POSTED ON DECEMBER 12, 2012:
T-Town & Weed Futures
How to be a leap-frogger instead of a laggard
Gary Becker is a Nobel prize-winning economist from the University of Chicago line of exceptional economic theorists and policy people. But his work is considerably more interesting than many of the Chicago School figures, including the most famous among them -- Milton Friedman. Becker's work is fascinating to me because he was one of the first modern economists to make agile use of mathematical economics and new model making techniques to examine social phenomena including marriage, staffing and talent selection in business, and drug addiction and its economic, social, and political consequences. Becker wrote a monthly column for BusinessWeek from 1985 to 2004. Here is what he said in a provocative November 2000 essay:
"Legalizing drugs is far from a panacea for all the distress caused by drugs, but it will eliminate most of the profit and corruption from the drug trade. ... To be sure, legalization will increase drug use by, among other things, lowering street prices, but that can be partially offset through sizable excise taxes on producers ... retail prices of cigarettes, alcohol, and gasoline are several hundred percent higher than their wholesale prices because of large "sin" taxes on them ... Although some drug production would go underground to avoid high taxes, experience with liquor, gasoline, and cigarettes shows that most producers would operate legally."
We need to face up to the outsized human misery and the expensive, brutal incarceration practice spawned by our medieval state and local marijuana policies. Ironically, we live in a state that has a strong rhetorical preference for "freedom." And while many of us believe that this nominal commitment to "freedom" is more than a little compromised by a whole set of puritanical preconceptions and some excessive religiosity, we need to deliver on at least one facet of what is fast becoming a big part of any intelligent person's 21st-century freedom agenda. We could do so via a willful act of political organization and maybe an epic fundraising favor from our electric music community. Tulsans could be powerful catalysts for a deep, sweeping redo of our Oklahoma/Tulsa marijuana laws.
I wanted to talk to an attorney in Oklahoma with direct experience with marijuana cases. So I had a short conversation with veteran lawyer Jay Ramsey, a defense attorney in T-Town who has handled many, many cases. Ramsey told me that Oklahoma has some of the most draconian marijuana laws in America. A first offense can get you a year; a second offense is a felony and brings a 2-10 year sentence, a punishment that is more than what many Oklahoma offenders get for "doing" physical violence to an adult. I asked Ramsey if he thought there was any chance that a legislative initiative of the kind associated with Okla. Sen. Connie Johnson's work, an effort he mentioned in our talk, or a statewide voter referendum that might yield change -- maybe along the lines of the medical marijuana model which has been in play in California for a very long time -- might come to pass. He said "no chance" in his judgement: this is where I depart from my newfound friend's analysis. I think we need to try to secure something akin to full legalization -- there are a passel of hot moral and economic drivers that should compel us to try to do so.
Why Does it Matter?
1) As many UTW readers will know, Oklahoma is now at the top. We are number one in terms of the number of women incarcerated per capita and very close to the top with men as well. The cost of this permissive, low level drug violation/non-violent offense regimen is costing the state in excess of $250 million annually -- the figure is my best estimate. I used a 2012 Oklahoma corrections outlay report prepared by the Vera Institute for Justice, and some drug offense "market share" numbers I cobbled together from other sources.
2) We are an extremely poor state: personal income, tax structure, and Republican nostrums about keeping state taxes extremely low condemn us to a structural shortfall that deprives the state of the finances required for critical services, especially public education. We need robust new revenue sources: if the early and middle run results of Colorado's first marijuana medical initiative are any indication, substantial tax revenues could come as a consequence of a weed initiative in Oklahoma; revenues in excess of $300 million annually, not counting reduced spending that would slowly but surely come from changing our absurd marijuana offense incarceration practices. This would be out of the blue cash, a wild "freedom dividend" that could dramatically augment our declining oil/gas tax dollars and our anemic income tax yields.
The "Business Model"
I'll be looking at the politics, practicalities, and strategy of mounting a Colorado style weed freedom measure in a week or two.
But we need to think about fundamentals first. What this means practically is preparing to fashion a "weed policy," assuming that we could secure passage of a legalization referendum that many people will consider provocative. For example, we should make it a stipulation of any marijuana grower/retailer license that the applying firm be small, say under 100 people total, locally owned and managed, and growing an appreciable portion of their weed on site or in the state. Some of these provisions are essentially experimental elements in the new Colorado legalization initiative that readers may recall was passed during our November elections. But these sale/provisioning strategies are needed even more in Oklahoma because they would give us a shot at doing something distinctive that would net the revenues and maybe even the smoker/tourist traffic that we need to dramatically augment our tax and service revenues.
This notion is essentially an anticipation strategy: Big Beer/Liquor, Big Tobacco, Big Junk Food, and a variety of other usual suspects hope to dominate the newly created marijuana space in the national economy and in every state where marijuana becomes legally available. And while in the normal course of events, there's nothing sinister per se about this prospect, it surely forestalls a locally owned/locally driven business model that would allow Oklahomans to benefit dramatically from a dynamic "weed world" economy.
And maybe while we're at it, we can do something truly inventive like involving our giant agricultural/farm and Ag Biz academic and business communities in creating new varieties of medically ok tailored strands of marijuana: lines that could enhance things like anxiety suppression and chemo drug side effect mitigation. With OU and OSU we have some of the top academic researchers in these areas; maybe we could even institute a new pharmaceutical industry as a side car to Oklahoma's entry into the "free" marijuana world.
Only by carefully planning a weed "business model" that consciously creates "infant industry" rules, licensing, local marijuana "grow," and retail sales features (through a statewide voter initiative which, again, I'll outline in the last article in this series), can we seize the moment and make the best of this coming sea change in America's lifestyle, criminal justice, and economic worlds.
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