Last week, we discussed some of the new opportunities presented by a legalized cannabis industry in New York. Obviously, full recreational legalization is still some time away, but the momentum for it is growing. This series is designed to touch on some of the main points both for and against it. This week we’ll tackle the real world challenges that legalization presents, which are ignored or glossed over by advocates for legalization. As voters and elected officials we shouldn’t ignore the costs, which may even outweigh the many benefits we discussed last week.
In Part 1 of the series we discussed some exciting opportunities associated with a regulated marijuana industry such as, compelling medical uses, increased tax revenue, investments in infrastructure and communities, elimination of minor marijuana possession crimes and the potential for hundreds of thousands of new jobs. If you want to read the whole article, it’s available on my website at www.andrewallace.com.
In this column we need to spend a bit of time looking at the unintended costs and consequences of legalized marijuana. There are a number of issues, which need to be carefully considered and planned out in advance before simply opening the doors to full legalization.
Medical Concerns. We discussed some of the sketchy evidence last week from users who have seen marijuana relieve severe symptoms, even replacing harder drugs (like opioids) with no loss of effectiveness. There are some vocal opponents including the American Society of Addictive Medicine, American Cancer Society and the American Academy of Pediatrics to name a few, which seem to disagree. Some scientific experts point to findings of increased risk of psychosis, depression and memory loss associated with chronic use of marijuana. A number of critics vigorously oppose smoking and inhalation as a delivery method citing the same problems with smoking tobacco, e.g., reduced lung function, secondhand smoke, chronic bronchitis, etc.
Another concern about legalization is that it encourages users to experiment with harder drugs to achieve a similar effect. Studies point to some disturbing correlations between marijuana use and the use of other drugs, such as, tobacco, alcohol, cocaine, and methamphetamine. Some reports show that people addicted to marijuana are three times more likely to be addicted to heroin. Legalization will increase availability and could magnify these negative correlations dramatically.
There is a growing concern, especially among children and elderly groups, which are unfamiliar with appropriate dosage limits, strengths of differing strains, and any historical experience with the drug itself. Increasing availability can only increase the amount of accidental overdoses and serious health effects in those groups. Obviously, this is a real concern.
Governmental Challenges. Any new regulatory system involves a new enforcement system. Putting a psychoactive drug in the hands of millions of people will create at first, a huge strain on government resources including police, first responders, hospitals, treatment centers and school personnel. One key area of concern is impaired driving, with some opponents of legalization pointing to a compounding effect of the already tragic DUI problem. Not only will we be adding new impaired drivers to the roads, we may be making those who are already impaired by alcohol even worse. Right now there’s no good roadside test for marijuana impairment, so the tendency will clearly be for over-enforcement and “better safe than sorry” policing.
Assuming we can sort out the enforcement problem, a larger concern is the sheer mismanagement of resources that will come with all of this new tax revenue. Years ago (and still advertised today), citizens were sold on lotteries as a way to subsidize education. This voluntary “tax” on those who could least afford it could be justified because the money was “ear-marked” for schools. That myth was quickly debunked as the lottery money was dumped into the state’s general fund and some of it may or may not have ever made its way to schools. Can you honestly say the schools are in better shape today with all of those billions in lottery money “invested” in them? I don’t think so. The same waste played out in the tobacco settlements. What was sold as a “healthcare” fund quickly turned into a general deposit for politicians to dole out pork projects in their districts. The amount of tax revenue that could be generated by legal marijuana will dwarf those two examples and likely will amplify the waste.
Then, there are other sticky issues for governments to navigate like banking rules. It is illegal to deposit money generated from marijuana in banks that are insured by the FDIC. Also, you cannot pay for marijuana with a Visa or MasterCard. Technically, for the United States to legalize marijuana at the federal level it has to fix some of these problems first. It would be violating at least three international treaties and workplace rules. Legalization is not a finish line; it’s a starting gate. There’s so much more to do after deciding to legalize it and, if done wrong, it could wind up costing us more than we ever recoup from increased tax revenue.
Commercial Limitations. Issues of legal use of marijuana in the workplace will become overwhelming for employers very quickly. They have already cited numerous problems in states that have legalized recreational use, including increased workplace accidents, increased absenteeism and reduced productivity. Employers who do business with the federal government, even indirectly, are still bound by the Drug-Free Workplace Act of 1988, which requires federal contractors and subcontractors to utilize drug-free employees on federal contracts. Now, if it comes down to keeping an employee who uses marijuana recreationally or keeping a lucrative government contract, employers will undoubtedly choose the latter. The proposed job gains under legalization then may be more hypothetical than real.
Some other commercial challenges will also include competition from unregulated synthetic marijuana and home-grown producers. Legalization only works if all of the participants are playing by the same rules and these kinds of unregulated producers will undermine the overall effectiveness of any legislation. Moreover, the disappearance of the Black Market is greatly overstated. Given the massive taxes being levied on legal producers, illegal producers will have a huge advantage in underpricing the legal competition. In the same way that massive tax increases on tobacco in the 1990s revived the Mafia by providing a huge new line of business for bootlegged cigarettes. So will a heavily-taxed legal marijuana industry. Faking a tax stamp is not a difficult technical challenge for people already willing to break the law.
Finally, the widespread availability of legal marijuana combined with efficient delivery methods, particularly those powered by social media platforms, will make keeping it out of the hands of children almost impossible. Schools are incapable of policing illegal edibles and vaping of marijuana in schools with test scores and graduation rates already in peril. Commercial actors are the least capable of stopping this terrible result and indeed, are actively incentivized to encourage it. We may cripple at least one generation of kids while we sort out how best to enforce a legalized product and keep it out of the wrong hands. That cost, itself, may be too high to bear.
As you can see, this debate is not a simple one, and there are real costs to offset the benefits. If anything, the costs may quickly outweigh any good that can come from legalization.
We’ll take up the task of trying to pull it all together in the final part of the series. In that column, I’ll give you my personal position, as well.
If you have thoughts or comments about this issue or any other, reach out to me at [email protected]
