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A Rebuttal to Drug Warriors Trying to Steer Investors Away from the Cannabis Industry


“Every man has a property in his own person. This nobody has a right to, but himself.”       – John Locke

A recent article by three former members of the Bush Administration attempts to steer potential investors away from the emerging legal marijuana industry. All three men now work for the Hudson Institute’s Center for Substance Abuse Policy Research. Hudson’s Chief Operating Officer and one of the authors of the article is John P. Walters, who served as Bush’s “Drug Czar” from the end of 2001 until Bush left office in 2009.

To be fair, the three men are correct when they point out that the federal illegality of cannabis adds another layer of uncertainty to the industry, an uncertainty that is not present in most other industries. If you are an investor planning on getting into the cannabis industry, federal law cannot be ignored and must be scrutinized closely. But after that, things seem to go off the rails in the article in terms of logic and facts.

Walters and company point out that the vast majority of people in federal prison for marijuana are considered “traffickers.” But they fail to point out that most of the people arrested for marijuana are only guilty of simple possession. That’s hundreds of thousands of people a year saddled with a criminal record for the simple act of possessing some plant matter that the government has deemed illegal.

Next they move on to the “myth” that legalization will eliminate the black market:

“It was also claimed that legal, state-regulated drugs would drive out the criminal element and cripple the black market, leaving all those trafficking profits for corporate shareholders. Again, a dangerous mythology, as the black market has thrived in states such as Colorado, driven by increased drug use. In reality, they have increased their power and their criminality under the protection of regulated regimes.”

Anyone who has ever claimed that legalization will completely eliminate the black market is incorrect. Alcohol is legal yet moonshiners still thrive in some parts of the country. No matter what, there will always be some people growing and selling cannabis outside the legal parameters.

What those who favor legalization have said is that when the price of legal cannabis drops below the price of similar black market cannabis, those operating in the black market will take a major hit to their bottom line. This is simple supply and demand economics and the results are already being seen with an increase in market share for legal cannabis in the United States and the drop in profits being seen by Mexican cartels. Some people may prefer their regular dealer for one reason or another, but when faced with a lower price for similar quality, most consumers will choose the lower price (in this case with the added bonus of being legal). This can have no other effect but to drive most dealers out of business.

Next the article’s authors took to task the notion that marijuana legalization doesn’t increase its availability to children.

“Advocates have also argued that regulated commercial marijuana would not find its way into the hands of the very young, since their use would be ‘prohibited.’ With the erosion of drug prevention messages that accompanies the increased acceptability and availability of state-sanctioned marijuana, it’s no surprise that recent findings from the states of Washington and Colorado have shown that idea to be wishful thinking – if not an outright lie – by advocates seeking the votes of rightfully skeptical citizens.”

And we find study after study of the actual data coming from these states and can clearly see time and time again that relaxed cannabis laws don’t lead to increased teen use. The phrase “drug dealers don’t check I.D.” is ubiquitous for a reason: it’s true and contains all the logic needed to explain why legal marijuana will be harder for minors to get.

Last, but not least, the article authors warn of marijuana use leading to lower IQ, psychosis and opioid dependence. Yet they cherry pick the studies they link to, studies that are easily rebutted by other when it comes to use and lower IQ, psychosis and opioid dependence. In fact, when it comes to opioids, a growing body of evidence shows that cannabis can actually help people recover from dependence on opioid painkillers.

In the end, Walters and crew return to the obvious problems that federal law can cause someone investing in the cannabis industry. But while they see these problems as reasons not to invest, others see them as reasons to change the laws. Marijuana businesses have to carry and store a lot of cash because banks won’t take it due to federal law – this is a great reason to change those laws and allow banks to take the cash. Marijuana businesses can’t deduct many expenses on their taxes because of federal law – a great reason to change the laws and allow the reductions.

The purpose of the article is easy to ascertain. Less investment means slower growth for the cannabis industry, so any investors that can be driven away is a plus for those who support the continuation of marijuana prohibition. A crippled marijuana industry is easier prey to bring down and any lack of effectiveness can be attributed to problems inherent in legalization and not to the roadblocks thrown in front of the industry by others.

One other sentence in the Walters and company article stands out above others and deserves comment:

“Potential investors should also know that legal marijuana remains a practice that several nations have tried and none has found the consequences tolerable.”

As apparent evidence of this, they link to a Newsweek article from 2015 that focuses on authorities in Amsterdam and around Holland cracking down on coffee shops and marijuana growers. It’s worth pointing out that marijuana was never legal in Amsterdam or The Netherlands as a whole, so to blame problems that arise from a “gray market” on legalization is a bit of a stretch.

The article authors also fail to point out the success with decriminalization of most drugs in Portugal or the utter failure of prohibition that is causing countries like Uruguay, Mexico, Canada and Jamaica – among others – to look at relaxing their cannabis laws.

There is no doubt that risk exists in the legal cannabis industry, more risk than comes with investing in many other industries. But with great risk comes great reward. Many investors will sit out the beginning stages of the marijuana industry, which leaves room and profits for those who are brave enough to enter the fray.

And at the end of the day reasonable people can have disagreements over policy. But a debate where if one side loses some of them go to jail is not really a simple disagreement. So when it comes to marijuana legalization, it’s very important that people have all the facts so they can come to an informed opinion.

When you are advocating for taking rights away from people who have not infringed on the rights of another, you better bring an airtight case. When your position is that someone who uses marijuana should be considered a criminal based on your opinion that they shouldn’t use marijuana, there should be no holes in your argument.

After all, those who support cannabis prohibition are saying that their moral opinion of your marijuana use should outweigh your natural right to do with your body what you want as long as you do not infringe on the rights of anyone else.

By what gives these right to some to have these powers over others? How does one acquire the right to overrule the natural rights of another?

If our own body is not our property, then what is?


  1. […] A recent article by three former members of the Bush Administration attempts to steer potential investors away from the emerging legal marijuana industry. All three men now work for the Hudson Institute’s Center for Substance Abuse Policy Research. A Rebuttal to Drug Warriors Trying to Steer Investors Away from the Cannabis Industry […]