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Rent-Seeking Potheads
March 28, 2010 — 12:59 am

I honestly could not initially decide whether or not to post this, as I could not determine if it was a hoax or parody (a la The Onion). But the more I thought of it, the more plausible it seemed.

Outlaw pot farmers in Calif. fear legalization could actually hurt their business:

“The legalization of marijuana will be the single most devastating economic event in the long boom-and-bust history of Northern California,” said Anna Hamilton, 62, a Humboldt County radio host and musician who said her involvement with marijuana has mostly been limited to smoking it for the past 40 years.

Local residents are so worried that pot farmers came together with officials in Humboldt County for a standing-room-only meeting Tuesday night where civic leaders, activists and growers brainstormed ideas for dealing with the threat. Among the ideas: turning the vast pot gardens of Humboldt County into a destination for marijuana aficionados, with tours and tastings — a sort of Napa Valley of pot.

The irony is deliciously delicious…in so many ways. But, foregoing all that, this is basically an issue of rent seeking. People who deal in black-market goods are protected from the ‘legal’ market. Not only do the goods they are producing/trading have an unnaturally high price point, they are shielded from competition from the free market. If anyone can get into the pot growing business, prices will dramatically fall. Some of the former illegal growers will then be priced completely out of the market.

We see this type of rent seeking behavior every day. Groups from manicurists and hair stylists to HVAC repairmen to interior decorators insist on licensure laws as requirements to enter their professions.

Those doing the rent seeking will nearly almost always claim that these types of licensure laws are needed so that only qualified people get the job. It’s a safety issue. Or a quality issue. Or, well, pick your reason.

In truth, it’s none of those. Rent seeking protects jobs using the force of government by way of restrictive fees and time-costing measures. It protects the few at the cost of hurting everyone else by way of decreased competition, higher prices and fewer employed people. You have a limited amount of money and you want to become a florist? Do you have the right license? Have you paid enough fees and attended enough classes? Sorry, you’re now priced out of the market. Some select florists benefit; the aggregate suffers.

But back to the rent seeking pot farmers of Humboldt County, California. Not only are their actions unbelievably immoral, they’re frightfully hilarious. The whole thing reminds me of the Simpsons episode where Homer Simpson is bullied out of the chiropractic market:

Steve: [walks in] Simpson! You’re not a licensed chiropractor, and you’re stealing patients from me and from Dr. Steffi.

Homer: Boy, talk about irony. The AMA tries to drive you guys out of business, now you’re doing the same to me. Think about the irony.

Steve: [grabs Homer by the collar] You’ve been warned. Stop chiropracting.

Homer: Not unless you think about the irony.

As pot legalization becomes more likely, I would expect to see more of this type of behavior. Just remember, the behavior is equally ridiculous when applied to interior decorators or florists, or the nearly other 30% of the workforce that requires licensure.

[Cross-posted at The Lesson Applied.]

— Justin M. StoddardComments (2)

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  1. […] at Shrubbloggers.] Filed under: Drug Policy and Economic Theory and Regulation Comments: 6 […]

    Pingback by The Lesson Applied » Rent-Seeking Potheads — March 31, 2010 @ 1:25 am

  2. I question the “immorality” of these pot farmers’ actions. It’s true that legalization would destroy many of their businesses, however, by suggesting that “black market” participants enjoy unnaturally high price points ignores reality. The price points are so high because of the significant risk these people endure.
    How many people have been put away for years or for life, having all their assets seized and their families destroyed? The true immorality is on the part of a citizenry that was willing to sit back and hypocritically keep a plant illegal, watching as prisons filled with nonviolent “offenders.” Then, as these same morally and fiscally irresponsible citizens spent themselves into a chasm, they decide that maybe marijuana isn’t such a problems after all, let’s get it for cheap and let the taxes keep paying for the ballooning prison population. After all, all the other “drug offenders” still need their baloney sandwiches, and the prison guards need to make their union wages for turning keys back and forth.
    It is the deepest irony that this previously categorized moral and health issue now turns on monetary expediency. Perhaps the most ethical thing to do would be legalize it, and then spend all of the initial taxes reimbursing the former criminals for their time, fines, forfeitures, land seized, and suffering caused by the immoral laws in the first place. I doubt that the taxes generated for the next ten years would be sufficient.

    Comment by Chris Horton — April 13, 2010 @ 4:24 pm

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