Marijuana Legalization is a Process and We Haven't Reached the Midway Point

May 11, 2017

Jonathan Caulkins, PhD
H. Guyford Stever University Professor of Operations Research and Public Policy
Carnegie Mellon University, Heinz College

On August 28, 2017, the National Council for Behavioral Health, Advocates for Human Potential (AHP) and the ATTC Network are partnering to host the  2017 National Cannabis Summit in Denver: An objective national forum for changing public policy, public health, treatment and research. In today's blog post, drug policy researcher and National Cannabis Summit plenary speaker Jon Caulkins muses on how marijuana legalization might evolve over the next 25 years. 

Colorado and Washington State legalized large-scale commercial production and marketing of cannabis for non-medical use in November, 2012. Almost immediately reporters started asking: “How has legalization turned out?”

I try to answer helpfully. Some results were predictable, such as declining prices. Others were less anticipated and so are truly news. My top three might include the proliferation of extract-based products, consumption increases coming largely from increased intensity of use rather than increased prevalence, and industry lobbyists replacing do-gooders as the drivers of liberalization.

Yet such comments, though true, are woefully incomplete.

A better answer would be, “We won’t know until 25 years after legalization and, by the way, we haven’t even fully started it yet.” Here, as I’m permitted a blog post not just a sound bite, I’ll try to explain why I say that.

One obvious point is that all of the so-called “legal” cannabis activity is still fully prohibited by the federal Controlled Substances Act (CSA). It is only state-legal, not legal. That matters. Here are a few "for instances."

Many state regulations – including marketing restrictions – will become unconstitutional violations of interstate commerce and/or commercial free speech as soon as marijuana is removed from the CSA. (The 21st Amendment that repealed prohibition grants states special regulatory powers over alcohol, but a similar constitutional provision concerning cannabis is not likely.)

Cannabis clearly meets the definition of a drug under the Federal Food, Drug, and Cosmetic Act (FDCA), so unless Congress grants cannabis an explicit exception, it will come under the FDCA as soon as it is removed from the CSA. Many cannabis industry actions will then immediately be banned by the FDCA.

Traditional production areas and methods may go bankrupt. The national supply of cannabis can be produced on the equivalent of 10 typical Midwest farms, and a year’s supply for a heavy user weighs less than one 22 ounce can of beer. So production will concentrate in whatever town or county offers the lowest production costs and most lenient regulations. Or, production may move off shore, especially for labor intensive flower products.

Legalization-to-date has already changed the industry. A decade ago, many producers tended 99 plants to stay under limits that triggered tougher federal sentences. Now growing 10,000 plants is common. But that only scratches the surface. Here are some predictions.

15 years ago grow operations’ key resource was a master grower. 15 years hence production will be commoditized and the key skills will be marketing and brand management.

Back then, marijuana was so expensive people claimed it was the nation’s leading cash crop. 15 years from now marijuana will be so cheap that convenience stores will use it as a loss leader that brings people in to buy more profitable items, like soda pop and gasoline.

Today public health leaders think using marijuana together with alcohol increases the risk for impaired driving. Tomorrow leaders of multinational corporations will think selling marijuana together with alcohol – and tobacco – increases the opportunity for enhanced profits.

One hundred and forty years ago the invention of machines for rolling tobacco cigarettes radically reduced production costs and prices. That triggered consolidation from regional companies to multinationals, and shifted tobacco consumption from cigars to cigarettes and from men to also women. Now the spread of legalization is radically reducing production costs and prices, rapidly increasing firm size, shifting the favored product forms, and shifting consumption from weekend to daily patterns of use.

I do not expect marijuana legalization to match the public health catastrophe wrought by the tobacco industry. But I expect the dynamic energy of the free market to exploit fully the profit potential of this new (to private industry) dependence-inducing intoxicant, and innovation will carry the markets and consumption to places we would have a hard time imagining today.

Some people used to think legalization meant the same old same old, just without the arrests. We’re far enough into legalization to realize how na├»ve those beliefs were, but we’re not yet far enough in to have much of an inkling of where this movement will take us.

My best guess is that 25 years from now we will rue deeply unleashing those free market forces and wish that we had restricted legal supply to non-profit organizations chartered to operate in the public interest. My greatest comfort is knowing that many predictions of distant futures often fall far from the mark, and so I dearly hope that time proves these predictions of mine to be wrong.

Jon Caulkins is the author, with Angela Hawken, Beau Kilmer, and Mark Kleiman, of Marijuana Legalization: What Everyone Needs to Know.

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