Even as they embarked on a deliberate experiment in legalizing marijuana for recreational use, the states taking the plunge unintentionally (we can only hope) initiated a second experiment. In dropping overt bans on the stuff while appeasing critics with reams of regulation, could they so bind the marijuana trade in red tape and taxes that they retained all the flaws of prohibition and gained few of the advantages of legalized status?
The answer was very quickly a big “yup.” But officials may just be learning from the experience and fixing their early mistakes. A little.
Last summer I wrote that federal financial restrictions, as well as restrictive state rules and high taxes, had conspired to keep the marijuana black market alive and profitable in Alaska, Colorado, Oregon, Washington, and Washington, D.C., the four jurisdictions with nominally legal recreational marijuana. My conclusions weren’t a stretch—I quoted local publications and pot vendors pointing out the advantages illegal dealers retained in terms of service and pricing. The rules hobbled legal businesses by hiking prices and preventing consumer-friendly offerings. Long-established illegal dealers were already in place to take advantage of that hobbling.
Last month, Washington’s Liquor and Cannabis Board reported that, one and a half years after recreational marijuana was legalized in the state, the “best estimate on the breakdown” of the marijuana market is: “$480M medical (37 percent of market), $460M state-licensed recreational stores (35 percent of market) and $390M illicit (28 percent of the market).”