Monopoly Monday: Marijuana

The political discussion on marijuana is mostly focused on the consumer side of things. Namely, about deterring our kids from flying through the drug abuse gateway and becoming dangerous at worst or unproductive at the very least.

However, directing the discussion toward the supply side, might provide some important insights and a nicer yield.

Wide partisan gap in opinions about legalizing marijuana use
An earlier Gallup poll claims that 51 percent of Republicans are in favor of legalization marijuana.

When it comes down to it, this becomes very much a partisan issue, filled with racial tensions. A majority of the population would like to see marijuana legalized. However, consensus departs based on political affiliations. Republicans, with a large base of White evangelical Protestants, are not for this drastic policy measure.

Currently, there are 18 states with bills posed to legalize marijuana. With Republican majorities in eight of these states, the bills will likely never see the light of day.

Decriminalization of Marijuana

In 11 other states, there are bills to decriminalize simple possession of marijuana. However, in eight of these states, we also see Republican majorities.

Republicans are likely to favor decriminalization over legalization. It makes sense, right? Baby steps are usually recommended for big, scary decisions like this one.

However, what decriminalization does is simply strengthen the drug supplying monopoly. It, ironically, plays to the typical “business-friendly” tune Republicans are known for.

Demand Increase, Criminal Monopoly Profits Increase

If we simply decide to make the penalties less harsh for consumers of marijuana, yet do nothing to curb the illegality of producers, we’ve accomplished very little to protect the safety and interest of consumers.

By legalizing the production of marijuana, we would stimulate the supply side by removing the barriers that allow drug cartels and dealers to charge monopoly prices. Decriminalization simply reduces the risk for consumers, increasing the demand for marijuana. A simple increase in demand, without the subsequent upward shift in the supply, will keep prices high.

supply and demand shift
The Demand Curve (D1) shifts up (to D2), when we simply decriminalize marijuana. This increases the price from 50 to 70, if there is no upward shift in supply.

Of course, the higher prices will bring some suppliers into the mix to reap the profits created by the shortage. But, the illegality of selling and producing, still makes it a very risky activity for would be new suppliers. The cartels and drug dealers who have been in the business already, will simply expand production by employing new dealers, since they have already taken the necessary measures to reduce their risks. They have a well-oiled supply chain, that has been established over years of informal, cartel-like relations. Monopoly profits will increase.

It is only by legalizing marijuana, that we can see the market take down monopoly suppliers. Further, actual safety measures can be taken to make sure marijuana is not the “gateway drug” it undoubtedly is today.

If Republicans want to win the young vote, and want to actually be proponents of “markets” they should think about the implications of their baby steps, and maybe just go all the way by legalizing it.

#MonopolyMonday

One thought on “Monopoly Monday: Marijuana

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s