I’ve been following the legal marijuana news out of Colorado and Washington for a few months now. I read an article about establishing the legal economy for the drug and was interested to see if some of my thoughts on the issue were correct.
You may remember that in the past I have suggested that the illegal markets for marijuana wouldn’t just disappear the day the drug became legal. In fact, I pointed to post prohibition America where moonshining and the organized criminal element continued their nefarious ways. Those with an established alcohol making capabilities stuck around to provide a cheaper product for quite a while – it was untaxed and unregulated and therefore cheaper. The distributors of old found new things to smuggle and new criminal enterprises to pursue. Some argue that prohibition was just a big boon for recruiting and training future organized crime syndicates.
This brings me to the firs cartel myth. Quick side bar here…
When people say “the cartel” I always ask the same question, “which one?” People forget that Mexico has more than one cartel and that as you travel south from there you run into even more cartels. The America idea of a single “cartel” just shows that most of us aren’t really in tune to what’s going on.
The first myth is that legalization of marijuana will cripple the cartels and they will go away. Granted, legal weed only exists in a couple of places and it’s only a couple of weeks old so we can’t expect to see this prediction completely played out yet. However, as we learn more about how Colorado is doing, the more we see that there’s room in the market for distributors of illegal marijuana.
First of all, the supply of legal weed just isn’t going to keep up with the demand. Regulations on how much you can grow to sell make it impossible to keep the market stocked. Restrictions on growers and the time it takes to grow a new batch of marijuana creates opportunities for the illegal market to survive.
The biggest opportunity for the cartel is the price of legal marijuana. A simple fact of economics tells us that high demand mixed with a limited supply drive prices up. The first round of legal weed saw prices start to rise as suppliers ran out of it. And by “rise” I mean double within a day or two. News from Colorado is that most shops are out of the recreational marijuana for a few months until the next batch can be grown and processed. (Do note that medical marijuana is a separate and can not be sold on the recreational market – all those people with glaucoma can not be subject to a market that includes greedy healthy people with lots of cash.)
The general thought is that when the Colorado legal dispensaries come back to the market in a few months with the yields of the latest crop, the prices are going to be very high. Never underestimate human instinct and its love of profits. Owners of legal pot stores stopped caring about access to legal weed for all citizens at about the time they noticed the growing pile of cash in their bank account. They will push the market as far as it will go and that’s likely at four or five times the street value of illegal weed. Lots of marijuana users will be priced out of the legal market. They will go back to their illegal sources of weed and then safely smoke it in the privacy of their own home.
The under 21 crowd doesn’t have access to legal weed in Colorado and likely won’t anywhere else in the nation. They make up a huge portion of the illegal weed buyer’s market. They also don’t mind smoking the crap that is provided by the cartels.
The bottom line is that legalization of marijuana isn’t going to be the end of the cartels. Most people forget that the cartels are vast criminal enterprises who count marijuana smuggling as just one of their many revenue streams. Any honest federal law enforcement officer will tell you that the cartels will throw loads and loads of weed at the feds in order to keep them off of their real money makers – cocaine and heroin. As one DEA agent put it to me one, “A truck load of pot is worth about a gym bag of cocaine. That truck load of pot looks better in pictures and on TV, though.”
The second myth went viral this week when FoxNews reported that legal pot shops could be targeted by cartels. This erroneous claim runs on the other side of the sunny, but also erroneous, outlook of pot advocates who claimed cartels would go away (as explained above).
Cartels have had competition in the illegal weed market from day one. You don’t really hear of the cartel engaging in turf battles with the home growers in the United States like they do in Mexico. That’s because in America there’s a downside to acting like a murderous African dictator in the course of carrying out your daily business. In Mexico – they seem to love that type of business model. Cartels know how they are expected to behave north of the border. Knocking over legal weed stores falls outside of that north of the border protocol.
As a conservative I have to sometimes shake my head in disbelief when conservative leaning news outlets buy into this propaganda. If the cartels were worried about competition there would be a ton of people missing in northern California… or hanging from bridges with witty little warnings penned to their flesh. The fact is – they let the street level sellers divide up turf and that’s pretty well documented. Inventing some scenario where they infiltrate the highly regulated and monitored legal weed market is not only irresponsible; it stinks of a comically bad Hollywood shoot-em up plot line.
I think the bottom line on legalization is that a bunch of upper middle class white guys no longer have to stress out about finding and buying weed. My generation has a lot of people who want to have a joint after work instead of a cocktail. We’re in a position of power now. This dream, if you will, has become a reality… in certain states. We also like to ride bikes, and as you can see, we’re taking over the streets.
I guess I should just apologize now for my entire generation. I’m sorry we’re a bunch of entitled nitwits who lead with lies, follow with shaky facts and finish with temper tantrums to get our way. You people picked the wrong time to stop spanking kids.