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Kamloops News

GEORGE: The corporatization of pot

Image Credit: SUBMITTED/Chris George
July 03, 2018 - 12:00 PM


So the Liberals have set October 17, 2018, as the date for unleashing recreational cannabis on Canadians. 

The idea behind the delay was to give the provinces and municipalities more time to prepare for a huge spike in use, an increase in impaired driving, and problems at work with stoned employees everywhere. The approach seems to require new legislation and gobs of money for law enforcement.

And now that the new legislation is in place it is pretty clear that the new penalties are a lot harsher than the old. Legalization? Not really.

What is clear is that those who jumped feet first into the medical cannabis market after the bungled Conservative legislation are poised to make out like bandits in the new protected industry growing up around recreational cannabis. With a captive market and law enforcement gearing up to take out the competition, it looks like a very low-risk investment.

So why the delay in legalizing recreational cannabis?

It seems that law enforcement across the country simply didn't think that the Liberals were serious about it and sat on their hands as the clock ran down. Even though workloads are expected to drop significantly, the agencies are all looking for more money to hire and train. Their fear was that lax enforcement would allow organized crime a window to take some of the market share away from the legit investors.

Lack of enforcement isn't the problem. Continuing prohibition is.

The huge legislative wall keeping all of those investments "safe" will create a new black market. Technology, innovation, and the demand for variety will see to that. The original idea was to take the existing black market pricing and convert the risk premium on the price of pot into a windfall for investors and governments. The problem is that after a decade or more of lax enforcement there simply wasn't much of that premium left.

There is a floor under the cost of production of cannabis. Water and nutrients are cheap, light is not. The traditional methods of lighting a grow-op involved high-pressure sodium (HPS) lights and ballasts. They are costly, burn through electricity in a big hurry, and generate a lot of heat. New technology in the form of LED lights is slowly working its way into replacing the old technology. LED lights are cheaper, use less electricity, and run a whole lot cooler than HPS.

So while the government was grooming a new market for insiders, the world changed. What used to be difficult and expensive just got a whole lot easier and cheaper. And in the process, it has dropped the retail street price of top-shelf cannabis well below the target pricing being bandied about in the halls of power and in the boardrooms. Compared to the quality and price currently available at your local dispensary what is available on the street is coming in at higher quality and less than half the price.

No wonder they want to hand out 14-year sentences to those growing for sale outside of the cool kids with connections.

If they really wanted to get the criminal element out of the game they would treat cannabis like carrots. We have a black market in alcohol. We have a black market in tobacco. We will continue to have a black market in cannabis. The common thread that makes these markets is the government.

Criminal sanctions and punitive taxation will ensure that there is money to be made by those on the outside. It will, of course, also ensure that those on the inside get to vacuum up the lion's share of the profit to be had which seems to be the intent behind this entire rigamarole.

Legalization isn't coming. This is simply a continuation of prohibition. All we have done is take some of the profits out of the pockets of men in leather and handed it over to men in suits.

— Chris George believes one measure of a just society is found in how well it balances fiscally conservative economics with social responsibility and environmental soundness in all of its living arrangements.

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