Month: March 2023

The Raleigh, Durham, and Charlotte papers put this op-ed below in online and print editions, https://www.newsobserver.com/opinion/article272626684.html#storylink=hpdigest_opinion; it’s been mentioned favorably by Thomas Mills’s PoliticsNC, https://www.politicsnc.com/a-week-of-bipartisan-progress-for-nc/, and featured in depth by a NC Policy Watch, https://ncpolicywatch.com/2023/03/21/north-carolina-should-learn-from-other-places-and-try-to-do-marijuana-right/ (no paywalls).

Excerpts:

The Compassionate Care Act (Senate Bill 3) would unleash the profit motive on millions of dollars’ worth of medical marijuana commerce in our state. But it’s likely to let well-funded out-of-state corporations grab the lion’s share of that money. They would then want to legalize lucrative recreational use quickly and be first in line to sell it.

While state commerce violates free market principles, SB 3’s 10 permanent licenses make for oligopoly, not market freedom. Sure, state delivery and eventually stores would take time and money to set up, but awarding licenses to private sellers “on the merits” or by lottery, SB-3-style, is a recipe for delays and litigation. Four years elapsed between the passage of a medical marijuana law and the first legal sale of medicine in West Virginia and Delaware.

Who gets to sell marijuana?

If the government doesn’t monopolize marijuana sales, then individuals or corporations chosen in various ways, like by lot, on the merits, by willingness to pay fees, by periodic auction, or by voucher privatization will get to sell it.  Voucher privatization failed in Russia because permanent rights were given away all at once, but we can learn from that mistake.  And none of the other options is humming.

Dividing the right to sell up annually per capita among residents avoids licensing disputes and delays.  It spreads wealth, at least unless interstate commerce comes in.

Mechanics are primitive:  The state passes out transferable electronic vouchers to all voters or bright-line tested residents. This is like Alaska’s Permanent Dividend Fund, which sent $1,884 in oil dividends to each qualifying resident of the state for 2014, and keeps on humming.

Say every voter gets one transferable Quota Share. Each Quota Share is entitled to a transferable equal fraction of the year’s total production target, set by the state. 

While actual allocations would be done at the state level, national numbers are available to work with. The RAND Report for Vermont suggests that 19,000 acres could satisfy national demand. That’s 827,640,000 square feet to split among 320 million people. So each Voucher  would allocate a little over two square feet. Say the total crop is now worth $40 billion, as the RAND Report suggests.   Say half of the total consumer price eventually went to pay for legality. Then 320 million people would divide up $20 billion, so an Annual Voucher  would be worth some $62.50. If the 78 million voters in 2014 divided it up, the raw number would be a little over $250 each.

This plan would need a minimum amount of square feet to grow a plant. Maybe it needs to use pounds instead.

Say 300 acres in North Carolina for 5,000,000 voters.  Quota Shares don’t seem like they’re worth much, so only they bring only chump change the first year – and keep costs down for the struggling industry.  Probably a few players will control the industry the first year.

That’s where the Russian lesson comes in.  The only obvious way to keep private power down is not make licenses all and only annual licenses. Industry (the Big Money Boys) will want longer licenses, but they may not have the votes yet.

In later years, voucher prices will probably stabilize.

Excerpts from panel appearance of Shaleen Title of the Parabola Center for the North Carolina Department of Justice webinar in 2022.  https://www.youtube.com/watch?v=ehlLi6hlWRE, 21-minute mark:

We need to make “evidence-based decisions that are not based on fear or stigma but rather the reality of data that we have in front of us.  I also want to say you don’t have to use the same models that other states have used. You can think about fairness and equity and one thing that’s brought up a lot is the idea of potentially state regulated stores. I think we are long overdue for a state to try that model. I think from a public health perspective and equity perspective it makes sense to see if they try that so I hope that is considered strongly.”

25-minute mark:

“I hope you’ll consider being the first state potentially to look at a state-run model . . . especially because we don’t have a state yet that has a successful equitable for profit model.  Maybe we will soon.  I think New York is an exciting one to look at, but we don’t have that yet.”

Here’s the Parabola Center’s story:

“Our team was the first in the nation to devise a clear path for small businesses and historically disenfranchised groups to enter the market. We are here to help create polices that reflect the needs of the millions of people who continue to form the legal cannabis movement.”

Both Republican majority and Democratic minority votes will be needed to pass medical marijuana in North Carolina.  Three medical marijuana grow licensing models from Republican-controlled states are available.

Florida:  Oligopoly requires government choosing a small number of well-capitalized sellers “on the merits”; requires vertical seed-to-sale integration; does not restrict cross-ownership.  Senate Bill 3 follows this model, with 10 sellers.

Oklahoma/Mississippi:  All comers get licenses.  Oklahoma fee is $2,500 per license (currently under moratorium); Mississippi fees vary by size of operation.  Amid excess, Oklahoma voters defeated extension of its program to recreational in a landslide on March 7.

Louisiana:  Sole growing licensees are land grant Louisiana State University and (Historically Black) Southern University, analogous to State and A&T.  They contract out some work.

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Other models for sharing the cannabis windfall exist.

California, Massachusetts, New York, and other states:  Some “social equity licenses” are issued to benefit casualties of the War on Drugs.  No program has succeeded yet.

Illinois and other states: A lottery among applicants who are deemed qualified is followed by litigation by applicants deemed unqualified.

Alaska: The Permanent Oil Dividend Fund gives each resident an equal check each year. But in Post-Soviet Russia, voucher privatization of assets failed because of permanent rather than annual privatization.

Patrick Oglesby, 919 619 8838, po@newrevenue.org, NC Bar #7944;
Center for New Revenue, http://www.newrevenue.org;
1830 North Lakeshore Drive, Chapel Hill NC 27514.

https://www.newsobserver.com/opinion/article272626684.html#storylink=hpdigest_opinion No paywall.