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Pot Matters: Seller’s Market

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The real topic of this column is why personal cultivation must be allowed under any regulatory framework for legalized cannabis. 

But to really understand why personal cultivation rights are essential, from a public policy perspective, it requires an understanding of the true extent of illegal drug sales in the United States in general and the extent of illegal marijuana sales in particular.

In a legal marijuana market, any ban on personal cultivation, in effect, acts as a price support system for licensed marijuana sales. In other words, a ban on personal cultivation will have the effect of inflating the retail price of legal marijuana. Inflated prices for legal marijuana create a market for the sale of illegal marijuana. 

Since the goal of public policy that legalizes marijuana is to reduce and eventually eliminate the illicit cannabis market, a ban on personal cultivation is counter-productive.

To many, this is just a theoretical proposition and one that often gets lost in the make-believe world of policy makers and legislators who argue that legal marijuana must be tightly controlled in order to create artificial scarcity, a condition that they mistakenly believe will both prevent diversion of legal marijuana to the illicit market and simultaneously create high prices that will discourage consumption. (See, for example, this report on how Massachusetts Legislators want to revise proposed marijuana legalization regulations if they are approved by the voters this fall.)

When legislators, policy makers and academics refer to the illegal market, do they really know what they are talking about? 

No one ever cites statistics about the size of illegal drug markets, about how many people actually sell marijuana or even how many people get arrested for drug or marijuana sales. However, there is some limited data on this topic, and it is persuasive.

A good place to start is the Uniform Crime Reporting (UCR) Program. 

In 2013, there were 265,685 arrests for any type of drug sales or manufacture in the United States, and of these, 84,058 were for marijuana sales or manufacture (cultivation). Incidentally, the arrest rate for blacks for drug sales was 3.2 times the rate for whites, and the arrest rate for blacks for marijuana sales was 3.1 times higher. 

Blacks make up about 12 percent of the population in the United States, but they account for about 33 percent of all drug and/or marijuana sales arrests.

Arrest figures, though, only give as a partial look at the illicit market. After all, police will readily admit that they don’t and can’t arrest everyone who sells drugs—as much as they’d like to.

The National Survey on Drug Use and Health (NSDUH) not only provides data on how many people use illegal drugs, it also provides data on how many people sell illegal drugs. This is perhaps the most significant, and more overlooked, statistic in the national debate over marijuana’s legalization. 

In 2013, according to the NSDUH, 3,958,966 Americans sold illegal drugs. 

Many of them only sold drugs one to two times. Of the 3.36 million adults who sold drugs, 1.7 million sold them one or two times; about a half a million of those adults sold drugs three to five times; and about 1.2 million sold drugs six time or more in the that year.

There is no data in this survey on how many of these folks sold marijuana. But marijuana accounts for about 31 percent of all drug arrests.

On that basis, it’s a good ballpark estimate that at least 1.2 million people in the United States sell marijuana. (And, by the way, while they account for one-third of all drug arrests, blacks only account for 11 percent of actual drug sellers, according to the NSDUH data.)

This much is sure. Close to 4 million Americans sold drugs in 2013, and about 266,000 of them got arrested.  

That means that law enforcement is only able to arrest 6.7 percent of the people who sell drugs in the United States. Furthermore, this means that whether marijuana is legal or not, law enforcement is only able to arrest 6.7 percent of those folks who sell marijuana outside the law, whether that law is a regulated market or a total prohibition on sales.

This is why the only way a legal market can work is to attract people away from the illegal market.  

Legal markets rely on voluntary participation. And anyone who doesn’t accept that is living in a make-believe world and certainly has not learned anything from the failure of prohibition.

Which brings the discussion back to the issue of personal cultivation. 

People can, do and will grow marijuana for personal use regardless of the law. 

If personal cultivation is not allowed in a legal framework, such cultivation will continue, and continue in a way that works at cross-purposes with the public interest in setting up a legal framework. 

It’s a seller’s market, a grower’s market and a consumer’s market. Police can’t arrest enough people to change that, and for marijuana legalization to work it will have to take this into consideration. 

(Photo Courtesy of The Daily Chronic)

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