very upset about the rollout of legal cannabis in that state, which he thinks has been badly bungled. He’s not wrong. Gary lives in Rockford, a mid-sized, industrial city in the north central part of the state, just below the Wisconsin border. Pot became legal for recreational use in Illinois on New Year’s Day, and there have been hiccups, as there always are. Within the first couple of days of legal pot, Gary stood in line for hours in front of the one shop near him that was selling recreational weed. Another shop that had secured a license in Rockford wasn’t yet doing business, and it was unclear why. After shivering in the Illinois winter for a couple of hours, he went home and called the guy he’d been buying weed from for a long time. Now considered a “black market” operator, he’s really just a dude who sells small amounts of pot to people he knows. Oh, and because legal pot in Illinois is in short supply, that guy was able to raise his prices for illegal pot.

This wasn’t how Gary thought it would go. According to him, a huge number of the people in line had come down from Wisconsin, which has particularly restrictive pot laws: the only cannabis product that can be legally sold in the Dairy State is CBD, and then only with a prescription. But the lines probably would have been long even if the cheeseheads has stayed home: there were similar problems across the state. Supplies were so low that several dispensaries closed their doors for several days in order to restock. As of last week, Gary still hasn’t been able to make a legal purchase. He told me he tried again and was in line for “at least two hours and they are running out of everything. I think I’m starting to hate corporate weed.”

I’ve been thinking about “corporate weed” even more than usual lately, as I’ve watched what’s been happening in my home state over the past few weeks, and as I’ve written about the crash of the pot business in my adopted state of California. The feature I wrote about the crash for the East Bay Express last week stirred a lot of debate, including a long, fascinating back-and-forth in my Twitter mentions. There’s no law saying that legalizing pot must create a “cannabis industry,” with Silicon Valley financiers providing the capital to “entrepreneurs” to set up farms, manufacturing operations, and shops. During the decades that people were fighting what until just a decade or so ago looked like a lost cause, nobody really had a clear idea on what the market for legal pot might look like.

Now that things are going so badly, some people are wondering: why not just legalize pot and let the market run as it always had, just without the constant threat of being busted? It’s not a bad question, theoretically. A lot of things would be better. But a lot of things would likely be much, much worse.

Many of the pot market’s problems stem directly from taxes and regulation. Both of those things absolutely had to happen for pot to become legal: we regulate business in America, because we must. We test pot for pesticides for the same reason we inspect meat for disease: public safety. We make Flow Kana label its Lime Sherbet pre-rolls for the same reasons we make Kraft Inc. tell us what’s in Cheez Whiz. And we tax pot for the same reason we tax anything: to pay for all that regulation, and, in California at least, to finance drug treatment, education, and public safety.

There was no way California would have legalized pot and allowed it to stay an unregulated free-for-all. The problem with people getting sick from illicit cannabis vape pens shows the kind of thing that would have happened from that. And while most pot growers and sellers working in the underground market before legalization were fine folks who operated ethically, albeit illegally, there was also a lot of bad stuff happening: violence, environmental despoliation, abuse of workers. That stuff all has to be addressed.

Once you start regulating and taxing, you’re talking about a real industry, and real industry needs capital investment, “management techniques,” and all the other stuff that comes along with it, both good and bad. Operating as a real industry means dealing with friction, and when that industry needs close regulation and heavy taxes, as pot does, there’s going to be a lot of friction, and a lot of costs. Which must be paid for. With capital. Which comes from capitalists. There’s just no way around it. It’s very, very difficult to launch and manage a pot business, which is the underlying reason my friend Gary stood in line freezing his ass off and never even got his weed.

There are three things California lawmakers can do this year to help relieve the situation: lower taxes; streamline regulations; and pass laws to prevent gigantic, heartless enterprises from taking over the business. At some point, address the fact that most local governments in the state refuse to issue licenses in the state. Other states should do the same, where they haven’t.

There’s no way to remove the greed factor entirely, but there are ways to tamp down its worst effects. One way would be to look to how the best actors did business before prohibition. As veteran cannabis journalist David Bienenstock put it even before legalization and repeated in my Twitter thread: “cannabis should transform capitalism, not the other way around.”


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