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Legal Weed Isn't The Boon Small Businesses Thought It Would Be

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Lester Black has this article at FiveThirtyEight with the above title:

But here's a word of warning for those looking to dive head-first into these brand-new legal weed markets: The data behind the first four years of legal pot sales, with drops in retail prices and an increase in well-funded cannabis growing operations, shows a market that increasingly favors big businesses with deep pockets. As legal weed keeps expanding, pot prices are likely to continue to decline, making the odds of running a profitable small pot farm even longer.

Washington offers a cautionary tale for would-be pot producers. The state's marijuana market, for which detailed information is available to the public, has faced consistent declines in prices, production consolidated in larger farms and a competitive marketplace that has forced cannabis processors to shell out for sophisticated technology to create brand new ways to get high.
Hmm.  How to keep the pot industry safe for small business?  How about this?  Maintain federal prohibition, repeal the legislative restriction on enforcement efforts, but maintain a "small potatoes" threshold for enforcement as a matter of policy.  Then when a pot operation gets too large, the feds swoop in and forfeit its assets.  Small businesses keep the business, users have nothing to worry about, the price gets a boost to provide at least some discouragement of consumption, and, most importantly, no weed business gets large enough to engage in large-scale marketing efforts.
Update

We knew that our secret lifestyle was unique and that it was also illegal and scary at times. We had to live a sort of undercover existence that our grandparents would cringe at if they knew their grandchildren lived barefoot and dirty, homeschooled and unruly in the hills, while our parents grew, trimmed and sold cannabis.

We never imagined that the biggest threat to our lifestyle could be legalization. But the new regulations allow unlimited growing licenses, which means venture capitalists will be able to create mega-cannabis corporations. The market is already flooded with cannabis from neighboring states. We're about to see a tsunami hit California.

3 Comments

Interesting suggestion, Kent, but I wonder if you would you favor this prohibition/small producer approach for any now-legal industry that makes a potentially dangerous product? Should the feds prohibit large scale alcohol production but let stills and home-made brewers thrive in a gray market? How about prohibiting tobacco or trans fat products made on a mass scale? Gambling is another vice that is dominated by large players, but those large players still produce a lot of jobs and provide a good/dependable product for their customers.

I get your concern with "Big Pot" --- gosh knows lots of folks on the left would like to see the feds take down Big Oil and Big Pharma and Big Banks and lots of other players in every market that seems to "increasingly favor big businesses with deep pockets". But there are also obvious problems with "Small Pot" as well, as suggested by what is afoot in DC: "How Congress unwittingly turned the nation's capital into the Wild West of marijuana" http://www.latimes.com/politics/la-na-marijuana-dc-20171229-story.html.

In the end, as I have said in some other threads here, these are dynamic and challenging issues that can turn often on whether and how you respect/trust the decisions made by individuals/markets and whether and how you respect/trust the decisions made federal government agents/regulators. I tend to err on the individuals/markets side of the ledger, but in this particular setting erring on this side might over time prove to be erring in ways harmful to broader society.

I would not shed any tears for Big Tobacco if it disappeared from the face of the earth. That said, there is a huge difference between maintaining prohibition on a product that has been illegal for as long as nearly all living people can remember and banning a now-legal product in which people have justifiably made investments.

For this reason, I do not think that any proposal regarding presently illegal substances requires justification by comparison to treatment of presently legal ones.

Prof. Berman:"...I wonder if you would you favor this prohibition/small producer approach for any now-legal industry that makes a potentially dangerous product?

~ After smoking an entire carton of cigarettes, has anyone found the need to repeatedly pound a person’s head into the sidewalk, or to jump off a balcony,
or to kill someone, &tc?

~ http://www.businessinsider.com/trayvon-martins-marijuana-use-2013-7;
~
https://www.washingtonpost.com/news/to-your-health/wp/2015/07/28/the-terrifying-timeline-of-how-a-colorado-teen-ate-a-pot-cookie-and-then-jumped-to-his-death/?utm_term=.ef4487fc7192;

~ https://www.usatoday.com/story/news/nation-now/2017/04/07/husband-killed-wife-pot-candy/100190066/ ;
~ http://www.nydailynews.com/news/national/n-woman-high-marijuana-crash-killed-grandkids-article-1.3403165
~ ~
http://www.mcclatchydc.com/news/politics-government/article24749413.html

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