Monday, October 25, 2010

A great reason why California proposition 19 is a dumb idea.

Hypothetically speaking, let's say that you own a steamship company. You observe that people in North America love eating bananas and that people in South America have lots of spare bananas hanging around. You could make money by shipping bananas from one continent to the other. What selling price do you aim for in your North American markets? Do you (A) have the United States make bananas illegal so you can smuggle them into the country and sell them for $20 a pound; or (B) dramatically reduce costs as much as possible so you can sell bananas in the United States at 80 cents a pound?

The real life banana companies go for (B) because a cheap price for bananas allows that fruit to penetrate markets, attract more consumers, and still make a profit. The backers of proposition 19, perversely, think the answer is (A). In other words, they think the dramatic expansion of marijuana consumption that will follow greater legalization will end up making marijuana less profitable to the drug gangs. The truth is the exact opposite.

Of course, proposition 19 also allows individual smokers to cultivate their own small plots of marijuana. Technically, this will reduce the price that drug gangs can charge by some small amount. It won't put drug gangs out of business. You don't see Phillip-Morris going out of business because college students are growing tobacco in their dorm rooms, right?

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