Does the cannabis industry need central planning? The Oregon Legislature thinks so.
On June 17, 2019, Oregon's governor signed a bill that allows the Oregon Liquor Control Commission (OLCC) to limit the number of marijuana production licenses "based on the supply and demand for marijuana."
The fact that Oregon has been producing massive amounts of cannabis actually was declared an emergency in Senate Bill 218 — a legislative convention suggesting the issue at hand deserves immediate government intervention.
The fact that more people have access to a product is not an emergency. In fact, a local grower stated that large supply of marijuana created "an intense pressure to come up with a really great product, to set yourself apart."
In a 2019 report, written by the OLCC, marijuana production licenses began flowing to applicants, with about 100 licenses issued as of June 2016, and up to 1,250 by January. Excited small businesses began popping up on streets. This continued increase led to a drastic decrease in the price of legal weed, from $10 per gram, to half of that by December 2018.
The report offered four avenues for Oregon's Legislature to take: "allowing the market to self-correct," "increasing license fees," "limiting the maximum producer canopy," and "placing a cap ... on the number of recreational licenses." The Legislature opted for the most invasive option.
Green Light Law Group states that "it is difficult to explain SB 218 as anything other than a direct attempt to appease the U.S. about ... illegal marijuana trafficking." The worry is that, because there is more marijuana than is able to be consumed, growers will turn to the black market and illegal interstate trade.
In fact, according to an Oregon Health Authority report, since legalization in July 2015, the cannabis-related crime rate among adults steadily dropped from about 15 arrests per 100,000 adults to less than five after early retail sales began a year later.
Nevertheless, law enforcement should be the ones responsible for ensuring that growers comply with the legality of marijuana sales. The Oregon Legislature has a massive list of rules under cannabis regulation, so why does a Soviet-style economic plan need to exist?
In a planned economy, the kind that is represented by SB 218's policies, choices that are made on behalf of businesses are in the hands of a few people. These people may be the smartest, most economically minded group, but they will never have enough data to efficiently run the sale of so much as a toothpick.
Only individuals know what they want, and how much they are willing to pay for it. Individuals run businesses, and have the best sense of their competition. A planned economy is inherently inefficient, because the freedom of choice is suppressed, thereby suffocating the information that prices are meant to convey.
It doesn't matter that cannabis growers are producing at such a high rate. They know the consequences, they know their customers, they know how to market themselves, and most importantly, they follow the law or are stopped. Oregon legislators only know what state economists tell them, through their endless and impersonal data.
Oregon should leave businesses alone and let law enforcement do their job, so that people have a fair shot at success.
Vladislav Yurlov is a Portland resident.
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