Is legalization actually bolstering, rather than undermining, the cannabis black market?
As cannabis becomes legal in more jurisdictions, the conventional wisdom is that legal markets will compete successfully with illegal markets, which will ultimately die-off. That conventional wisdom, however, is seeming not to be so wise after all.
What’s missing? The legalization of cannabis isn’t really legalization at all. The so-called “legal” markets are tightly regulated and highly taxed. Taxation has, after all, been the most politically significant component of the argument against the war on drugs, and against the war on cannabis in particular.
As cannabis use became more popular in the second half of the 20th century and more people had benign experiences with the drug supposedly capable of inducing “reefer madness,” the rhetoric of prohibition out of concern for public safety began to lose its purchase. The public attitude shifted instead to the idea that if cannabis isn’t harmful then it shouldn’t be banned, but rather regulated and taxed much like alcohol. Politicians seized this taxation rhetoric and suddenly the prospect of tax revenues from cannabis sales started to look like the budgetary cure-all for left-leaning jurisdictions with amenable electorates.
But it’s important to remember that the movement to end the war on drugs didn’t begin as an effort to increase tax revenue. Rather, the movement developed almost exclusively out of disgust at the devastation wrought on the lives and communities of non-violent drug offenders. As such, it was very much an extension of the civil rights movement. Discriminatory enforcement practices ensured that those arrested and convicted for drug charges were (and still are) disproportionately poor and minorities, casting the war on drugs as a tool for racial and class conflict that was doing untold damage to non-affluent and non-white populations.
However, it’s also important to remember that politicians rarely rally to the cause of the underprivileged, but come running like they’re late for dinner if tax dollars are on the line.
Seeing this, advocates for ending the war on drugs forged an unholy alliance with politicians who couldn’t be bothered to offer more than lip service to the idea of helping poor minorities, but who would fight to the death to take credit for increasing government revenues.
Whether this unholy alliance was a correct strategy will be something for historians to debate. Opponents of the war on drugs simply wanted to end the suffering of its countless victims. What harm could teaming up with vain politicians with a taxation agenda do if it meant these very politicians would be willing to bully desperately needed drug law reform through their jurisdictions?
We’re starting to see harm as the hope that the emergence of legal markets would undermine the illegal industry is proving to be mere wishful thinking.
What’s happened is that the taxation agenda has completely co-opted the movement to end the war on drugs. Promoting the taxation potential for legal markets as a major rationale for legalization has in-fact turned the conventional wisdom on its head, as very steep taxes on cannabis are incentivizing consumers to go back to the illegal market.
Meanwhile, the illegal market is larger than ever, with more efficient and robust production and distribution channels thanks to the increased difficulty enforcers have opposing these operations in jurisdictions in which cannabis has been “legalized” in one way or another. This blurs the lines between what could be seen either as major crimes or as civil infractions amounting to nothing more than operating without a permit. Indeed, cannabis related arrests are up for the past two years, but with that increase has been a major spike in arrests for mere possession, while arrests for sales and manufacturing have continued to fall.
So, who is winning the war on drugs? The taxation agenda and the politicians whom it empowers.
Who is losing? The same people who’ve always been losing.