AUSTRIAN ECONOMICS ADDICT

Just as Uber is taking transportation into the modern era by breaking up the old government sanctioned taxi cartel system (read- ‘Car Wars’ Return Of The Jitneys: Uber vs. The Taxi Cartel). We in Ohio are about to set up a stone age cartel system for marijuana if issue 3 is passed.  Don’t let anyone tell you that issue 3 legalizes marijuana in the State of Ohio. It does not. It creates a monopoly for 10 specific groups to grow marijuana, while it restricts the amount that everybody else can possess or grow. Here is what Issue 3 says (read ballot issue 3 here).

WHAT ISSUE 3 WILL DO

1) “Create exclusive rights for 10 self-designated landowners (click here for list of owners) to grow, cultivate, and extract marijuana.”

2) “One additional growth facility may be allowed in four years if existing facilities can’t meet consumer demand.”

3) “Allow approximately 1100 retail establishments to sell recreational marijuana if they get a license.” You have to get a license to sell.

4) “Create a special tax rate limited to 15% on gross revenue of the growth facilities…..and a special tax rate limited to 5% on gross revenue of each licensed marijuana retail store.” Don’t you wish you could set your tax rate that can’t be raised?

5) “Create a new state government agency called the marijuana control commission to regulate the industry comprised of seven Ohio residents appointed by the Governor.” Will this board be susceptible to lobbying or bribery?

6) “Limit the ability of the legislature and local governments from regulating the manufacture, sale, distribution, and use of marijuana and marijuana products.” Local governments have no say in any of this.

7) “Allow each person, 21 years of age or older, to grow, cultivate, use, possess, and share up to 8 ounces of usable home-grown marijuana plus 4 flowering marijuana plants if the person holds a valid state license. Allow each person 21 years of age and older, to purchase, possess, transport, use, and share up to 1 ounce of marijuana for recreational use.” You have to have a license to grow your personal plants. The amount you can possess is limited. And you can’t sell any of it you can only share it.

8) “Authorize medical use for a person who has a certified debilitating medical condition.”

A MARIJUANA TAXI CARTEL! WHY NOT AN UBER MARKET?

Issue 3 doesn’t legalize marijuana. If it did, there would be no restrictions on the amount each individual could possess for any reason. Issue 3 gives out 10 marijuana medallions to certain individuals to supply marijuana. It excludes everybody else. An Uber market would allow every individual to grow, possess and sell marijuana if they choose.

The 10 cartel owners are either economically ignorant or they are relying on the economic ignorance of the voters when they put in the provision that one additional growth facility can be allowed in four years if existing facilities can’t meet consumer demand.

How is the cartel going to figure out demand? Why would it take 4 years to figure out demand? In a free market, individuals will demand less and supply more at a high price, and will demand more and supply less at a lower price. So in a free market, demand is constantly being discovered, not by any individual or group of individuals, but by every individual making decisions on consumption and production at the present price.

Who sets the price in the cartel marijuana system? The 10 growers will set the price in the cartel system because they don’t have any competition from other potential suppliers who can’t get a marijuana medallion. This is why the taxi cartel prices were so high. Government limited the supply of taxi medallions, which artificially drove up the price of a cab ride. The price was shown to be too high once Uber started supplying rides. These 10 individuals have set up the same type of cartel system that the taxi industry has enjoyed for decades.

WHAT ABOUT ISSUE 2?

Instead of lobbying and paying (bribing) legislators to gain a monopoly position, these 10 groups have decided to use the ballot initiative process of amending the constitution to benefit themselves by restricting access to the marijuana market. It’s crony capitalism through the ballot initiative process.

Issue 2 tries to stop people from using this process to benefit themselves. Here is what issue 2 says (read ballot issue 2 here).

1) “Prohibit any petitioner from using the Ohio constitution to grant a monopoly, oligopoly, or cartel for their exclusive financial benefit or to establish a preferential tax status.”

2) “Prohibit any petitioner from using the Ohio constitution to grant a commercial interest, right, or license that is not available to similarly situated persons or nonpublic entities.”

What will issue 2 do? Very simply, the cartel that the people are trying to set up if issue 3 is passed, is prohibited. In other words, you can’t use the Ohio constitution to set up a crony capitalist enterprise. You must do it the old fashioned way, lobbying and bribing politicians.

HOW SHOULD YOU VOTE?

If you are inclined to vote yes on issue 3 because you believe it legalizes marijuana, then you should also vote for issue 2 because it will allow anyone to enter the market for growing marijuana. I think you should vote for issue 2 and against issue 3. Then either lobby the legislators to legalize marijuana, or bring a clean ballot issue in the next election that simply allows individuals to grow, use and sell marijuana. An Uber type marijuana market will spontaneously organize itself, and the out dated cartel system will go away. If you pass issue 3 and not 2, you will be fighting the marijuana cartel at some point in the future just like Uber fights the taxi cartel today.