Laissez Faire is the Wrong Approach to Cannabis
By Grant Ellis, Legal Intern, Parabola Center
A common refrain from well funded multistate cannabis operators (MSOs) and their front groups is that government oversight of the fledgling cannabis industry will stifle the legal market and “hurt small operators and consumers the most.” But without a robust regulatory scheme to protect homegrow rights, ensure equity, and enforce antitrust provisions, legalization will be nothing more than a handout to corporate actors who specialize in leveraging first-mover advantage to sell inferior quality products for exorbitant prices.
The idea of “corporate liberty” is flawed
In fact, a well built regulatory scheme that wards off corporate oligopolies/monopolies, has low barriers to entry for smaller companies or those owned by equity operators, protects homegrow rights, and rejects the use of police resources to target the unregulated market would be impossible to create in the absence of government.
For those reasons and more, an approach to legal cannabis that rejects any and all regulatory oversight in the name of “corporate liberty” is flawed on a fundamental level. Intentional or otherwise, such rhetoric poses a direct threat to equitable market access for smaller companies nationwide at a time of unprecedented change that will shape the future of cannabis in this country.
Monopolists will destroy mom-and-pop shops
Looking back at the history of a “no-holds-barred” approach to oversight of emerging markets in the United States highlights how these concerns are more than simply conjecture.
In the late 1800s, railroad and oil barons leveraged their extensive financial resources to obtain lucrative state-sponsored monopolies. The result was the utter devastation of smaller, independently owned operators.
In the oil business, for example, a large number of community-owned oil towns were devastated due to monopolistic practices of deep-pocketed business interests. In the middle of the century, friends, neighbors, and family members would combine their savings in order to purchase one of the expensive mechanical drills that had newly arrived on the scene If oil was struck, the profits would then be used to construct a town hall, grocery store, post office and more – all of which were owned by community members.
In the eyes of titans like J.D. Rockefeller, who owned the giant refinery Standard Oil, the smaller, mom-and-pop oil towns posed a threat to his goal of conglomeration.
With no government oversight to stop it, Standard Oil struck a deal with the railroads, promising kickbacks in exchange for special transportation rates.
Those half-price shipping rates allowed Standard Oil to undercut the locally owned operators and eventually drive the small communities into bankruptcy.
With the competition eliminated, Standard Oil quickly increased its prices. With no other options left on the market, consumers then had no choice but to pay higher rates for an inferior quality product from a company with no incentive to compete for their business.
“Cutting red tape” is code for cutting off your rights
The tale of Standard Oil, recounted in the excellent book “Standard Oil,” by the founder of investigative journalism, Ida Tarbell, reflects exactly what will happen in the cannabis market if corporate operators are permitted to consolidate control in the name of “cutting regulatory red tape.” A corporate-controlled market would almost certainly result in a ban on homegrow, police task forces designed to target the unregulated market, and a wholesale rejection of equity provisions for cannabis licenses. The balance of interests demands government actors capable and willing to ward off such behavior and, just as importantly, a grassroots community willing to call out those public officials if they fail to uphold that standard.
Support consumers not monopolies
The public was able to force our government to do just that in the case of Standard Oil, eventually compelling regulators to break up the company and create new rules to prevent similar abuses in the future.
By way of a nationwide reform movement, sustained by the cogent demands for fairness and transparency embodied in the work of Ida Tarbell and other journalists, the people of the United States of America created a system of regulatory enforcement that worked in their interests rather than to protect the profits of a few large corporations.
Today, we are faced with a similar clarion call in the cannabis industry: to level the playing field of that emerging market in the face of modern monopolists who view homegrow as a threat to their profit; to create laws that work for those most harmed by the drug war rather than Wall Street suits; and to do so in a manner whereby justice is the measure of historical progress. All mountains can be moved, so long as we recognize and use the power of our shared eternal vigilance.
