Politics & Other Mistakes: Black markets matter

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There’s much to be said in favor of Maine’s medical marijuana program – and plenty to be said against it. It’s both a sensible method of allowing those with health problems who can benefit from cannabis to obtain it easily and economically – as well as a major scam.

Medical pot is big business in the state. In 2020, it generated over $250 million in sales, making it Maine’s most lucrative agricultural crop. So naturally, government regulators wanted to make it all but impossible for the small growers (euphemistically called “caregivers”), who sell most of the medical weed, to operate.

The state had proposed rules requiring elaborate security systems, track-and-trace devices to make sure none of the plants are diverted to the black market, and an array of other measures that would have significantly increased the price of medical marijuana and would likely have put most of the dealers out of business.

These changes wouldn’t have been subject to review by the Legislature, because the law governing the Office of Marijuana Policy stated that all rule modifications are considered minor, and such mini-alterations aren’t subject to legislative oversight.

The reason is simple: “The aim now is to eliminate the medical program and merge it into the adult-use program,” said state Rep. Lynne Williams, D-Bar Harbor, sponsor of a bill that returned control of the rules to the Legislature. “They’re trying to put the caregivers out of business because adult-use brings in a lot more revenue.”

It’s true the tax on recreational pot is far higher than on the medical variety. But the best month of sales for adult-use generated just $5 million, less than a quarter of the cash from medical pot.

Medical marijuana is also more readily available than cannabis for fun. There are thousands of caregivers all over the state offering product at rates comparable to the black market. Retail weed is available in only a handful of locations due to onerous state and local licensing rules, which force those businesses to charge substantially more.

Why would the state want to mess with a system that seems to be working well enough? Probably because of that previously mentioned scam thing.

Many medical marijuana caregivers don’t just sell their plants to people whose doctors have recommended pot. They also have a thriving side hustle as black marketeers. It’s not all that difficult to grow more weed than you’re legally allowed to and divert the excess to under-the-counter sales. And they already have a ready-made customer base.

Williams, who is a lawyer with about 40 clients in the medical marijuana business, admits there are “problems” with the industry, but insists stricter inspections are all that’s needed to keep everyone on the right side of the law. She warns that more rigorous regulations would likely have unintended consequences.

“As an educated guess, a bunch of (caregivers) would revert to the black market,” she said.

Just in case you happen to be ignorant of the economics of the black market, all sales made there generate exactly zero tax revenue.

Oddly enough, Williams’ bill to halt the changes until the Legislature reviews them was initially received with only lukewarm support among Democrats. But GOP state Sen. Brad Farrin of Norridgewock was instrumental in getting the measure out of committee with a majority ought-to-pass recommendation and rallied his caucus to back the measure. Farrin was concerned that the new rules would limit the availability of the drug for veterans suffering from post-traumatic stress disorder.

“There is an issue of government overreach,” Williams said. “Leave people alone. That’s a strain that goes through (the Republican Party).”

In the closing hours of last week’s legislative session, the bill passed both chambers with veto-proof majorities. Now, Maine needs to find a balance in its marijuana regulation, making it cheap enough and easy enough for consumers to buy, without encouraging the black market.

The best way to do that is to tighten the screws only slightly on the medical-pot segment, leaving it relatively unscathed by state government’s relentless march to regulate everything into oblivion.

There are plenty of more pleasant ways to get oblivious.

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