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Will Illinois’s Marijuana Legalization Plan Include a Monopoly?

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Photo Gracie Malley for Cannabis Now

Economics

Will Illinois’s Marijuana Legalization Plan Include a Monopoly?

Existing medical cannabis cultivator license-holders are pushing for control.

In board games and in life, a monopoly is a great thing — for the tiny percentage of people who have control of the bank. For the rest of us, it’s a tedious bore, where the best you can hope for is an abusive relationship in which mediocre product is offered for a premium price.

From a purely capitalist perspective, it might be possible to justify or at least defend the power moves currently being made by Illinois medical marijuana growers.

Do Not Pass Go

As the Chicago Tribune reported, the state’s cannabis cultivators are celebrating their newfound freedom to spend money politically by lobbying Illinois lawmakers and the governor to secure a near-monopoly on supplying cannabis for a future recreational market.

Existing growers have hired a former state Senator, Pam Althoff, as the executive director of a new Medical Cannabis Alliance of Illinois, which put out a statement declaring that they “support no new cultivation licenses.”

New Illinois Gov. J.B. Pritzker campaigned hard last year on the promise to legalize recreational marijuana in the state, which has a sizable and growing medical marijuana industry — bolstered in no small part by a recent allowance for anyone with a prescription for opiate-based painkillers to also access medical cannabis.

Pritzker, at least, is literally banking on the legislature getting legalization done: the governor’s proposed budget plans on the state reaping $170 million from licensing fees, as the Belleville News-Democrat recently reported.

At the moment, it costs about $200,000 for a medical-marijuana cultivation permit, with a $25,000 non-refundable application fee. Once that $225,000 is plunked down, there’s a $100,000 annual renewal fee — plus, you know, the build-out and the labor costs required to actually grow cannabis. There are currently 22 cultivation centers across the state, one in each state police district, according to the newspaper.

A pair of Chicago-based state lawmakers who have been working on marijuana legislation for the past two years recently said that they plan to introduce a bill to legalize recreational marijuana within the next month or two.

Language has yet to be finalized and whatever is in the introductory bill may not be what makes it through the lawmaking process which, like most everything else, is often susceptible to the influence of enormous amounts of money.

And money is exactly what’s already at play in Illinois’s medical-marijuana industry, with even more cash at stake should recreational marijuana become legally available in Chicago, America’s Second City and the Midwest’s major population center.

Game Over?

The prospect of the state’s limited medical growers receiving state approval to grow all of Illinois’s cannabis prompted Mark De Souza, CEO of Revolution Enterprises, a state-licensed cultivation operation that bills itself as the largest cultivator in the state, to pen an op-ed in Crain’s Chicago, the esteemed business journal, arguing against such a scenario.

“I oppose a limit on new licenses for commercial production,” he wrote. “I cannot and do not speak for other cannabis firms, but I crave competition, because competition will ultimately lead to a healthier, more robust industry — one that generates more tax revenue and jobs for Illinois.”

Deploying an argument that seems to hold more water given the results in other states (the main reasoning why California, for example, has only reaped about half what it expected to from marijuana taxes is a thriving underground market sustained by high prices on the regulated market), De Souza argued that a monopoly situation would lead to a “new and unregulated market.”

“The whole point of ending pot prohibition is to bring this market out of the shadows,” he wrote. “If the new market immediately becomes the Wild West, it will not succeed.”

Other states with limited cultivation capacities have seen demand far outstrip supply. This script has played out in Washington a few years ago, in Nevada in the summer of 2017 and again in Pennsylvania. Canada, too, saw some empty shelves after limiting or at least strictly regulating the supply-side of the marijuana industry.

Will Illinois learn from those lessons, or will it decide that money talks most convincingly? De Souza, at least, is offering an argument that is compelling because of both its reasoning and its source. Revolution would stand to benefit with a monopoly, but at a greater cost that could severely hurt marijuana legalization’s purpose.

TELL US, do you have access to cannabis where you live?

2 Comments

2 Comments

  1. YearofAction

    February 25, 2019 at 10:32 pm

    Let’s defeat the attempts to establish monopolism, and promote individual entrepreneurialism by contacting our representatives in Congress to apply Section 5 of the 14th Amendment to enact this reform that rectifies the existing malformed federal definition of marijuana:

    The term “marijuana” means all parts of the smoke produced by the combustion of the plant Cannabis sativa L. which is, as are the viable seeds of such plant, prohibited to be grown by or sold by any publicly traded corporation or subsidiary company, and such smoke is prohibited to be inhaled by any child or by any person bearing any firearm, as is the intake of any part or any product of such plant containing more than 0.3% THC by weight unless prescribed to such child by an authorized medical practitioner.

    This careful reform retains the Schedule 1 status of marijuana itself for further consideration of the adulterated medical value that it derives from cannabis, but it carefully abolishes the prohibition of cannabis plants. It restores and protects the rights, privileges, and immunities of citizens to participate in the supply-side of the cannabis market, as authorized by the 9th and 10th Amendments, and Section 1 of the 14th Amendment, while explicitly preserving the existing prohibitions on cannabis use that are important to citizens. It also converts the 0.3% THC limit that is used to prohibit certain varieties of cannabis, to a THC limit that is used to prohibit certain persons from abusing cannabis or its products.

    This reform will federally emancipate citizens to again grow the versatile and valuable plant Cannabis sativa L., pressure Illinois to expand the quantity and types of cannabis cultivation licenses, and reduce the licensing fees. This pressure will increase the number of legitimate cannabis businesses which will increase competition to better fulfill the demand, and reduce cannabis prices while increasing state revenues.

    Let’s tell our representatives in Congress to abandon the 20th century propagandized misconceptions of “marihuana”, eliminate the federal misnomers of cannabis, override the legal misconstructions of marijuana law, and restore the benefits of cannabis commerce to citizens, by enacting this careful and comprehensive 21st century reform of the federal definition of Schedule 1 marijuana.

  2. Toker Joe

    February 25, 2019 at 12:22 pm

    Politics and corruption go hand in hand in Illinois. They don’t call Cook County, Crook County for nothing. This will not end very well for the states residents.

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