Liberal MP Justin Trudeau yawns as he votes during the 14th hour of voting on amendments to the budget Bill C38 in the House of Commons on Parliament Hill in Ottawa on Thursday, June 14, 2012. THE CANADIAN PRESS/Sean Kilpatrick

What Justin Trudeau Means by Legalization

Federal Liberal Party Leader Justin Trudeau stopped in Winnipeg last week on a campaign that has yet to officially kick-off. During his brief visit, Justin voiced support for medical cannabis in Canada and Your Medical Cannabis Headquarters, the local dispensary owned by Glenn Price that was told to shut down, and did not, by Winnipeg authorities last week at the urging of anti-cannabis activists. The Liberal Party has been calling for the legalization of cannabis for sometime now, with Trudeau reiterating that by licensing and restricting its sale it will keep the plant out of the hands of children and criminals.

But that is exactly the problem. It is the nonviolent “criminals” who are only deemed criminal because cannabis is in the Controlled Drug and Substances Act. Licensing and restricting its sale to keep it out of the hands of these people doesn’t make any sense. The state has criminalized cannabis and all its producers and consumers for the last 92 years. And now we are to trust this same state apparatus with legalization? Keeping it out of the hands of criminals literally means keeping it out of the hands of the “criminals” who have been safely producing BC Bud without any help from the government. And there is nothing about legal cannabis that will keep it out of the hands of children. Alcohol is legal, yet underage drinking is a concern for Canada’s health authorities. Legal cannabis (read: taxable cannabis) will take revenue out of the hands of organized crime and transfer it to the larger apparatus of organized crime: the federal government.

But is Justin Trudeau against home-growing the way Harper has been with the MMPR? While the LPs are well positioned for recreational markets, the Liberal leader sounded like he supported independent growing. He told a crowd last year that,

“[T]he current hypercontrolled [sic] approach around medical marijuana that actually removes from individuals the capacity to grow their own is not going in the right direction. It neither respects freedom or the kind of care that people need… If someone wants to brew their own beer or make their own wine, they’re more than welcome to. But the vast majority of consumers are happy to go to a liquor store to purchase their alcohol because its of known quality. And the choices available to consumers and the knowledge of what it is that goes into what you’re buying empowers consumers.”

But how does the alcohol model work in Ontario? The Beer Store controls 79% of the market. The rest of the market is divided between the state-owned LCBO and independent breweries. Like BC’s farmers, these brewers have little capital and distribution reach compared to their corporate competition. The Anheuser-Busch-Molson-Coors-Sapporo cartel control what is on the shelves at The Beer Store. The breweries that aren’t part of the cartel are at a competitive disadvantage, and not because of some free and fair market, but because of prohibition-era rules and regulations that are there to protect people from themselves.

Ontario‘s beer cartel charges independent breweries substantially higher rates to stock their products on The Beer Store’s shelves. Independent breweries must either hike their prices in order to justify the higher rates and attempt to make their money back, or take a loss at the expense of having their product sold alongside corporate beer. But, like Trudeau said, “If someone wants to brew their own beer or make their own wine, they’re more than welcome to. But the vast majority of consumers are happy to go to a liquor store…”

The Ontario cartel charges “volume-based fees” for corporate beer and “uniform operating fees” for independent breweries, ensuring the shelves are full of the former. They get away with this using the same kind of licensing and regulation Justin Trudeau advocates for cannabis. The goal is always to corner the market and price-out competitors. Can you imagine a scenario where LPs supply 80% of cannabis in Canada while BC’s farmers (the original growers of BC Bud) are priced and regulated out of existence? Sure, we may be “legal” according to Justin Trudeau’s standards, but what is the point of being legal if the market is so rigged that competition is impossible?

Let’s take another “license” in the Canadian economy just to drive home the fact. To be a dairy farmer, one must go through the proper regulatory channels. Of course, it’s all for consumer health and safety. That’s why Canadians pay up to three time more for milk than Americans. That’s why the Canadian Dairy Council sets prices for cheese, butter, ice cream and yogurt. The “free market” is much too wild and chaotic. All the economic lessons from failed socialist states need not apply here. The $25,000 permit to produce milk from a single cow is not excessive and not designed to keep smaller less-capital intensive competitors off the market. That’s a conspiracy theory.

It must also be a conspiracy theory to discuss political incentives. Never mind why politicians would lie to get into office, or why government licensing (even with the best of intentions) will inevitably fail and create the conditions for regulatory capture by the top-producers in the industry. That’s what happened to the dairy and poultry industries, and that’s what happened with the re-legalization of alcohol. Strict rules and conditions were set in place because alcohol was still a social evil, but a necessary one in which the effects of prohibition were worse than the drug itself. And yet, the so-called leaders of the cannabis movement often tell us, “We’ll legalize it first, then fix it later” or that there will be “many models” and somehow governments will voluntarily abandon the ones that don’t work and embrace the ones that do. Yet, here we are nearly 100 years after alcohol legalization, and Ontario is still plagued by prohibition-era laws.

Is this the model Justin Trudeau has for cannabis in Canada? In Ontario, the Beer Store cartel is able to use regulation and fees to charge prohibitive fees to smaller breweries that hold out against the consolidation by corporate breweries, while at the same time charging themselves rock-bottom prices in their monopoly retail outlets. Will Canada’s dispensaries and compassion clubs fall under a guise of a private monopoly? Or will independent dispensaries still exist but supply the market with cannabis from the private LP cartel? Justin Trudeau came out in support of Glenn Price and his dispensary, but what about the BC growers who don’t have the Liberal Party connections? What about the BC growers who predate the MMPR? What about BC growers who have been criminalized and jailed under previous Liberal governments? Why the hell should they believe Justin?

To keep it out of the hands of children and the nonviolent criminals who are responsible for BC Bud, the federal government will undoubtedly allow the LPs to open their sales to a recreational market, while at the same time making it easier for them to do business. And since there is much red tape to cut from Harper’s MMPR, there will be significant opportunities to influence the bureaucracy and “capture” the process. The LPs are in every position to become the cannabis cartel of Canada and that’s all Justin Trudeau means when he says “legalization”.