The U.S.’s War on Drugs is now universally regarded as an abysmal failure that has caused enormous amounts of harm, while doing nothing to reduce the use of illegal drugs.
The movement to legalize cannabis is now global. The United Nations recently released a major policy paper calling for the decriminalization of all drugs (with respect to “simple possession”).
Cannabis is fully legal in California. Yet anti-cannabis drug enforcement is actually increasing in the state.
The use of safe, non-toxic/non-addictive cannabis is big in California. Unfortunately, most of this business continues to go to the cannabis black market. Because of this, there is a new War on Drugs in California, a quest to “stamp out the black market”.
California authorities have tripled the number of raids on unlicensed cannabis shops in the last year and seized $30 million in pot products, but legal industry leaders say enforcement is still inadequate to break the dominance of the black market in the state.
Let’s pretend that the United States is a free enterprise, capitalist economy. It’s getting harder and harder to continue to pretend this – as a smaller and smaller handful of gigantic corporations control everything. But let’s pretend.
California’s cannabis industry is divided between the legal industry and the cannabis black market. Right now, the black market holds a 60% market share, because of the dismal job done by the state in legalizing cannabis.
Only about 10% of California’s counties even allow full cannabis commerce. And even where it is legal, cannabis is over-regulated and over-taxed.
In contrast, the black market can operate everywhere. It pays no taxes. It is crippled by no regulations.
Let’s make this scenario more generic, to fully illustrate the stupidity of California (and the vast majority of U.S. state governments). Let’s call the legal industry “Company A”. And we’ll call the cannabis black market “Company B”.
- High taxes
- Extreme regulation
- At least partially frozen out of 90% of state counties
- No taxes
- No regulation
- Operates everywhere
Question: how do we enable Company A to take market share from Company B?
Here is the capitalist/free enterprise answer.
We slash taxes for Company A. We streamline regulations as much as possible. We allow these legal businesses to operate everywhere in the state.
And then we allow the economies of scale that come with a vibrant, growing legal industry to do the rest. That’s called “free enterprise”.
This isn’t a fantasy. It’s already a reality in one state: Colorado.
Colorado is winning the battle against the cannabis black market. And it’s doing so the Free Enterprise way. When Colorado realized (early on) that the state was losing the battle against the cannabis black market, it did not regress to “War on Drugs” thinking.
It reduced cannabis taxation. It made the state cannabis-friendly for doing business. A Seed Investor article laid out this success.
The result? Colorado now has a $1 billion per year legal cannabis industry, in a state with a population of less than 6 million people. It’s reward? The state has now also harvested more than $1 billion in cannabis taxes and fees. Its black market is less than half the size of California’s.
California’s “plan” (if we can call it that) is to do nothing to make the state more cannabis-friendly for legal business. But it’s going to “stamp out” the black market with heavy-handed law enforcement.
The War on Drugs. Chapter 2.
Einstein is famously quoted as saying that the “definition of insanity” is to continue to perform the same action – but expect a different result.
The U.S. national War on Drugs is one of the greatest law enforcement failures in History. It was even more self-destructive and counter-productive than the original “War on Drugs”: U.S. alcohol Prohibition.
What is California’s solution to its cannabis black market problem? Another War on Drugs.
It’s not mere idiocy. It’s bone fide insanity. And like the first War on Drugs and the second War on Drugs, it’s doomed to complete failure.