kenneth Brent Olsen

Dr. Kenneth Brent Olsen

Government regulations on markets usually do a lot more harm than good.  They stifle innovation, slow economic growth, limit job creation, undermine sustainable development, and cause harm to those they are intended to protect.  Examples of this abound locally in Hanford. 

For example, as councilmember Kalish Morrow eloquently pointed out in her most recent op-ed, the old restrictive zoning practices from the 1990s which were designed to help the downtown area of Hanford have actually caused harm to both the downtown and the people of Hanford.  These practices have caused the downtown area to effectively close up after business hours on weekdays and on weekends in general.  There is not much of a nightlife in downtown Hanford, as a result.  Even more concerning, due to restrictions on optometry offices, the residents of Hanford of lower socioeconomic status have been harmed by the lack of affordable vision care available in Hanford.  The Hanford City Council is seeking to change this in order to help downtown and the people of Hanford.

Another area where regulations negatively impact people locally is with limitations placed on cannabis dispensary permits.  The general arguments for limitation of permits for cannabis dispensaries are based on outdated ideas of prohibition as well as the desire for the government to ensure market viability and success for investors.  However, both of these concepts are misguided.

Limitations on permits, in addition to high taxation of cannabis, have led to higher prices for legal dispensaries, and therefore continued viability of cannabis on the black market.  It is much cheaper for someone to get high quality cannabis products through the black market than to use the legal market.  So the black market is thriving.  The Hanford Police Department remains busy spending tax-payer dollars on the pursuit of black market cannabis products.  These are, from my perspective, wasted resources. 

Restricting the number of permits leads to less market competition, and therefore higher prices.  High prices of legal cannabis are the largest contributor to the thriving black market, in addition to long lines at legal dispensaries. 

While many prohibitionists would argue that increasing the number of legal cannabis dispensaries might increase cannabis use, that is simply not the case.  Change in cannabis use remains at approximately the same rate after legalization as before.  Tax revenues from legalized cannabis have exceeded expectations and the absence of significant adverse consequences to legalization is striking. 

Those who advocate for limitations on permits based on the idea of market sustainability and protecting investors are likewise using flawed thinking which results in increased prices, and therefore, increased black market use.  While these limits do result in a less risky investment for legal cannabis investors, they also result in higher-priced cannabis and increased draw to the black market.  The limits also cause market innovators to be less likely to be able to affordably compete for the permits available and this becomes cost-prohibitive for them.  As a result, they engage in less expensive black market cultivation and dispensing, offering lower prices for customers who either can’t afford the higher cost of legal cannabis or prefer paying lower cost at a fairly insignificant risk for products that are equal or better than what they can get on the legal market.  The black market contributes much less toward tax revenues, causes an increase in cost to taxpayers for law enforcement efforts against the black market, and generally leads to a less sustainable legal cannabis market.

Would cannabis investment become more risky if these limits were not set?  Sure.  Some investors would not see a return on profits.  Some businesses would be unable to compete and would go out of business.  But the market, left unhindered by the government, would ultimately stabilize and would result in availability of higher quality products at a lower cost and also as a side benefit would lead to a reduction in black market cannabis cultivation and sales.  This would cause higher tax revenues and reduced cost to taxpayers on law enforcement efforts towards blocking black market cannabis sales and cultivation.  It would be a win-win for market investors, cultivators, innovators, consumers, and ultimately taxpayers.

Dr. Kenneth Brent Olsen is a clinical psychologist practicing in California. He has been active in the Libertarian Party since 1996 when he ran for Salt Lake County Commissioner in Utah. He contributes to the "A Voice of Reason" column regularly. To contact Dr. Olsen, please email him at  vicechair@ca.lp.org.

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