The war on drugs has been a failure. It did not stop the drug trade. It only made the prison system bigger. The war on cannabis continues through aggressive national and local enforcement and ban action, with no end in sight. And we have a huge illicit market. This is all very bad and we collectively have to figure out how to get people to comply with state law rather than penalize everything.
The issue of enforcement or compliance is probably the most important one facing most states at the political level. Today we’ll take a look at the argument that it’s better to focus on compliance over enforcement. The thinking process is that three things will reduce the illicit market: (1) federal and state-wide legalization, (2) incentives to enter the legal market, and (3) put compliance above compliance. application. Let’s decompress this below:
The ban and the application did not work
It goes without saying that enforcement and prohibition, when combined, has led to decades of a failed war on cannabis, imprisonment and misery – in many cases affecting people from the parties. most marginalized in American society. Despite the dissuasive measures of the Controlled Substance Act – up to life imprisonment – people were still growing, selling and consuming cannabis.
Going on a tangent, the decades since the formation of the Drug Enforcement Administration have seen the number of drug overdoses and arrests. at the top. Last year we Noted that “Americans are now 19 times more likely to overdose on drugs and about 5 times more likely to be arrested for drugs than they were in the year the DEA was created.” There was 100,000 drug overdose deaths in the United States this year. These deaths are not due to cannabis, but it shows just how bad the government is doing in the war on drugs.
Despite all of this, some people seem to think ban and compliance are still the answer. In California, most cities still ban or severely restrict cannabis, and people can go to jail for doing things that would be legal in a nearby city. Yet the illicit market is enormous. In 2019, there was would have 3,000 illegal cannabis companies in California. The ban, even in combination with the enforcement, failed.
The execution versus compliance compromise
In 2013, the federal government kind of changed its tone with the Cole memo. This federal cannabis enforcement memo limited federal cannabis enforcement to the prevention of a list of eight things the federal government deemed problematic, such as sales of cannabis to minors or cartel activity. So, (1) in states that have passed laws consistent with Cole Memo priorities, and (2) for companies that have complied with state law, the federal government has essentially kept its promise not to give priority to the application.
This left the application to state regulators. States have done everything from overzealous application to next to nothing. The state of Washington, for example, has become so aggressive with law enforcement that its legislature forced the agency to focus on helping businesses comply with the law – a pretty good result. California regulators have done next to nothing and allowed the illicit market to grow so large that even aggressive enforcement efforts cannot change it.
The compliance approach
Some government actors want to avoid disincentives execution that do not work, and opt for the incentives of compliance, which might well. The big problem is that the group of non-compliant actors includes everything from outright illegal actors to licensed companies that negligently violate state laws, and everything in between. Obviously, the incentives and disincentives are very different for each group of people, which makes this a huge challenge. A few steps are essential to achieve this:
Step 1: Legalize cannabis
The first step here is widespread legalization at all levels of government. In addition to simply criminalizing cannabis, federal law imposes insane tax and compliance costs on businesses. State and local ban can have similar results. This makes participating in the legal industry intimidating for some. Hence the continuation of the illicit market.
Step 2: Encourage compliance (and you won’t need an enforcement)
Then the government must encourage entry into the legal market. We’ve worked with thousands of companies in this space and know where the issues and fixes are, and they include things like:
- Lower or eliminate taxes
- Elimination of license caps and competitive licenses
- Reduce license fees in general and eliminate them for social equity seekers
- Increase in license processing times
- Eliminate or reduce the role of local agencies in the authorization process
- Reduce regulatory burdens that require things like massive initial construction
All of these things (and this list is not exhaustive) both increase the time it takes to get a license and impose costs that most founders just don’t have. Making access to the legal market easier and cheaper is the only way to encourage it. And if people enter the industry, the application becomes less of a priority.
Step 3: Compliance rather than enforcement
Once people are in the industry, the dynamics of compliance with the application change a lot. There are really two big buckets of potential issues here:
Let’s first talk about licensees who break the rules. Agencies really have three choices here: (a) do nothing, (b) enforce these rules and impose penalties, or (c) try to help licensees come into compliance. Option (a) is a very poor choice (the option chosen by California for the most part). My view is that with the exception of serial violators or serious fouls, option (c) should be the preferred approach for regulators: helping correct an error rather than punishing it. This will inspire the industry to be more upfront and apparent with agencies, foster trust and reduce the burdens and expenses associated with enforcement, prosecution, etc.
Next, let’s take a look at companies that operate illegally outside of the illegal market. If, after legalizing cannabis and lowering barriers to entry, this is still happening, it may be the only place where the government’s hands are tied to law enforcement. But the hope would be that the government would encourage compliance in state licensed programs to such a degree that people voluntarily participate in them and the illicit market dissipates as a result.
My take is that legalization, incentives for the licensed market, and the focus on compliance is really the only way to end both the waste of time that is the war on drugs (for cannabis) and the illicit market. Most of these things are easier said than done, but if states adopted this mindset when considering how to regulate cannabis, they could avoid the headache of a massive illegal market. that they cannot control.
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