When it was first proposed, the concept of marijuana legalization seemed solid enough. Take the world’s most popular illicit substance, establish a taxed and regulated marketplace and watch all of the evil associated with the herb – the criminal activity, the youth consumption –fade away into a footnote of American history. And by all accounts, it was a plan that should have worked. After all, we weren’t dealing with a new idea or anything. It was one that advocates borrowed from a time when alcohol was once prohibited across the United States, causing an uprising in crime, death and a vast array of other debaucherous behavior that could only be tamed in a legal regime.
So rather than reinvent the wheel, the cannabis community forged ahead along the same path. Only, things are not exactly shaking out the same way they did for booze. It could even be said that, at some level, marijuana legalization in its present form is failing.
One of the biggest arguments made by cannabis advocates when trying to sell their spiel to politicians and voters was that legal weed would eliminate the black market. This, they said, would make it more difficult for children to get their hands on pot than in decades past while also generating significant tax revenue for the states. But the underground pot trade hasn’t really gone anywhere. In fact, it is only growing stronger now that criminal organizations have the luxury of being domestically based instead of running distribution from Mexico.
All one needs to do is take a look at California, which legalized the leaf a couple of years ago, to see that this is true.
While the Golden State was predicted to rake in $643 million in pot taxes in the first year, it only collected right around half of that. This is because the black market continues to dominate leaps and bounds over the legal sector. High taxes (the highest in the nation) and licensing issues are said to be the cause of this mess. A recent forecast from BDS Analytics and Arcview Market Research suggests that it could take five years before the legal market begins to outsell the underground.
Furthermore, the black market in legal states is carrying over to areas of prohibition, as well. It is part of the reason that the counterfeit vapes said to be making so many people severely ill (and even killing some) have become so prevalent. Law enforcement agencies all across the country have also been complaining that people trafficking pot in from legal states is making their jobs more difficult.
There is simply no shortage of illicit operations (large and small) trying to capitalize on pot’s forward momentum. It’s a development that continues to benefit the average cannabis consumer, so they’re not really complaining. As I pointed out in a previous column for Forbes, “marijuana legalization breeds a better black market.” It’s a statement that seems to be more accurate with each passing day.
But once again, this is another fail.
Diehard cannabis advocates might argue that all of the black market madness exists because of conflicting federal and state law. There was even a point where I would have been inclined to agree that federal prohibition is the real monster behind all of this ruckus. But I’m not convinced at this juncture, at least not 100 percent. Why? Well, just take a look to the north in Canada, where marijuana has been legal nationwide for the past year. It’s black market pot trade is still way stronger than the legal sector.
As a matter of fact, a recent report from the Associated Press indicates that nearly 43 percent of the country’s pot consumers continue to buy weed from illegal sources. And doing away with the black market is the entire reason that Prime Minister Justin Trudeau set out to legalize weed in the first place.
Yep, that’s right, another massive fail.
Many consumers complain that they simply cannot afford to buy marijuana through legal channels. It’s one of the reasons that some pot firms have started producing budget weed for broke stoners. Meanwhile, the cannabis industry continues to perpetuate the myth that most cannabis users are upscale and have no qualms whatsoever about dropping beaucoup bucks on craft cannabis.
It could even be said that the push to convince the world that pot users are something they are not might be leading the cannabis trade to ruins. While the growing and selling of marijuana was once touted as a great job creator, many leading cannabis firms have been laying off hundreds of employees as of late. Canadian-based producer Hexo is slashing 200 jobs, while CannaTrust is cutting 140. In the United States, Eaze recently announced that it was eliminating 36 positions. The popular Weedmaps is also trimming the fat. The company says it will get rid of 100 employees.
Other cannabis firms have also surfaced to reveal that layoffs are necessary to appease the bottom line. All of this equates to just one thing: the so-called multi-billion dollar cannabis industry just isn’t as fruitful as they’d like for us to believe. Even the federally legal hemp trade is struggling to get off the ground.
And while some market analysis show that legal cannabis is set to reach $66 billion by 2025, that doesn’t automatically mean that the companies that make up the industry will reach profitability.
And now for the biggest fail of all.
Marijuana legalization, at least as far as the United States is concerned, hasn’t even accomplished the modest task of reducing the number of arrests made in this country for pot possession.
Believe it or not, in spite of more states bringing weed into the mainstream, the latest FBI crime data shows that police forces in America still busted more people for pot last year than they did in 2016 and 2017. Well over a half a million people went to jail for marijuana possession during that time.
Considering all of the insanity surrounding the cannabis trade, it’s hard to argue that marijuana legalization is working. It should be, but the scene is just too convoluted. What’s scary is some 2020 presidential candidates, like Bernie Sanders, have proposed ending federal prohibition using the same types of taxed and regulatory models where high taxes and increased spending are all part of the plan. It’s difficult to imagine, though, knowing what we know now, that the American people are ready to support such a high-dollar scheme. Sure, the polls show the majority of the U.S. population supports marijuana legalization. But that doesn’t mean they will buy it legally once it happens.
