Wednesday, February 25, 2009

California's Marijuana Plan Won't Work

California is currently considering a bill that would legalize and tax marijuana. It is being hailed as the source of, according to some sources, up to $1 billion in new revenues for the state. It seems like a plan with little or no downside and, knowing the state of California's proclivity for shallow depths of thought, it'll probably pass. But it will fail, and here's why.

The plan can only be successful under one perfect scenario: The black market for pot instantly dies and several companies quickly move in with a ready-for-market marijuana supply and distribution network. You'd have to be stoned out of your gourd to think that will be the case.

Instead, here's what will happen. The law will pass, and the black market will continue while producers set up their supply and distribution channels. Some big companies will get into this because they will already have the distribution channels but not the product. Some well positioned black market suppliers will get involved because they will have the product, but not the distribution channels. Marijuana of unpredictable qualities will begin to hit California stores but, because of the state's desire for pot to be a cash cow, it will be damned expensive.

So consumers will be faced with a choice. They can buy over the counter pot at an extreme premium at no harm to themselves because, by state law, possession will be legal. Or, they can buy from their same old supplier at lower prices and trustworthy quality at no harm to themselves because, by state law, possession will be legal. If you think consumers will choose the former en masse, I have some highly taxed, high quality orega...er, marijuana you may be interested in.

No comments: