Politics & Other Mistakes: Dope economics

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Maine has finally found a way to eliminate the black market in marijuana. It’s made legal pot so cheap that bootleggers can’t compete.

On the downside, it’s also made legal pot so cheap that the companies that grow it and sell it can’t turn a profit. A lot of them have already gone out of business.

The problem is particularly acute in the medical marijuana segment of the industry, where nearly 1,350 of these “caregivers” have called it quits. That leaves the state with less than 2,100 places to purchase medical cannabis.

Al Diamon

How dire is that situation? There are currently about 2,160 plumbers in Maine, but at last count, none of them was available any time soon. The state sports 2,960 licensed electricians, all of whom are too busy to deal with your wiring problem. There are roughly 2,900 state, county and local cops, but there’s never one around when you need it. You have a better chance of getting an appointment with a medical specialist, of which Maine has just over 2,400, than somebody who is permitted to dispense a joint or two to ease the pain of whatever ails you.

The problem is too much grass. The state has licensed so many grow facilities that it’s created a glut on the retail market. The prices in adult-use pot shops have plummeted, making it cheaper for dopers to buy there than from medical outlets, which often grow their own.

“The oversupply has led to massive drops in wholesale prices,” John Hudak, director of the state Office of Cannabis Policy, told the Portland Press Herald, “making it difficult for registrants to endure mounting energy costs and other market decisions.”

The cause of this (sorta) crisis is both too much regulation and not enough of it. Let’s consider those problems in order.

For several years, the cannabis office has attempted, mostly unsuccessfully, to impose new rules on the medical market. This near-constant barrage of attempted restrictions has frustrated many caregivers to the point where they’ve quit the business. Or, at least, the legal part of the business, since it’s common knowledge that a lot of med pot proprietors have also been dealing in the black market. Additional layers of oversight would have made that side hustle even riskier.

Meanwhile, the state keeps licensing new grow facilities. There are about 90 in operation currently, with another 60 going through the approval process. They’re already producing more ganja than even the growing market can absorb, forcing down prices to the point where neither legal medical caregivers nor their illegal alter egos can turn a profit. As for legitimate recreational purveyors, they’ve seen prices plummet below what they need to break even.

To address these issues, the Legislature is considering a bill to halt licensing of new cultivation facilities until the market stabilizes. It’s also considering a measure to limit the size of any additional grow sites. These are both complicated pieces of legislation that, given the state’s history of mismanaging marijuana, could have all sorts of unintended consequences.

Such as reviving the black market.

There are significantly more lawyers in Maine (2,800) than medical pot caregivers, which probably explains why ill-considered laws are such an attractive option. There aren’t any official figures on the number of economists in the state, but it can be safely assumed there aren’t all that many of them. If there were more, perhaps legislators would get the word that artificially limiting product availability might jack up prices, but it would also make it easier for grow-your-own illegal dealers to once again undercut those prices.

As is often the case when government meddles in matters it neither understands nor appreciates, there might just be a simpler way to assure customers of readily available cannabis at a reasonable price:

Leave the free marketplace alone to sort out the supply-and-demand thing on its own. If that costs the state a few more caregivers and bankrupts the occasional pot shop, it’ll hardly lead to a widespread economic debacle.

Those who lose their livelihoods as a result can take solace in knowing Maine always needs more plumbers and electricians.

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