Marijuana legalization isn’t working for a simple reason: the new legal system doesn’t come with enforcement.
That’s the paradox of legalization—it requires a new drug war of sorts.
When you’re transitioning from a black market to a legal market, you need to do two things. You need to develop a clear, coherent, easily regulated and taxed system for the legal market. And you have to crack down on those businesses that remain in the black market.
California is failing on both ends. While cities are charging money for licenses from legal sellers and establishing policies, they are failing to enforce – and shut down—the black market. The persistence of the black market means that its purveyors are low-cost competitors to the legal market.
This leaves newly legal sellers to struggle with the costs of legalization and unfairly low-priced competition at the same time . And they’re not responding wisely, as SB 311 makes clear.
SB 311 is backed by distributors and other parts of the cannabis industry for a number of reasons, but their real game is to reduce the costs of being legal. The legislation is complicated, but it essentially adds to the problems of the new messy regulated system. It makes things more complicated, by establishing a new workaround that allows distributors of cannabis products to sell their products to other distributors who handle transportation or logistics.
There may be reasons for that, but the details of the legislation would also loosen testing procedures.
That’s not good. Testing is costly, but testing also is one of those things a proper legal market needs. And testing needs to be at one clear controlled point that is closest to the point where cannabis is sold to the public. Instead, SB 311 would allow testing to be done earlier in the distribution chain, and then provide no limits on where that tested product can go or how long it takes to get to market. The tested product could sit around for months or longer and travel for hundreds of miles, without being tested again.
That’s madness. California cannabis needs more controlled testing, not less. Two recent recalls of cannabis products are a reminder of why this is essential. If there’s no guarantee of quality and safety in the legal market, why shouldn’t customers go with the cheaper black market?
The unpopular reality is that California needs a tough system with a powerful distribution segment at its center. Yes, it needs a cartel—a legal one. That distribution segment must be big enough to be able to raise the capital to have a reliable testing and taxation regime and to move product. SB 311shows that the current cannabis distribution system is too weak, too diverse, and too undercapitalized.
A cannabis cartel also should be big enough to be a force for countering the black market—both by lobbying for more law enforcement, and having the scale and knowledge and capital to keep tabs on those in the black market.
It also would help if state and local law enforcement agencies would devote more resources to shutting down black market businesses.