**** Warning: Too long. Too damn long. ****
Even if Washingtonians pass I-502, it could still die (ironically enough) because of another drug liberalization effort. I’m talking about medical marijuana.
You might have heard that purveyors of medical marijuana aren’t thrilled about I-502. And that’s understandable. If the initiative is approved, and everything goes according to sponsors’ plans, that would put a huge dent in the medical marijuana business.
Think of booze as an analogy. If there were such a thing as prescription booze, would anyone buy it?
–Well, yes, actually. If booze at the pharmacy cost only half as much as the same booze purchased from a liquor store, then you might see quite a few people turning up at the pharmacy with prescriptions in hand. And that could be just the type of thing we see with medical marijuana prices undercutting retail marijuana. So rather than retail pot putting medical put out of business, I think the reverse will be true, and I’ll explain why.
Reading over the text of I-502, I couldn’t find anything that speaks to a change in the law for medical mj dispensaries and how they get their supply. Therefore, if the iniative passes, what we will have are two marijuana price structures and these could turn out to be quite different.
First, there will be the retail marijuana price, which will be controlled by a combination of three things: (a) the cost of production and distribution (including all licensing fees and taxes on the seller), (b) a hefty 25% sales tax on the buyer, and (c) market forces.
Next, we will have the medical marijuana price structure, which is subject to different taxes and licensing fees, different costs of production, and so on. My estimate would be that, whatever the retail mj price turns out to be, the medical mj price will be lower.
Oops. Did I say there would be two price structures? In fact, there will be three. The third one will be the black market price. And yes, there will still be a black market in marijuana, even if that black market does not involve organized crime. Consider that under I-502’s provisions, it will still be illegal to grow your own non-medical dope, as many Washingtonians do now. If I-502 passes, do you really think that everyone who’s growing their own now (and selling some on the side) will dump their grow gear and head down to the nearest legal pot shop so they can pay two or three times as much for the same product? Of course not. And why would they? Where’s the incentive to go legit or quit? Does I-502 increase penalties for illegal producers? Does it increase enforcement?
–No it doesn’t. So what will probably happen if I-502 passes is that the black market will stick around in some form for at least as long as it takes the legal market to become competitive on price. Which could be never. Some users might switch from patronizing illegal dealers to getting their pot from medical dispensaries if that turns out to be cheaper, but if these users don’t have a legitimate medical need, that would still be technically illegal. And, more importantly, it would undermine the whole justification for I-502, which was supposed to eliminate by making everything legal. But again: Why would anyone buy an expensive, highly taxed product from a state-controlled store when they could get it cheaper or easier somewhere else?*
So don’t expect to see legal pot shops springing up all over as a result of I-502 passing. And don’t expect the black market to disappear overnight, either, if it disappears at all. This new law has the potential to be a huge quagmire, and to set the struggle for nationwide legalization back for years.
If it passes and doesn’t work out as planned, look for a repeal effort within a couple of years.
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*I’m basically making the kootchman’s argument here. Except that where he questions taxing mj for ideological reasons, I question it for practical ones.
