Thursday, January 9, 2014

Decriminalize or Legalize?

Toronto Mayor Rob Ford was on “The Sports Junkies” a US-based sports radio show. One of the topics that came up was marijuana legalization. A marijuana user himself, Ford questions why the Conservatives don’t at least try to draw a revenue from it. “They’re very strict when it comes to marijuana and any other drugs,” Ford told the sports radio show, “so it’s not going to happen here.”

Mayor Ford didn’t elaborate whether he supports full-scale legalization or further decriminalization. The first option would allow the government to extract money from taxing the producers and consumers of marijuana. Additionally, legalization could resemble something like the medical “free-market” plan that becomes effective April 1st 2014. Federal and/or provincial governments may assume direct control over who the marijuana producers are, where they grow, how much they produce and what their methods are (i.e. factory-farming with pesticides or small-scale organic*). Uruguay has already taken this route. This is not a free market and would leave Canadians with fewer options than we have now in the decriminalized market.
The current market for marijuana is much more free than Uruguay’s or Canada’s new medicinal scheme. Despite its regulation as a Controlled Substance, the market for bud is all over the country. Although you can’t buy it legally, no matter where you are in Canada, there is somebody selling it. There are no licensing requirements for growers or grow-op facilities. Yet no one has died from a bad batch. There are no government restrictions on what strand of marijuana to grow or regulations on production processes, and because of this costs and prices fall as better bud reaches the market sooner. In this current market there are no subsidies. Subsidies for marijuana producers would reward loss and promote wastefulness. Without government subsidies, marijuana producers survive by serving consumer interests, not the whims of state bureaucrats. There is certainly no supply-management scheme, yet prices and production coordinate with consumer demands.
Perhaps if the cops weren’t so busy trying to suppress the market, accreditation agencies would spring up from voluntary exchange. If marijuana was decriminalized further so growers were free from prosecution and fines, then we could reach a state where the number of marijuana producers increases, or at least remains the same. Health Canada’s “free market” program limits the number of producers. Legalization should not follow this model.
But will it? It seems as if lately admitting to marijuana use is the cool thing to do among politicians. Liberal Leader Justin Trudeau has made marijuana legalization a top priority so far in his campaign. In contrast, Prime Minister Stephen Harper is addressing other issues. Simply stating that his government is “looking carefully” at the Canadian Association of Chiefs of Police proposal to ticket people with 30 grams or less. They argue that the costs associated with prosecuting people are expensive and a criminal record places barriers on future travel, employment and citizenship.

 Governments will make money off of marijuana whether they fine people or tax them. If legalization is followed by hefty regulation, as it most likely will be, Canadians could be left with a market that is actually worse than the one we have now. While the marijuana industry has a criminal element to it, the economics keep prices low and competition high. Marijuana consumers have access to one of the freest markets in the country in spite of its illegality. Legalizing the market subjects it to Ottawa’s regulatory regime. While pot activists may hoop and holler about the current laws, perhaps it’s best to lower that time preference a bit. Marijuana’s slow ascent out of the black market via people’s tolerance and unenforced laws may be better than a premature government-decreed legalization.

*Not saying one is superior to the other, just pointing out that in a free market, consumers ultimately decide the structure of production.

Also available at Mises Canada

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