Despite what you've been told...
On November 6th, 2012, Colorado voters (36% of whom –the largest voting bloc in the state—are registered independents) passed Amendment 64, a ballot initiative legalizing marijuana for adults 21 and over, 54.8% to 45.1%. This amendment, titled the “Regulate Marijuana Like Alcohol Act,” states that “the people of the state of Colorado find and declare that the use of marijuana should be legal for persons twenty-one years of age or older and taxed in a manner similar to alcohol.” Opponents of marijuana prohibition have long asserted that executing military-style SWAT raids, imposing gargantuan fines (up to $1,000,000, depending on quantity), subjecting users, sellers and cultivators to prodigious terms of imprisonment (up to life, in some states), and sabotaging an individual’s prospect of acquiring gainful, legal employment for at least 10 years after his or her release, have thus far been ineffective in drying up the nation’s supply of the herb, or decreasing overall rates of consumption. In fact, they argue, that all of this occurs in the name of eliminating a drug that the government acknowledges is, quite literally, impossible to overdose on, only exaggerates the absurdity of prohibition and the war on drugs in general. These realities, coupled with growing disillusionment among the American populace --and western states in particular-- with the federal government’s attempts to “protect us” from ourselves, have led some areas of the country to take matters of drug policy into their own hands. Aside from Colorado, voters in Washington passed Initiative 502, which also legalizes and regulates marijuana, 55.7% to 44.3%. Similarly, voters in Portland, Maine elected to legalize the possession and consumption of the plant at the city-level, and comparable measures are gaining traction in Arizona, California, Oregon and, most promisingly, Alaska, where possession of up to an ounce of marijuana in one’s own home has actually been legal since 1975, due to a unique privacy provision in that state’s constitution.
To many in the freedom movement, these important steps forward in repealing arbitrary prohibitions on victimless "crimes” represent promising shifts in public attitudes towards the role of the federal government in regulating day-to-day interactions among private individuals. Ryan McMaken, writing on LewRockwell.com, has twice touted it (here, and here) as the nanny state becoming “just slightly less powerful in Colorado and Washington.” The second of those two articles was actually written as a rebuke to a piece by Pat Buchanan postulating that legalization signals a “deeply libertarian trend,” after which he erroneously goes on to purport that such a trend is corrosive to the moral fabric of traditional American values. Washington’s Blog called it historic. Tom Woods argued that this was an example of voters in both states successfully nullifying federal law; while true in the legal sense, that analysis overlooks the statist dimension of the new legislation, which grows the power of the government significantly. While these insights cannot be dismissed outright, the reality of legalization in Colorado is much less of a libertarian victory than most in the freedom movement have thus far realized. In fact, in executing the provisions of Amendment 64, the state of Colorado not only does not treat marijuana anything like alcohol (excepting the required age for legal purchase), it has actually expanded government control in ways people outside the the industry and its regulatory bodies could never have foreseen. It has not, in any way, repealed any portion of the nanny state; it has enlarged and strengthened it, albeit at the state level rather than the federal one. One can be almost certain that Eric Holder has agreed to let legalization play out not because nullification has been effective in demonstrating to the feds that they are diminishing their own legitimacy with arbitrary edicts that effectively do nothing except increase our prison population, but because they, too, realize that this will be an opportunity to expand the scope and influence of government to a segment of the market it previously had little control over, should voters in other states want similar laws.
It could be said that “black market” is just a government smear term for “free market,” albeit with a significantly enhanced element of risk, and a lack of legitimate options for seeking legal recourse in dispute resolution. If Bob owes Steve $400 for a quarter-pound of marijuana, but Steve alleges that he is owed $500, neither Bob nor Steve can appeal to a legal, objective, 3rd party arbiter with knowledge of property rights law to resolve their dispute, and the two are therefore left to mediation through their own non-institutionalized channels. Given that the higher element of risk tends to attract personalities to the business whose time-preferences are often very short, and concern for the future very limited, this can frequently be a recipe for violence. This are the primary ways in which the “black market” differs from the free market, and are a direct result of government prohibitions. In almost all other aspects, “black market” transactions function largely as they would in a totally free society; the government does not extract taxes on sales, they do not inspect or regulate the quality, potency, packaging or labeling of the product, they do not stipulate who an individual can or cannot sell to, they have no way of knowing who has purchased what quantities of the substance, or how much they paid for it, they cannot dictate that the plant must be grown in certain parts of towns or counties, but not others, they cannot impose price or wage controls on the people who cultivate, refine, package, transport or sell it, and they cannot track it from production to sale. All of this, however, has changed with the passage of Amendment 64.
According to the Colorado Marijuana Enforcement Division (MED), only dispensaries currently distributing medical marijuana pursuant to Medical Marijuana Code 1-CCR 212-1 may apply to enter the retail market as well. Application fees for a medical dispensary license are, at minimum, $7,500, whether or not an individual’s establishment is approved to begin operations. This must be renewed yearly, at a cost of $3,750, again, whether or not an individual is approved. If one wishes to cultivate plants on the premises, these fees are increased by $1,250; likewise if the business desires to create marijuana-infused products, including foods, beverages, lotions, concentrates, etc. Every person who wants even simply to work at a retail marijuana outlet must also be licensed to work at a dispensary. This process is called getting “badged” in Colorado, the application for which can be found here. For those who do not want to read through that entire document, I’ll summarize some of the more invasive points:
-Page 1: You must disclose any scars or tattoos. Your application may be denied if an MED officer believes that any of your tattoos may indicate a past gang affiliation.
-Page 2: Any conviction of a felony EVER, even three decades or more prior, is grounds for denial.
-Page 6: In fact, even a simple arrest in the last ten years, without a conviction, is grounds for denial.
-Page 8: You must provide contact information to every single job you’ve held in the past 10 years. If the state discovers that you did not report a place of employment, your application is denied.
-Page 9: Delinquency on student loans is, likewise, grounds for denial.
And, then, it gets scary:
-Page 13: You must authorize the state to conduct a background check “using whatever means they deem appropriate.” You must agree to authorize “any person or entity contacted by the Investigatory Agencies to provide any and all such information deemed necessary.” You “hereby wave any rights of confidentiality.” Any financial institution you are associated with must “surrender to the Investigatory Agencies a complete and accurate record of such transactions that may have occurred with that institution, including, but not limited to, internal banking memoranda, past and present loan applications, financial statements, and any other documents relating to my personal or business financial records in whatever form and wherever located.” You must consent to these entities releasing any information “designated as confidential or nonpublic under the provisions of state or federal laws.” During your criminal background check, the state of Colorado will also examine “records of arrests which may have resulted in… dismissed charges, or charges that resulted in a not guilty finding.”
And if that wasn’t bad enough, there is this wonderful caveat at the end:
“Any information contained within my application, contained within any financial or personnel record, or otherwise found, obtained, or maintained by the Investigatory Agencies, shall be accessible to law enforcement agents of this or any other state, the government of the United States, or any foreign country.”
Oh, and if the information they happen to uncover about you is false and is disseminated to other law enforcement agencies, well, you’re on your own:
“The State of Colorado, Investigatory Agencies, and other agents or employees of the State of Colorado shall not be held liable for the receipt, use, or dissemination of inaccurate information.”
As if this level of government intrusion was not bad enough, there are also mandated regulations for “limited access areas,” and who can be in them, rules dictating RFID tags on shipping containers, the information that transport manifests must display, how inventory is tracked, how receiving is conducted, how a business must handle discrepancies, where marijuana can be stored, what type of security must be used to protect it, what types of containers marijuana may be sold in, what health benefit claims may be made, what language the packaging is in, the minimum size of print on labels, what information must be displayed on packaging, what constitutes “clarity” in product description, and how to address data and records loss. Establishments must also agree to random inspections, financial and transportation records audits, reporting of managerial changes, “character investigations” on any employee at any time (even if they have already been badged and are not suspected of violating any regulationss), and “voluntary” surrender of any marijuana products deemed noncompliant by MED officers. If an establishment is found to be in violation of any of the aforementioned rules, it is not only in danger of being shut down, but its owner(s) and employee(s) may be subject to arrest and/or felony charges.
But, of course, the government intrusion does not stop there. Marijuana at retail establishments is taxed at 25% of retail value, on top of city and county sales taxes, sin taxes, and marijuana-specific taxes; in some cases, these extra charges amount to almost 40%. Then, in a particularly clever execution of infringement upon consumers (which actually demonstrates an understanding of free-market principles, albeit a Machiavellian one used to extort even more money from the productive class), government officials prohibited establishments from purchasing extra marijuana (which they are only allowed to possess in restricted quantities) for the purposes of retail sale before Jan. 1st, when the law took effect. Instead, they merely allowed medical establishments to make a “one-time stock transfer” from medical to retail stock, which they are legally required to separate. The government knew, as it acknowledged dozens of times prior to the legalization date, that people from Utah, Wyoming, Nebraska, Oklahoma, New Mexico and Kansas would pour over state lines in droves to purchase marijuana, driving demand through the roof. By not permitting establishments to increase their "medical" marijuana supplies (as if they were somehow different from "retail" suplies), however, they ensured that businesses would instead raise prices, in some cases almost three fold (medical marijuana retails for around $30 for an eighth-ounce, some operations were charging almost $80). This, in turn, would allow them to extort extra tax revenue from marijuana-tourists on the first day of recreational sales, while employing less regulatory resources. Somehow, this is supposed to be representative of a "deeply libertarian trend" among the American populace.
In fact, there was nothing libertarian about the legalization of marijuana in Colorado and Washington, and there is nothing libertarian about the federal government refraining from raiding otherwise legal establishments (probably by piling out of a BearCat in SWAT gear). For the state government of Colorado, this was an exercise in getting their hands on one of the last segments of the market not subject to government regulation; NONE of these invasive application questions, monstrous fees, or threats of felony charges for noncompliance apply to alcohol retailers. For the federal government, this is a chance to see if there is enough nationwide support for these measures for them to similarly follow suit. Although I pray that others will soon awaken to the decidedly non-libertarian reality of this form of legalized marijuana, I fear that I am hoping against hope; or maybe I’m just jaded. Sure, on the “black market” you can be arrested for possessing something our overlords deem “dangerous,” but the law was simple and one dimensional; get caught in possession of the stuff by a state purveyor of violence, and you'll go to jail. During prohibition, no corner drug-pusher ever concerned himself with whether or not his containers were childproof. Sure, now you won’t do jail time just for possessing marijuana, but you might do it for not signing the bill of lading properly.
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