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  • Writer's pictureEric

Legalization a year later, not much has changed.

A year ago today Michigan legalized marihuana for recreational use. We celebrated. A wave of sanity seemed to have emerged, long dormant since 1937. A year later, economic nerds might characterize our reaction a year ago a classic example of "irrational exuberance." The year that has happened since demonstrates why it is vital to have an experienced marihuana attorney guide you through the licensing process.

Legalization was a huge step but nowhere near the last. Michigan voters legalized marihuana with proposal one but that fact has done very little to change state attitudes toward cannabis. Many local officials simply opted out, the state did not start accepting recreational marihuana until this past Friday.

Estimates on the cannabis industry range from the billions to the bazillions* but unfortunately the government has not yet figured out their place. The actions of local officials are frustrating but they are only one part of the problem. These issues are not isolated to the United States. Motley Fool reports industry layoffs up north:

"In Canada, there are a variety of regulatory and procedural issues pressuring the marijuana industry.
Regulatory agency Health Canada, for instance, has been unable to keep up with an enormous backlog of cultivation and sales license applications. Even though changes have been made to the growing license-application process, Health Canada isn't going to work its way through this backlog anytime soon. This has led to exceptionally long wait times to gain clearance to grow or sell cannabis, and it's driven a lot of consumers to illicit producers."

A common theme through all these stories is the continued existence and ubiquity of marihuana available on the black market.

Canadian pot companies are also dealing with a practically insurmountable pricing gap between legal weed and black market marijuana. In the third quarter, Statistics Canada reported that black market marijuana was 45% cheaper on a per-gram basis than legal pot. This is what coerced HEXO to recently announce the launch of Original Stash, a value brand designed to compete with black market marijuana on price. Though this line could be successful on a volume basis, it could cripple HEXO's margins.

60 Minutes recently found similar issues with the black market in California.

When a black market exists, the government has failed to understand the wants and needs of its citizens. This is true no matter the product. Steve Jobs warned Harper Collins that if they did not sell eBooks to customers, "[T]hey will steal them." People who want something bad enough will break the law to get it, simply because the government has not offered them a legal path.

This reminds me of my undergrad and John Locke's theory of "consent" to government. Michigan residents voted to legalize but cannabis has been widely available on the black market for most of the 20th century and all of the 21st. If we do not offer them a legal path they will take their chances on the black market. California taxes on weed have been reported at 45% by some news outlets. If pushed to the black market, that percentage drops to zero. Seems like we need a better solution in some states.

Local officials who vote to opt out need to understand that recreational marihuana will be in their communities no matter how they vote. The only question for local officials is whether people will consume cannabis in way that benefits business in your local community or not.

“Nothing so needs reforming as other people's habits. Fanatics will never learn that, though it be written in letters of gold across the sky. It is the prohibition that makes anything precious” - Mark Twain

A year after legalization, we should still feel good about crossing that line. But it is not the finish line. Not even close.

*Not an actual number, but an exaggeration by the writer for effect.

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