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Wal-Marting of Weed

Marijuana growers are concerned that, as their product becomes legalized, the market will be dominated by mass produced, inferior quality strains.  This is being dubbed the “Wal-Marting” of weed.

After weathering the fear of federal prosecution and competition from drug cartels, California’s medical marijuana growers see a new threat to their tenuous existence: the “Wal-Marting” of weed.

The Oakland City Council on Tuesday will look at licensing four production plants where pot would be grown, packaged and processed into items ranging from baked goods to body oil. Winning applicants would have to pay $211,000 in annual permit fees, carry $2 million worth of liability insurance and be prepared to devote up to 8 percent of gross sales to taxes.

The move, and fledgling efforts in other California cities to sanction cannabis cultivation for the first time, has some marijuana advocates worried that regulations intended to bring order to the outlaw industry and new revenues to cash-strapped local governments could drive small “mom and pop” growers out of business. They complain that industrial-scale gardens would harm the environment, reduce quality and leave consumers with fewer strains from which to choose.

[...]

The proposal’s supporters, including entrepreneurs more disposed to neckties than tie-dye, counter that unregulated growers working in covert warehouses or houses are tax scofflaws more likely to wreak environmental havoc, be motivated purely by profit and produce inferior products.

[...]

Adding to the anxiety of growers – and the impetus Oakland officials have to get the grow tax in place – is a November state ballot measure to legalize marijuana possession for adult recreational use and authorize local governments to license and tax non-medical pot sales.

If it passes, Proposition 19 is expected to feed the state’s hearty appetite for marijuana. Backers of creating the four big indoor gardens say the plan is not dependent on legalization, but would benefit from it.

While amusing because of the reputation of this particular crop and its enthusiasts,  it is always thus.  Despite the conception in the popular culture that government regulation springs from consumer pressure over the screaming protests of industry, the fact of the matter is that it almost always is demanded by big players in the industry in an effort to thwart competition.

Mass producers complain that they have huge investments in infrastructure and that upstarts either piggyback on their work or skirt the oversight that they themselves are under.   Usually in the name of public safety, they demand that their own standards and practices be required by law.   Because compliance is expensive, it then becomes very difficult for small operators to make a go of it or new entrants to join the competition.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He has a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. JKB says:

    Well, it had to happen. Here the weed market ran according to unrestrained capitalism up to now. But in hopes of getting the prohibition off their backs, they wanted legalization. Well, in come the bureaucrats with permits instead of the bureaucrats with badges. Now a few connected players are looking to corner the market just like the liquor distributors did after prohibition.

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  2. Franklin says:

    Well, it’s really some of both (consumer pressure & corporate lobbyists) that lead to regulation, and I don’t see any easy way around it. The general public does want some protection (otherwise we’ll all be smoking lead-tainted weed from China), but it’s the lobbyists who write the actual laws.

    In this case, the “mom & pop” growers probably have about a zero chance of forming a powerful lobbying group, simply because they are currently illegal.

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  3. Brummagem Joe says:

    Weed is a product like any other. As the market develops there will be the Wal Marts and the Whole Foods marketing the product. There will be plenty of room for producers and retailer to those who want an “organic” product, in fact it’s likely to be the most profitable part of the business

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  4. grampagravy says:

    I laughed out loud reading this article. I can just imagine legalizing pot and putting enough regulation, tax, etc. on it to leave room for a black market. Then, all they will have changed is that the revenuers will be chasing the bandidos instead of the DEA.

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  5. floyd says:

    Meanwhile in nearby cities…. moves are afoot to outlaw soda-pop and puppies

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  6. grampagravy says:

    “Meanwhile in nearby cities…. moves are afoot to outlaw soda-pop and puppies”

    Thank goodness these “gateways” to far more egregious things are about to be curtailed.

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