The movement towards legalizing marijuana in California is promising and should make those who favor legalization optimistic. If you think most popular reasons people oppose legalization are misconceptions about the negative consequences that will arise, then by example California should be able to change popular opinion in favor of legalization fairly quickly. One note of pessimism, however, is to watch for instances of Bruce Yandle’s famous Bootleggers and Baptists. This is when regulation is supported both by those who want to restrict trade for moral or safety reasons (baptists), and those who want to do so to create or preserve profitable “bootlegging” opportunities. For marijuana, this would be existing pot growers opposing legalization in order to protect their large black market profits from the competition that complete legalization would allow.

One countervailing force with respect to marijuana is that some proprietors probably have an idealistic dedication to the “cause” of legalization, which will temper their bootlegger motivations. Even those who don’t feel that way may be tempered by the bad P.R. among their customers that would result from outright opposition. The thing to watch for here is more subtle moves by current proprietors. This, for instance, raises tbe B&B alarm:

The for-profit company is made up of four proprietors of nonprofit dispensaries and their lawyer. Mr. DeAngelo calls them an “A-team of cannabis professionals.”

In late March, it helped lobby the City Council in San Jose, the nation’s 10th-largest city, to pass ordinances regulating dispensaries, a crucial step toward a legitimate industry.

If B&B is correct, then the regulation of dispensaries that the “cannabis professionals” pushed for would amount to increasing barriers to entry and other anti-competitive policies designed to increase their profits. In fact, this is exactly what it was:

The San Jose City Council on Tuesday approved drawing up guidelines for the operation of medical marijuana collectives as a way to regulate the businesses and possibly bring in much-needed revenue to the nation’s 10th largest city…. [C]ity leaders voted to draft an ordinance that would likely limit the number of pot clubs, control where they operate and tax them.

Now cue the bootleggers:

“Our desire is to be good citizens, to pay our taxes and play by the rules,” said Steve DeAngelo, operator of the Harborside collective, which is part of a group of 16 collectives that recently formed a coalition to advocate for increased oversight.

And cue the baptists:

“The only way to ensure medical marijuana collectivesfollow the rules is to regulate them, and I can’t say we’re doing that today,” said councilman Pierliugi Oliverio, who introduced the motion.

It is probably the case that the only way legalization is going to occur is with the political support of those that will profit by it. The downside to this is that they will be able to influence the rules, and will do so in a way that maximizes their profits at the expense of the consumer, and at the expense of competition.

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