Unintended Consequences: Pot Legalization

In my 20s I learned something important that changed my idealism when it came to how the world would be awesome if all the politicians would listen to me – the law of unintended consequences. I came across an interesting example in a 22 May story Planet Money did about the uneven Marijuana Laws in the USA. One of the biggest arguments in favor of pot legalization is the legalization will reduce the street price which will allow drug lords and gangs to have less money. This allows them to have less power and we all win. The same number of people get baked and Mexican and border cities don’t become war zones. (For the record I am conflicted. I think legalization does imply a sort of endorsement by the government – “this isn’t that bad for you or it’d be illegal”) Turns out this has pretty much worked exactly like that:

Chuck used to sell marijuana in California. But the legalization of medical marijuana in the state meant he was suddenly competing against hundreds of marijuana dispensaries. … The legalization of medical marijuana led to a rush of pot farmers with permits to grow marijuana legally. That in turn led to a supply glut — and plummeting wholesale prices. Some growers haven’t been able to unload all their crops at the price they want on the local, legal market.

So far, so good, right? Well, here comes the law of unintended consequences:

So [Chuck] moved to New York, where marijuana is still 100 percent illegal. Since making the move, he says, he’s quadrupled his income. (For the record: His name isn’t really Chuck.)

He spends pretty much every day dealing what he calls “farm-to-table” marijuana. On a recent afternoon in his dimly lit New York apartment, he was just about to complete a daily ritual: loading about 50 baggies of marijuana, worth a total of about $3,000 into his backpack, before heading out to make deliveries. “We’re helping keep people stoned on a Friday night in New York City,” he said.

What we thought was just California’s business (“If they want to be stoned – let them. Our state isn’t going to allow THAT”) has the unintended consequence of pushing the illegal dealers to states where they can continue to sell without as much competition.

Chuck sells marijuana for about $60 for an eighth of an ounce; in California, it would be anywhere from $30 to $45. With his New York customers, Chuck talks about marijuana like it’s a rare California wine. When he pours out the contents of his backpack to reveal strains with names like Girl Scout Cookies and AK47, his clients are wowed.

Because Chuck is working in an illegal market, his customers have a hard time finding other marijuana retailers. “There’s plenty of weed in New York; there’s just an illusion of scarcity, which is part of what I’m capitalizing on,” he says. “This is a black market business. There’s insufficient information for customers.”

So while legalizing pot in California is having the intended consequence of removing the criminal element, it’s not as if they just give up. After all, they were already risking their freedom to be dealers. They still want to make as money as possible and so California is essentially exporting the criminal element to other states – something I’m sure they resent. The easy solution would be to have one drug policy across the entire USA (it’s similar to why companies lobby the government for federal regulations rather than deal with 50 different ones). Either we need to have pot legal everywhere or nowhere. But don’t be surprised if that leads to other unintentional consequences. To spitball one: Another argument often given for the legalization of pot is that kids do pot specifically because it’s illegal. They’re rebelling against their parents and they can only do that with banned substances. Maybe they just move on to other, more dangerous substances. Also, that argument ignores that fact that people smoke cigarettes and drink alcohol despite those being legal.

It’s a great reminder that things are rarely as simple as they seem when opposing sides are chanting slogans.

3 responses to “Unintended Consequences: Pot Legalization”

  1. I think once Washington and Colorado kinda figure out how to regulate/manage marijuana, it’s going to cause a lot of other states to follow suit. There’s just a lot of questions they’re still working out – and I personally am interested in how a situation would play out with it being legal in the state but still federally illegal.

    I’m torn on this issue because instinctively I’m not for legalization. But at the same time, I don’t have any argument for that stance. And I see a lot of benefits for legalization. So complicated.

  2. […] stats. Now, I’m not one of those who feels that drugs should necessarily be legal although I did discuss some of the issues revolving around pot legalization in a previous post. However, it seems quite arbitrary that we have banned nearly every recreational drug but alcohol […]