Five Myths About a State-Run Cannabis Industry

Five myths about a state-run cannabis industry. Because the debate between having a state-run vs. privately-owned cannabis industry is riddled with fallacies.

State-owned vs. privately-owned cannabis companies. What’s the difference? Is one more advantageous than the other? Are state-run (or government-owned) farms and stores more concerned for the public than those pesky “for-profit” dispensaries?

Let’s dispel five myths about a state-run vs. privately-owned cannabis industry. It’s not as if this is some abstract philosophical issue.

Following New Hampshire’s Senate’s rejection of cannabis legalization, the Republican Governor Chris Sununu offered an alternative: a state-run cannabis industry.

In legal Canada, except for Saskatchewan, provincial governments monopolize distribution. In some provinces, such as Quebec, there are no private stores. The province runs the entire retail industry.

And that’s what New Hampshire’s Republican Governor suggests—a system where cannabis can only be sold and marketed by the state. 

The state may even monopolize growth, but Sununu wasn’t specific on the details. But he called it a “long-term, sustainable solution for our state.”

Which it obviously isn’t. State-run enterprises are how the Soviet economy worked. And we know how that turned out.

Sununu’s approach only affects the cannabis sector rather than the entire economy. But it will fail for the same reasons. So here are five myths debunked about the efficiency of a state-run cannabis industry.

Five Myths About a State-Run Cannabis Industry

#5 Governments Care About Public Health

In dispelling the five myths about a state-run cannabis industry, this one may be the easiest. For it misunderstands what “public health” is and what profit is for.

First, consider public health. We’ll assume that the words mean what they claim: the general population’s health. (We’ll discuss a more accurate definition below).

Governments pursuing a policy of public health can only go so far. To combat covid, the government took unprecedented steps in shutting down businesses and placing people under house arrest.

But covid is still out there. It keeps evolving. At one point, the mental and financial health of the population outweighed the perceived benefits of fighting covid using government policy.

Likewise, Canada has a universal health care system. Many Americans want one too. What if that entailed bureaucrats deciding what can and can’t be sold in a grocery store?

Or they could do one better.

Once a week, a federal bureaucrat visits your home. They rummage through your kitchen to ensure you’re eating healthy and ask invasive questions about how often you exercise and what kind of exercise it is.

Maybe they’ll demand you trade in your treadmill for an elliptical because running is “bad for your knees.” And then reverse policy three years later when the latest “study” confirms the opposite.

Maybe public health can mandate gym memberships and periodically “audit” gym security footage to ensure you’re getting their recommended 150 minutes per week of cardio.

Of course, “public health” must be balanced with individual liberties. A public health regime that decides what you can eat and whether you can go to work is tyrannous. 

Even if the ones enforcing the rules are well-meaning.

Just because the state says “public health” doesn’t make it accurate. Likewise, a state-run cannabis industry doesn’t provide any of the protections or choices that public health claims.

#4 Public Health Cares About the People 

A state-run cannabis industry is about “public health” because, as we’ve seen with covid, public health is often a good cover for power grabs and profiteering.

But covid was about a massive transfer of wealth from the middle class to large, well-connected corporations.

Likewise, Canada’s legalization of cannabis was about “public health.” It has resulted in a cannabis cartel where the small-to-medium-size producers are getting systemically squeezed out.

Public health’s response to the opioid crisis has been to give taxpayer-funded drugs to addicts. A move that subsidizes the fentanyl market and ensures the streets remain full of opioid-dependent homeless.

Or take the most significant public health fiasco of the 20th and 21st centuries: nutrition.

Public health took the advice of prominent agricultural lobbyists who evidently spent more on politicians than the beef industry. Since the 1970s, public health has demonized animal fats and promoted plant carbohydrates.

During that time, obesity rates have skyrocketed. Type 2 Diabetes is far too common, especially in children. So is non-alcoholic fatty liver disease, which was once unheard of.

Certain cancers have increased, including colorectal cancer, which public health blames on red meat instead of the processed grains and sugars they recommend as part of a healthy diet.

Cardiovascular diseases also remain a top killer among North Americans, despite everybody following public health’s advice to reduce saturated fats.

Could the Lipid Hypothesis be junk science supported by big business? That big business successfully lobbied the government to promote a biased and unscientific nutrition program that – to this day – still recommends processed grains, sugars, and plant protein over ancestrally-preferred foods like animal protein and fat.

Could it be that public health doesn’t care about the people?

They follow the mandates put forth by corporate-controlled politicians. Even in bureaus where some autonomy exists, the bias toward institutional fixes rather than bottom-up grassroots solutions guarantees that corporate influencers can weasel their way in.

Governments enable businesses to figure out how to profit without providing goods and services to people on a consensual basis. Which leads us to the next state-run cannabis industry myth.

Five Myths About a State-Run Cannabis Industry

#3 Profits Go Back to Social Programs

Perhaps the strongest argument proponents of a state-run cannabis industry make is that the government diverts profits into public coffers instead of private bank accounts.

But this argument is only “strong” if you lack education in basic economics.

It’s obvious – even if the “profits” are going into schools – that state-run enterprises lead to inefficiencies and misallocation of resources.

In a state-run cannabis industry, political considerations replace the profit motive. Allocating resources becomes about what’s politically expedient rather than what provides the most value to consumers.

A state-run cannabis industry lacks entrepreneurship. As Mises said, “Nobody can be at the same time a correct bureaucrat and an innovator.”

A competitive business environment encourages entrepreneurs and rewards innovation. The best a New Hampshire state-run cannabis industry can do is compare its static monolith to the diverse market economies surrounding them and try and mimic them.

Essentially, how the Soviets ran their economy. 

Profit and market competition drive private owners to act in consumer interests. In contrast, removing market-driven incentives guarantees bureaucratic responses. 

Profit and loss guide resource allocation. But of course, if you advocate for a state-run cannabis industry despite these objections, odds are, you don’t consider these objections valid.

They are, to use the parlance of our time, symptoms of white privilege and supremacy. 

# 2 Economic Calculation is a “Right-Wing” – Probably Racist – Concept

The great economist Ludwig von Mises once said: “Bureaucratic management is management of affairs which cannot be checked by economic calculation.”

But, per the zeitgeist, there is no difference between public and private goods. As seen above, “profit” is a sin, and that money should go to government schools and roads.

But people who argue against markets are ideologues. They are like children who complain that their parents are forcing them to eat vegetables. If given the freedom (or “liberation,” as they like to say), these people would eat ice cream for dinner every night and then blame the “patriarchy” for their resulting stomach aches.

Likewise, economic calculation is a neutral concept. Due to cultural and historic disadvantages and (actual) racism, specific individuals struggle more than others to achieve success.

But the economic system itself is not “racist.” Suppose a private-sector cannabis industry is producing racial disparities. In that case, the solution is not to create a state-run cannabis industry.

If the private sector produces “systemic biases,” the solution is cultural. It is not to undermine markets and impose a state-run cannabis industry.

And if “institutional barriers” are the issue, odds are, these barriers, like in Canada’s legalization scheme, are government-created. 

If you consider “private property” as one of these barriers to equal opportunity, then I highly suggest you read some Sowell before speaking further on the topic. 

Five Myths About a State-Run Cannabis Industry

# 1 Markets Are Chaotic and Immoral 

Advocates for a state-run cannabis industry may incorrectly claim that free markets are chaotic, wasteful and immoral.

The idea that markets are chaotic and wasteful and that central government planning is rational and orderly is a long-debunked myth from the 19th century.

It’s amazing people still make this argument.

First, there’s a knowledge problem. Central authorities do not possess the information needed to make minute, tacit decisions for every aspect of the cannabis industry.

Market prices – and only market prices – convey the information needed. They act as price signals to share the dispersed information about consumer preferences, resource availability and production costs.

A competitive market process allows for decentralized decision-making that leads to efficient allocation. Without market prices, how is the relative scarcity of resources reflected?

How is it possible for a state-run cannabis industry bureaucrat to rationally allocate resources and make sound production decisions if there’s no accurate pricing information?

They could look to the privately-run cannabis industries in neighboring states. 

But what if the entire world has a single state-run cannabis industry? The situation would be like our money and banking situation.

When Has “State-Run” Ever Worked?

Money and banking are completely cut off from the market process. And ergo, from consumer wishes. This is why the rich get richer while the poor get poorer. This is also why modern markets seem so chaotic and wasteful.

There’s no market process. Money is state-owned and controlled. It’s as foolish to think a state-run cannabis industry will serve consumer interests as it is to assume the current crony-capitalist system serves the poor and middle classes.

But ultimately, the argument that markets are immoral and the government is “for the people” ignores the culminated efforts of every sound historian and philosopher who has ever existed.

Markets emphasize the importance of individual freedom and consensual relations. Voluntary transactions respect individual liberty and enable mutually beneficial outcomes.

In contrast, central planning, such as a state-run cannabis industry, involves coercion and restricts individual choice. It’s immoral and leads to chaos.

There is no valid argument for a state-run anything, let alone a state-run cannabis economy.