On June 25, Illinois became the 11th state to legalize marijuana. Governor J.B. Pritzker claims what really sets Illinois’s law apart is that it is the “most equity-centric” legalization law yet. According to Democratic state Representative Jehan Gordon-Booth, this means that “the communities that have suffered through the war on drugs will now have an opportunity to enter a new market and be successful.” This vision of equity, though, is based on a deeply flawed understanding of what a mature legal marijuana market will look like.
The law establishes a social equity applicant status for license applications. Applicants with this status, which include people from low-income communities and communities of color, will receive an advantage in the marijuana licensing process, and reduced fees. There will also be $30 million in low-interest loans available to defray startup costs for certain dispensaries.
This vision of equity is based on the assumption that, post-legalization, there will be huge sums of legally generated revenue from selling marijuana. Based on this premise, lawmakers think the state should ensure that members of marginalized groups are among those reaping these large rewards. The problem, however, is there will soon be no money to spread around.
There is currently a mini–gold rush under way, as marijuana businesses exploit the pent-up demand for legal weed. Small businesses are also succeeding because marijuana remains illegal under federal law—the risk premium has kept many large companies from entering the space. But this gold rush will not last. Weed, frankly, grows like a weed. Once marijuana is fully legal and the industry is properly industrialized, it should be incredibly cheap; the only question is when this will happen.
In Oregon, marijuana has only been legal for a few years, and the prices are already starting to crash. The state is sitting on over six times as much marijuana as it needs, which has sent state lawmakers scrambling to find ways to get rid of it all by approving its exportation. Read more