Basic cannabis economics. Wherever you find reefer madness, a poor grasp of basic cannabis economics is right behind it.
For example, public health busybodies demand THC limits. As if adults choosing high-THC strains of cannabis will simply shift their demand to lower-THC strains once public health tells them what their preferences should be.
Most, if not all, government workers lack an understanding of basic economics and, therefore, basic cannabis economics.
So let’s clear up some misconceptions. First, let’s start with a definition from economist Thomas Sowell.
“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”
Politicians Who Don’t Understand Basic Cannabis Economics
Canadian Prime Minister Justin Trudeau legalized cannabis in 2018, three years after pledging to do so.
From the beginning, we covered what Justin Trudeau meant by legalization (i.e. Corporatization) and what he should do instead (remove cannabis from the criminal code and rely on our common law/customary traditions for regulation).
But Justin Trudeau does not understand basic economics, including basic cannabis economics.
The trust-fund prime minister believes federal budgets balance themselves. That economies grow “from the heart outwards,” which must be doublespeak for running up the credit card.
The former drama teacher also thinks inflation isn’t a concern for “families,” which he claims to care about.
Justin Trudeau is a textbook example of a politician that places “compassion” and what sounds good over what works. He is the type of politician that ignores scarcity.
But the problem isn’t only in Canada.
Connecticut, for example, is trying to enforce THC limits unsuccessfully. Retailers can’t sell flower higher than 30% THC; concentrates are capped at 60%.
But convenience stores, gas stations, and CBD-only stores can get around these limits by focusing on delta-8 THC.
Obviously, a politician with an understanding of basic cannabis economics would declare THC limits a failure. They would find another way to persuade people to consume lower-THC cannabis. Maybe by trying a method based on consent rather than coercion.
But Democratic Representative Mike D’Agostino thinks the problem is that the rules aren’t strict enough. As he told the House,
All we’re trying to do is make sure that any products that are sold with a significant amount of THC in Connecticut are sold in our regulated marketplace through the dispensaries, where there’s labeling requirements, there’s per package requirements, there’s per container requirements.
And all Fidel Castro was trying to do was create a “new socialist man” who would set aside all personal interests, goals, and desires to devote his life to building a communist society.
It may look like a stretch to compare THC limits to systemically dismantling the market economy for a utopian ideal, but the principles are the same.
Politicians who don’t understand basic cannabis economics will destroy the cannabis industry before it can thrive.
Look at Canada’s cannabis sector. Even large producers struggle to keep up with the government’s criminal excise tax structure.
Politicians who don’t understand basic cannabis economics are the biggest threat to cannabis legalization. The world can now look at Canada and conclude, “I guess cannabis legalization doesn’t work.”
Basic Cannabis Economics in the Edible Market
Economics studies cause and effect, showing what happens when you do specific things in specific ways. With basic cannabis economics, we should look at the incentives certain decisions create rather than the stated goals.
In other words, consequences matter more than intentions.
Canada’s public health busybodies say because children are attracted to cannabis edibles, THC limits and other restrictions are justified.
It’s easy to declare good intentions and blame others for the problems. But, by understanding basic cannabis economics, you can see how Health Canada‘s strict edible rules have led to counterproductive, even disastrous, consequences.
The Canadian government hasn’t changed consumer demand. People still want potent edibles. The consequences have been
- a) continued revenue streams for “illicit” edible makers and;
- b) legal producers are focusing on potent cannabis extracts.
Health Canada sees the consequences of their actions but refuses to take responsibility because they don’t understand basic cannabis economics.
They released a statement decrying “copycat” cannabis edibles, especially since they appeal to children. (Ignoring that refined sugar is generally terrible for children or that teens are experimenting with “safe supply” opioids in B.C. An issue much more severe than illegal cannabis edibles).
And instead of acknowledging that THC limits are counterproductive, they go after potent extracts they consider “edibles.”
Health Canada may argue that child-resistant packaging and THC limits are necessary “for the children.” But, at the same time, they complain that legalization and “privately-owned for-profit” dispensaries have resulted in higher hospitalizations and E.R. visits by children who have accidentally consumed cannabis edibles.
So which is it?
Basic Cannabis Economics
Many people think economics involves money, finance, and banking. And it does. But at its core, economics, including basic cannabis economics, is about the logic of action.
Consider a clean-up crew arriving after a cannabis festival. Maybe the garbage cans are piled high. Cannabis roaches and lost paraphernalia litter the ground. The clean-up crew is confronted with an economic problem.
Where to start? They must allocate their scarce resources (cleaning supplies and equipment), which have alternative uses. Do they start with the bathrooms or by emptying the garbage cans?
Perhaps a discarded joint starts a small bushfire. The clean-up crew would be wise to begin there.
Human life consists of allocating time and resources efficiently. This is an inescapable fact of reality.
In this example, no money has changed hands, and there’s no market in the traditional sense. But the choices made by the clean-up crew are necessarily economic.
There are no solutions. There are only trade-offs.
Yes, public health can limit THC and demand child-resistant plain packaging. But the trade-off incentivizes others to produce high-THC edibles in packaging that are pleasant to the eye.
Why must ‘copycat’ cannabis edible appeal to children? Are adults not allowed to enjoy the marketing of their favourite chips, candy, and chocolate brands?
Making choices is at the heart of economics. Understanding basic cannabis economics means understanding that you can’t change people’s preferences by affecting supply.
All you do is frustrate consumers and incentive black markets. It’s not like public health is trying to keep the public from consuming tide pods or inhaling aerosols.
In fact, if they took the heavy-handed approach to those issues as they did with cannabis, they would lobby for the prohibition of those goods.
Which would create a black market (or at least incentivize alternatives, like the popularity of synthetic cannabis in places with strict cannabis prohibition).
Public Health is a Joke
Public health busybodies wonder why some people don’t listen to them.
Imagine going to the doctor, and he gives you financial advice. It may be sound financial advice, but it’s not their place to provide it. Not in that setting.
Likewise, I expect medical professionals to take a cautious, conservative approach to high-THC cannabis edibles. They have every reason as “public health” to provide prudent insights and opinions.
But enforcing these opinions through government laws is one step too far. It ignores basic cannabis economics and reduces individual adults to an infantile state.
It also doesn’t work.