Marijuana for Millionaires

—By Kevin Drum

| Sun Nov. 1, 2015 2:31 PM EST

41128_424755311230_2510995_nYesterday a friend emailed to ask if I had any thoughts about Ohio’s Issue 3, which would fully legalize marijuana cultivation and sale in the state. Ohio? I barely pay attention to California, let alone Ohio.

But Issue 3 turns out to be surprisingly fascinating—or venal and repellent, depending on your tolerance for sleaze. Apparently one of the authors of the initiative came across a Rand report on marijuana written by a bevy of drug-policy worthies, and it offered up a dozen possible options for legalization. One of them is called "structured oligopoly":

It is natural to ask whether there is some way to get for-profit businesses to behave in the public interest. The answer is “Perhaps.”

….States might prefer instead to offer only a limited number of licenses, creating artificial scarcity that makes the licenses valuable—valuable enough that firms will have a strong incentive to cooperate with regulators rather than risk revocation….Limiting the number of licensees also makes monitoring their behavior easier. A rogue company could more easily break the rules if it were one of 1,000 licensees than if it were one of just ten.

….So a structured-oligopoly strategy might involve licensing a limited number of firms, monitoring them closely, and not being shy about rescinding a firm’s license if it behaves in ways contrary to the public interest.

This might not be your cup of tea, but let’s stipulate that it has some potential. How would you distribute these licenses? The straightforward approach is to auction them off for set periods. Unfortunately, this has a big drawback: it maximizes the payment for licenses, and thus minimizes the profit of the oligopolists. This is obviously vexing.

So how about this instead? Pick out ten rich friends. Each is required to put up $2 million to help pass a ballot initiative. In return, you promise to write the names of the investors directly into the initiative, giving them a perpetual and exclusive right to grow marijuana in the state of Ohio.1 In addition, you write a special, unalterable flat tax rate into the law, as well as a minuscule annual licensing fee. Now that’s an oligopoly you can believe in! Keith Humphreys, who brought this to my attention, has a few comments:

It has taken the alcohol industry decades of lobbying to roll back many of the restrictive, public health-oriented regulations established after the end of Prohibition. Booze industry executives must look with envy upon the emerging marijuana industry, which can use the ballot initiative process to achieve complete regulatory capture from day one.

….No one should be surprised that in a country with an entrepreneurial culture, a commitment to free markets, and a political system highly attuned to corporate donations, legalized marijuana would develop a significant corporate presence. Indeed, many drug policy analysts, including me, expected this to happen eventually. But the rate at which the change is happening is truly startling, and will become even more so if the Ohio initiative passes.

If the marijuana industry ends up being a clone of the tobacco industry, will legalization supporters experience buyers’ remorse? It depends who you ask.

Well, you could ask me. I don’t care what they’re legalizing. This stinks. It’s crony capitalism without even a veneer of decency, and if it applied to anything else nobody would have the gall to ever let it see the light of day. If this is the price of pot legalization, count me out.

1Technically, no names are actually in the initiative. Instead, it limits marijuana cultivation to ten specific parcels of land that are owned by the ten investors. Also, individuals are allowed to cultivate small amounts for their own recreational use if they get a licence.

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NORML Hesitantly Backs Ohio Legalization Initiative

A campaign to legalize medical and recreational cannabis in Ohio has garnered a big endorsement from NORML, but the marijuana lobbying organization isn’t thrilled with a key business-related aspect of the measure.

NORML decided to get behind Issue 3, the legalization measure being pushed by Responsible Ohio. However, it expressed concern that the initiative calls for just 10 legal cultivation sites, all of which would be owned by wealthy campaign investors.

Keith Stroup, who founded NORML in 1970 and is now legal counsel for the organization, wrote on the organization’s website that such a restriction is a “perversion of the initiative process,” and he called the ballot measure a “bitter pill to swallow.”

“In this instance, the initiative process is being used to try to make the rich and powerful even more rich and more powerful,” Stroup wrote. “But currently Issue 3 is the only option available to stop the senseless and destructive practice of arresting marijuana smokers in Ohio.”

The NORML board of directors therefore voted to support the measure, but some board members abstained to note their opposition for the record, and one even flat-out opposed the initiative, Stroup wrote.

Issue 3 will be on the ballot this November in Ohio.

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Ohio voters have 2 opposing marijuana issues on November ballot

YOUNGSTOWN, Ohio (WKBN) – Ohio voters will have to decide on two opposing ballot questions in November.

One issue would allow recreational marijuana use, but the other issue would take away most of the framework of that law.

The Responsible Ohio amendment is Issue 3 and would make growing, selling and using marijuana in Ohio legal. Backers say the new law would free up the courts and bring in millions in tax dollars. Growing would be done at 10 sites around the state. The locations of the sites have already been chosen.

The state assembly put their own issue on the ballot. Issue 2 would make the marijuana cartel illegal immediately.

What analysts do not know is what will happen if both issues pass.

“Now that’s a tricky question that not many people know the answer to. Some say one could trump the other. Some say the one with the most votes wins,” said Faith Oltman of Responsible Ohio.

If the anti-monopoly measure passes, Oltman said that will mean the end of voter’s say in legalizing marijuana.

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Buying the constitution

Big money, not popular demand, is what drives the marijuana proposal

The haphazard signature-gathering effort by backers of a marijuana-legalization ballot issue suggests something other than a grass-roots clamor to bring legalized pot to Ohio.

And the cities and townships where backers of the issue propose to set up their government-sanctioned-monopoly pot farms don’t seem exactly enthusiastic about that prospect.

All in all, the lurching campaign effort shows ResponsibleOhio’s proposal for what it is: a bid to use the mechanics of state government — and, thereby, voters — to create an insider business opportunity for a handful of people. The campaign is driven not by popular demand, but by the big money of the investors who stand to profit.

If a genuine grass-roots group of Ohioans wanted to see marijuana legalized for medical or recreational use, nothing would stop them from circulating petitions in support of that effort. But despite ResponsibleOhio’s complaint that lawmakers have been ignoring a burning desire for years, that supposed desire hasn’t inspired very many people to volunteer to pass petitions.

To get the proposed amendment onto the November ballot, the group is paying people to circulate petitions. To be fair, few groups could muster the hundreds of thousands of valid signatures needed by using volunteers alone; many turn to paid circulators. And ResponsibleOhio’s paid circulators certainly aren’t the first to turn in lots of flawed signatures.

But, a spot check at county boards of elections shows a remarkably shoddy effort by ResponsibleOhio’s circulators: As of Friday, major counties were finding more than half of the signatures invalid for one reason or another. At this rate, when the counting is done, the group won’t have the 305,591 valid signatures required to make the ballot, even though it collected more than double the number. (If that happens, Ohio law allows a 10-day “cure period” for petitioners to try to get the additional signatures needed.)

In Franklin County, as of Tuesday, only 40 percent of 113,000 signatures counted so far were valid. About 26,000 people weren’t registered to vote at the address they listed on the petition; 23,000 weren’t registered at all. About 7,800 were duplicates and 2,600 were deemed “not genuine."

Circulators with any commitment to the cause they’re pushing, beyond a per-signature payment, tend to try a lot harder to get valid signatures.

The pushback from communities that stand to host the constitutionally protected pot farms is more evidence that ResponsibleOhio’s heavy-handed approach is unwise. If the proposal was simply to make marijuana cultivation legal, prospective growers might emerge naturally and work with local officials and residents to win them over.

Instead, ResponsibleOhio’s investors secured rights to properties in 10 locations around the state and wrote a constitutional amendment that would give them exclusive rights and hamper local government’s ability to get in their way.

It’s no wonder Ohioans — those who actually have kept up their voting registrations and are concerned about their communities — aren’t the ones driving this self-serving scheme.

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