Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Monday, March 10, 2014

The "legalization won't eliminate cartels" straw man

Over the weekend, I had an exchange on twitter about the impact of marijuana legalization on "cartels" (a term that often seems to be used as shorthand for the black market though of course "drug cartels" are only one part of the black market.)  Twitter doesn't lend itself to explanation, so I thought I would extend my comments into blog form.  

Dan Riffle of the Marijuana Policy Project tweeted (in response to a comment by Kevin Sabet about big marijuana) "Pete Coors sucks, but he beats Al Capone."  This led Kevin (who I had had the pleasure of hosting at TJSL in the fall and liked very much) to reply with the following:

I jumped in, saying that eliminating cartels is a straw man in the marijuana legalization debate.  No one suggests (except maybe in hyperbole) that marijuana legalization will "eliminate" the cartels.  But marijuana legalization will certainly cut into their profits and reduce black market violence.  To say "we can't eliminate cartels completely so there's no reason to legalize marijuana" is a bit like saying "I'll never have six-pack abs so there's no reason to exercise!"  

Tony Dokoupil (of NBC News) responded to this with another line of argument I hear fairly often but have always found--to be frank--totally baffling.

When I was doing debates during the Proposition 19 campaign, I ran into this argument all the time: "marijuana legalization won't actually result in any black market reduction because black market actors can always just diversify and/or expand existing revenue streams!"

With all respect, anyone who believes this needs to think it through a bit more.

Let's imagine Apple's CEO found out that Samsung was cutting into their smart phone market share.  Do you think he would say: "No worries, if people stop buying iPhones we can just sell more computers!  Or maybe we can release a watch!"?  No, of course not.  Every dollar of lost iPhone sales is one less dollar in Apple's pocket.  That's true even if the company is still selling plenty of computers and iPads.  Or if it invents a fancy new watch to sell.  

And this is also true when it comes to the black market and marijuana.  Every dollar of marijuana sales that is moved from the black market to the legitimate market is one less dollar going to--for lack of a better word--"criminals."  

To be sure, reasonable people can disagree about how much marijuana legalization will reduce black market profits/violence in general or the power of "drug cartels" in particular.  We don't know how exactly much of the "drug cartel" revenue comes from marijuana relative to other sources.  We don't know exactly how much of the marijuana market would remain underground in any given legalization system, due to tax avoidance, etc.  (We can guess at all of these things--and some guesses are sophisticated enough that we could call them estimates--but we don't know.)  

So there is room for debate about how much of a benefit, in terms of reduction in black market violence, marijuana legalization would bring.  There is also, of course, room for debate about whether that benefit of legalization (and other benefits, like tax revenue) outweigh any negatives of legalization.

But there can be no debate that legalization would take a significant amount of the marijuana market away from "criminals."  As a result, the black market violence that comes with illegal marijuana sales (see here and here for just two recent awful examples) will likewise diminish.  And all of this is a very clear and certain "win" of marijuana legalization.  

We can only estimate how big a "win" this would be.  But anyone who does not acknowledge this as a win is either in serious denial or is uninformed about how business works or the history of organized crime after alcohol prohibition or both.

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