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July 26, 2010

Following the money as the marijuana laboratory of California is heating up

Pot farm This new report from Reuters, which is headlined "High finance and corporate pot, California style," highlights just some of the reasons why the California initiative to legalize marijuana is potentially such a big deal. Here is a snippet from the piece:

The magnitude of the experiment is difficult to fathom -- the world's eighth largest economy will tear down barriers to the most used illegal drug in the United States. The state that invented car culture will have open freeways to take the bounty to the rest of the nation, where higher prices -- and the risk of handcuffs -- beckon.

Even the cops who most hate it see legal California marijuana as a different breed of drug -- and a game changer for the country. "The stuff we are getting in California is fricking leading the world," said Los Angeles County Sheriff's Department Senior Narcotics Detective Glenn Walsh. "We already send marijuana all over the States, presumably all over the world."

A drug of hippies and cartels, marijuana has become a cultural touchstone. To advocates, it symbolizes counterculture freedom and alternative medicine; to detractors, it is a drug that saps the resolve of hardworking Americans, draws children down a path to other more dangerous drugs and enriches ruthless Mexican cartels.

Economists see a different picture -- a multibillion dollar market about to be unfettered with little sense of how consumers will react. Two rules they expect to apply: competition will lower prices and expand the market; businesses will look for ways to get ahead of the pack.

One recent study predicted California marijuana would underprice high-quality Mexican imports in virtually every city in the United States, even including the costs of smuggling and state taxes.

The reaction of drug cartels behind vast imports into the United States is anybody's guess, from abandoning the field to doubling down in a legal market where they can plow profits into political campaigns for legitimate allies.

But fear of the effects of legal California 'bud' already has made its way to the streets of Tijuana, the Mexican sister city to San Diego and a major gateway of drugs into the United States. "We're screwed," said Juan V., a street dealer in the grimy border city of around 2 million people. "They are going to want us to lower prices," he said. "We'll just have to sell more here."

I have been following and blogging the issues of pot legalization in California so closely in large part because I share the view that the "magnitude of the experiment is difficult to fathom."  And there are lots and lots of ways in which the impact of this experiment will echo into sentencing law and policy at both state and federal levels.

July 26, 2010 at 08:24 AM | Permalink


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