State Governments Are Creating Their Own Drug Cartels

Much of what government does is tax people to try to fix problems that government caused.


Politicians just don't learn.

People die as police fight drug dealers. Marijuana dealers form gangs and fight among themselves.

It's so stupid. Especially because marijuana is relatively harmless.

Finally, some states legalized it, hoping to put an end to the black market. But legalization hasn't ended the violence.

Why? Because many states impose so many unnecessary rules.

California is one of the worst.

"The illicit market is approximately two to three times the size of the legal market," says cannabis industry lawyer Tom Howard in my new video.

Illegal sales thrive in California because politicians make distribution pointlessly difficult.

Howard advises clients who want to open a dispensary, "You have to have a $50,000 safe, a $200,000 security system, and a $100,000 consultant help you make an 800-page application."

Every single plant must be weighed, tagged, and tracked from seed to sale.

This information is "not being used to benefit anybody," complains grower Jason Downs. "It's just a waste of everybody's time, money."

While legal sellers struggle, clueless California Gov. Gavin Newsom complains: "Illegal cannabis grows! They're getting worse, not better."

His solution: California taxpayers now will spend $100 million to bail them out!

Much of what government does is tax people to try to fix problems that government caused.

Politicians are so arrogant and ignorant that they even lose money when they take over profitable illegal industries.

Bookies once let people bet on horse racing without going to the track. Politicians called them criminals and said government would put an end to the "crime" of off-track betting by running that business themselves.

New York claimed they'd use their profits to "promote the public welfare." But the state's rules were so bureaucratic that New York lost millions on its off-track betting parlors.

Other states manage to lose taxpayer money running liquor stores (Alabama, certain counties in Maryland), and even on sports betting (Oregon).

Only governments can mismanage so badly.

Back to marijuana: Illinois' rules are probably the worst.

"Only 'social equity veterans' in Illinois can get a license," explains Howard. In other words, new licenses are supposed to go to prior "victims of the drug war."

But the bureaucrats' rules are so complex that a full year after legalization, zero new licenses have been issued.

Meanwhile, politically connected people grabbed every existing license.

One billionaire from the Wrigley gum family "paid $155 million for six dispensary licenses," says Howard. Illinois is "creating a cartel."

Vice News confronted Illinois bureaucrat Toi Hutchinson, the governor's cannabis adviser. She denied that her licensing program is a failure. "It's delayed, but it's not done yet," she said. "The fixes that we've been able to do almost in real time…another thing that is not normal for government. I don't know how to solve for racism and capitalism and structures that have existed for 100 years."

She blames capitalism for her failure to allow capitalism to work?

Arrogant government workers have little knowledge and no shame.

Howard says Illinois is "like [old] Russia, where they had the state pick and choose winners and losers."

Other states have bad rules, too.

"Florida and Arizona are millionaires' clubs," says Howard. "You have to not only grow it; you have to be able to produce it and process it. You have to own your own dispensary. If you have $40 or $50 million, it's great."

Massachusetts requires all dispensaries to black out windows lest anyone see the marijuana. Stores must also check everyone's IDs multiple times.

Legalization doesn't have to be stupid.

Oregon and Colorado have reasonable rules, and in Oklahoma, "anyone can get a cannabis license," says Howard, "provided you've lived in Oklahoma for two years."

The result?

"You get a lot more innovation—more entrepreneurs coming into market. Some go out of business, and some do very well….It's free market capitalism."

That works! If only politicians would let people try it.


NEXT: CDC Sentences Kids to Another School Year of Irrational Masking

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  1. Thanks, John. Another fine article.

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  2. Our governor was asked what programs HASN'T the government screwed up. Quite proudly, he said Social Security, Medicare, Medicaid, US military, USPS. Even the local press there laughed.

    Imagine the incompetence that is necessary to screw up the sale of weed.

    1. So the governor could name only federal programs? No wonder s/he got laughed at.

      Actually I've seen/heard SocSec said to be a program government can't screw up, because its service consists merely of writing checks.

      1. No, it's screwed up. For instance, if you retire at 66, 67, 68, 69, or 70 instead of one year sooner, you get more every month, which is as it should be, although I have no doubt the numbers were pulled out of somebody's ass. However, waiting til 71 provides no extra monthly amount. They are encouraging people to quit being productive at 70, for no realistic reason.

        It's funny how that goes hand in glove with IRAs and especially 401(k)s. Those require you to withdraw starting at age 72, even if you are still working and contributing to your account.

        There are probably details and tricks and workarounds, so my blanket statements should be taken as generalities only.

        Government not only can, but does, screw up everything it touches.

        1. There is an easy fix to social security. Go back to the original idea and say you are eligible for benifite starting 4 years after life expectancy. I believe that would be about age 83 by today's standard. It would instantly save money and people will realize it's a ponzi scam and call for it to end

          1. There's an even easier fix for your fix: they'd scream and yell fro the old system. Game, set, match.

            The real fix is to leave it to individuals, get the government out of it. That too will never come to pass.

            I have often wondered if it would be possible to opt out at any time, get a check for what you have paid in, ha ha. Similarly, people should be able to opt-in, by paying that exact same amount, thus keeping both more or less honest.

            1. get the government-guns out of it.......

              People don't seem to take notice that 'law' is enforced by gun threat.
              If you don't support pointing guns at people to make them PAY for a service then you don't support Social Security.

  3. Before all the commenters start whining about bureaucracy and red tape in blue states like California, Illinois, and Massachusetts, just remember that weed is at least legal in these states. Meanwhile it remains illegal in white-trash hick states like Mississippi, Alabama, Texas and basically everywhere else in the bible-belt.

    1. Its so legal in states like CA and IL and most people still buy and sell it illegally

    2. Is it okay to mention that someone can still get twenty years in federal prison for smoking a doobie if the feds really want to go after that person?

      States will always have a lot of power to control stuff that happens within their border. Louisiana didn't end alcohol prohibition until the 1970's, and there are still well over a hundred jurisdictions where the sale of alcohol is prohibited.

    3. Ah the usual Tony sock showing up to spew bigotry and hatred.

      Fuck off shithead.

      1. You and Sevo were dipped into the same tank of stupid.

        1. It was empty; you and Tony hadn't been squeezed into it yet.

    4. Meanwhile it remains illegal in white-trash hick states like Mississippi, Alabama, Texas and basically everywhere else in the bible-belt.

      Those damned red states, content to just have their cake rather than trying to tax it and arrest people for it too. They probably incarcerate relatively fewer people for shorter terms for trivial possession offenses too!

      1. Humorously; It's all the black people in 'legalized' states complaining about that 'racist' ?freedom? they were granted.

        Just another 'peek' preview of the ever-growing National Socialism growing in this nation. Power-Mad people all jumping on the Gov-Gun-Forces for everything they desire.

        The Nazi-Government made the *Power* to *Steal* = Wealth statement a reality.

    5. Did you miss the part where extremely Bible-Belt Oklahoma has one of the best legal systems? They do require a medical card, unfortunately, but the cards are very easy to get. I had a much worse time trying to get a regular state ID card.

      And there are dispensaries on nearly every street. Low prices compared to other states, from what I hear.

    6. Yeah, the blue states want to kill and disable as many people as possible and increase the state coffers if they can at the same time. Murdering people and making them sick is no big deal to liberals, Demorats, progressives, socialists, and communists.

  4. Illegal sales thrive in California because politicians make distribution pointlessly difficult.

    Howard advises clients who want to open a dispensary, "You have to have a $50,000 safe, a $200,000 security system, and a $100,000 consultant help you make an 800-page application."

    Every single plant must be weighed, tagged, and tracked from seed to sale.

    But...that's like it was to get an experimental license. Those were the types of rules that assumed maybe 1 person in a million would have access to cannabis legally. It's like they assumed marijuana would continue to be an expensive black market item that they were making a to-be-rarely-used legal loophole for.

    So they got what they assumed.

    1. Image for just a minute how much a vegetable would cost if you had to do seed to sale.

      1. you seen those little plastic stickers on your apples, oranges, tomatoes, limes, etc? That's exactly what those are there for.. seed to market. That barcode will identify who grew that piece of fruit where, when it was harvested, and to which wholesaler it was resold. Growers HATE them, but at least =someoutfits stepped up and made the stickers and application doable at low cost.
        Even so, its a stupid idea. Not like they are growing lettuce in fields where pigs roam and dump their poop all over, so when someone eats that spinach and gets dysintery they can figure out which pig pooped where and whej, and go harrass the grower.

        1. That's not seed to sale that just identifies the brand, and the type

  5. I would strongly recommend a Netflix docuseries that touches on this subject called "Murder Mountain".

    It's about the Marijuana cultivation and trade centered in Humboldt County, California, aka the Emerald Triangle. Humboldt is credited with supplying 60-80% of the illegal marijuana in the US. The primary thrust of the documentary is the large number of missing persons in and around southern Humboldt county, and in particular on one particular mountain near a small town called Alderpoint. The documentary focuses on one case in particular, that of a young man who went missing (spoiler alert: subsequently murdered) and his family's attempt to locate him.

    However, the secondary issues that the documentary touches on is the second order effects of legalization on the "industry" there. As one (legal) Marijuana farmer said, "legalization has wiped out more farmers than the drug war ever could".

    1. Every act has consequences. You want it legally permissible to fry one's brains? Then expect things are going to get bad.

  6. Stossel is right about the absurd over-regulation of California's cannabis industry. However, Gov. Newsom's $100 million industry bailout (to cover excessive environmental review costs) isn't being paid by all taxpayers, only from tax revenues paid by consumers at state-regulated stores.

  7. If cannabis is so dangerous then why does assigning a barcode to it make it safer?

  8. It’s about time someone at this allegedly-libertarian website that supposedly believes in free markets and supposedly opposes crony capitalism, economic protectionism, racial quotas, excessive occupational licensing, excessive regulation, bureaucracy and overtaxation finally noticed that in many states, almost always Blue states like New Jersey, marijuana “legalization” is nothing less than all of these things combined to create a state-sponsored cartel designed to funnel benefits to the dominant party’s cronies, donors and voters through the politicized doling out of licenses and excessive taxation. And the criminal laws that previously banned weed as a dangerous substance will now be used to ban competition and assure that the State gets its cut on all sales. Ask the ghost of Eric Garner how that works.

    I am told weed has no real harmful effect. I fear that I have identified one clear debilitating effect weed has: Causing libertarians to forget their supposed core values.

    1. But does that make legalization worse than illegalization? It isn't for liquor. The state's cut of everything is a given in this world. We should be glad for every notch they loosen the collar, rather than criticize the loosening.

      1. “But does that make legalization worse than illegalization? It isn’t for liquor.”

        Funny that you mention liquor. The “three-tier system” for marketing liquor is frequently criticized here. And with good reason. But the law recently adopted in New Jersey for cannabis makes the three-tier system looks like unrestrained free market by comparison. The three tier system for liquor does not mandate that all license holders have an agreement with a labor union, like the cannabis law does. The three tier system does not have race and sex quotas, like the cannabis law does.

        It was not necessary for a monstrosity like this to be adopted in order to reform marijuana laws. States like Oklahoma prove it.

    2. As if the extremely well compensated lobbyist for every product known to man has no bearing on "free markets", crony capitalism, economic protectionism and favoritism, etc. etc. Every single institution in this country operates under a buy, bribe, scratch my back and I'll scratch yours, coerce, blackmail, or some other shady method of operation. The crooks, criminals, and evil-thinkers/doers are in absolute control.

  9. Oregon's system with a "free market" led to so many businesses being open that most couldn't turn a profit. WA smartly limited the amount of licenses and has had far better results. And there was so much extra weed being grown in OR they had no choice but to traffick it illegally or let it go to waste. This naturally caused the feds to start making a lot of threats. If you have tracked the weed, as WA does, it's very easy to prove that it's not being diverted out of the state. The LCB in WA uses roughly 1/3rd of the tax revenue on enforcement. If checking an ID at the entrance and point of sale is too hard then you're just not cut out to run a business.

    1. Oregon’s system with a “free market” led to so many businesses being open that most couldn’t turn a profit.
      Profits are evil.

    2. Let's apply the same limits to every other product too. Shoes, apples, pool chlorine, you name it.

  10. There is another reason California have more off-book weed providers than legal ones.
    FedGov still maintain the delusion that they trump state laws, and FedGov still hold that MJ is a Schedule One drug (it never was, and MUST be delisted, soon). This possession, cultivaion, use, sale, are all FEDERAL level CRIMES. Sure, they turn a blind eye in most cases. However, possession of a firearm AND weed is grounds for serious legal action by Feds. Buy a gun, fill out the NICS form, you must answer the MJ question yes or no. If they find, later, you ARE a "user or addicted to any controlled substance" (the formal category for MJ) yu have committd TWO felonies.. one, lying on the 4473 form, two, havig both items.
    State government in Clifornia have a nasty hbit of checking lists of legal medical MJ users, then checking their registrations of firearms (one of the few states that register most guns, should be banned as unconstitutionall , but here we are) to see who is on both lists. They then "pay a visit" to those individuals confiscate their guns, bust them for violating the laws, sometimes turn them over to the Feds for prosecution (lying on the MJ question on the purchase form).

    SO the response has generally been, deal on the black market, that way the Gabbling Nuisance and his henchmen have no way of connecting gun ownership with MJ use. Bet da gummit never thought that one out. One more reason for the thriving black market in that state. They deserve it,too.

  11. Calling it legalization over partial legalization was always deceptive - a deception that @reason participated in to make it sound as if the war on drugs might be coming to an end.

    In all the articles in @reason on so-called legalization there was hardly a mention in any that the legalization was partial only and was passed for mostly political reasons such as new taxation and state control.

  12. I'm not a fan of drug abuse.
    I'm also not a fan of dictating by gun-force what drugs everyone has.
    So long as drug abusers obey all other laws; I couldn't care less.

    What I do know is the Federal government has NO authority to enforce drug regulation. Beyond that; each State, County or City to their own way.

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