Cannabis Doesn’t Need Government Regulation

If the goals of regulation are to make things regular and orderly according to rules and standards, then it’s worth pointing out the alternative to government regulation.
Markets regulate themselves everyday, through competing business offers, customers choosing among various goods and services, and competing businesses reacting to customers’ choices.
The most obvious type of market regulation is the price system. Like a fish in water (even polluted water), individuals in a capitalist economy are often unaware of the importance and spontaneous origins of market pricing, as well as its regulatory aspect.

There are countless examples throughout history governments imposing restrictions on prices causing surpluses or shortages. Communist countries, which have tried to completely supplant the market and take over the price system, have failed miserably, often with a death-toll in the millions.
In contrast, healthy economies with competing businesses and industries use market forces as the only regulator of price. Simply put, the terms of exchange offered by some sellers restrict the terms of exchange other sellers can offer.

If a dispensary near my place sells cannabis at $10 a gram, other competitors must match that price or have their trade restricted. A competing dispensary owner could sell the exact same strain for $12 a gram, but then he won’t sell as many grams. There is a regularity in the prices of cannabis at any place and time. How is this accomplished? By each seller’s reaction to the actions of customers and competitors. Unlike physics or chemistry, economics must take into account the choices of individuals. Planets don’t choose to revolve around the sun, hydrogen atoms don’t choose to bind with oxygen to make water, but human beings choose whether to patronize dispensary A over dispensary B.

In addition to prices, markets regulate quality as well. A dispensary can sell old mouldy cannabis for a lot cheaper, but the actions and choices of competitors and customers won’t let them. Competitors and customers can restrict (that is, regulate) the quality of cannabis a dispensary can offer for sale. Competitive dispensaries cannot afford to alienate customers by offering old mouldy cannabis, especially when competitors down the street are showcasing their highest quality bud. In this way, market forces (that is, individual consensual decisions) regulate quality. A dispensary owner’s reaction to the actions of customers and competitors are captured in real-time by market prices. It is a fatal conceit to believe government central planners can mimic this process with any efficiency.

In fact, market regulation become less effective when the market is not as free nor fair. A government regulator holds a monopoly on the regulatory business, the best example here being Vancouver City Council’s commandeering of the dispensary market. Since monopoly lacks competition, and lacking competition changes the range of prices, range of quality and ability to sell, Vancouver‘s regulatory scheme for cannabis dispensaries and compassion clubs will be less effective than otherwise would have been if the market had continued to develop its own regulatory process. Vancouver’s legal monopoly on cannabis regulation means customers and patients now have nowhere else to turn. If Vancouver’s regulations knock the number of dispensaries down from over 100 to just 16, it will create unintended consequences that, in the eyes of the government regulators, will likely require more government intervention.

The decivilizing effects of ignoring market forces still surface if there are competing dispensaries but restrictions on supply. There will be less incentives for cannabis farmers and extraction crews to maintain quality and hold down prices. In other words, there would be fewer market regulations on quality and price despite the growing number of government rules and standards. Merely passing a law does not change economic reality. It is the actions of each market participant that constrain and influence the actions of others in ways that make markets regular – that is more or less predictable.

Freedom of exchange makes market regulation effective and without having to establish a wealth-sucking bureaucracy. Competing dispensaries are free to sell, customers are free to patronize other businesses and therefore prices and quality are tightly regulated because of the free choices customers and competitors have. Market forces are weakened when there are more government restrictions on consumer and entrepreneur choices. The more restricted the market is, the less free and fair it is. There is a direct trade-off between government restriction and market regulation. But there is never a situation where one can say the market is “unregulated.” There are different kinds of regulation, regulation by bureaucracy or regulation by market forces. But there is no such thing as an unregulated market, and if the goal of regulation is to make things orderly and controlled, bureaucracies, that are not accountable to consumers and can never face bankruptcy, should remain suspect.

The argument for or against government regulation isn’t about ends, it’s about means. Government action can often lead to more meddling than necessary, creating counterproductive mandates and restrictions.
Market forces, on the other hand, have been the most successful regulators of quality and price, both logically and empirically.