Nonprofit motive: how to avoid a likely and dangerous corporate takeover of the legal marijuana market.

• Author: Caulkins, Jonathan P.
• Position: SAVING MARIJUANA LEGALIZATION

The standard debate about marijuana legalization has been "Should we, or shouldn't we?" For better and for worse, the country appears to be moving toward answering that question in the affirmative. The next logical question is, or ought to be, "What sorts of organizations do we want to supply that legal marijuana?"

The debate typically skips past that crucial question and presumes that legal cannabis will be produced and sold by for-profit companies--with the government setting some regulatory limits such as restricting access to minors. Colorado and Washington, the two states where voters have already approved legalization, have gone this commercial route.

At first glance, it doesn't seem so bad. After all, the companies that have obtained licenses to produce or sell marijuana in Colorado, and the quasi-legal medical marijuana dispensaries that operate in a number of states, seem quaint and countercultural right now--hippies enjoying a nice middle-class lifestyle clucking over little plots with fifty or a hundred plants. But such mom-and-pop operations aren't likely to last.

Cannabis is just a plant. If cannabis production ends up looking anything like modern agriculture, these small, independent operations will be shunted aside by bigger, professional farms. And if cannabis distribution looks anything like distribution of other consumer goods, those farms will supply companies that use marketing savvy to develop and exploit brand equity. These more organized enterprises will be driven by profit and shareholders' interests, not concern for public health or countercultural values. And as these companies grow, they'll begin to wield considerable political power. (Note that even the current legal cannabis industry, in its infancy, already has trade associations, lobbies, and holds annual conventions.)

While a few small firms may adroitly adapt to a low-volume, high-touch niche market serving primo brands to college-educated connoisseurs--akin to microbreweries--a larger, corporate reality looms. With 60 percent of marijuana being used by people with a high school education or less, we should expect the majority of consumers to shop for value: they'll seek Walmart-style everyday low prices, not boutique ambience at boutique prices.

So if we want to avoid a legal cannabis market dominated by large companies that push to sell as much as possible to as many people as possible, then what do we do? How do we design a legal market that protects public health and limits drug abuse?

The most effective model, as Mark Kleinian explains elsewhere in this issue (see "How Not to Make a Hash Out of Cannabis Legalization," page 32), may be restricting sales to government-owned and--run stores. Right now, that is at best a long shot. Marijuana is still prohibited under federal law, and a state law involving the state...