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There Will be Shortages


Anyone who follows my work knows that one of my major pet peeves with legalization is that government officials, lawmakers and bureaucrats dictate almost every aspect of the supply chain. As we have seen time and time again, this leads to shortages of legal cannabis for sale. Treating cannabis like a dangerous substance that needs to be regulated and restricted at every turn always leads to legal supply not meeting legal demand, which leads to high prices and the continued market dominance of illegal sellers.

Cannabis consumers in Michigan are learning this lesson, and it seems they will have at least another year to make sure they learn the lesson well. While the Michigan Marijuana Regulatory Agency plans on beginning recreational retail sales sometime in early 2020, the reality is that initial sales will come from the medical marijuana side of the equation, and supply for Michigan MMJ is already short. And since there have been zero recreational cultivators licensed yet, the hopes of supply being brought up to par anytime soon are slim.

The result will be that illegal dealers in Michigan will have very little competition and will operate pretty much as they always have, except now their customers can legally possess what they sell. How long it will be before there is a decent supply of legal adult-use cannabis in Michigan is anyone’s guess, but the answer will likely be counted in “years”.

The solution to the supply problem is as simple, but it not being adopted by government officials is a certainty. More supply has to be allowed to be grown and sold. Lower barriers for licenses, less regulation, lower taxes – these are all things that will draw more growers and sellers into the market. After all, government agencies create nothing but headaches and delays; cannabis has to be grown and sold by actual people who have the incentives and the expertise to get the job done right.

Yet none of these things will happen, and inaction will be justified with claims that marijuana is dangerous and must be kept out of the hands of teens, kept from being diverted to other states, etc. In reality, the government is the worst organization imaginable to accomplish cannabis legalization. Whether on a local, state, or federal level, government officials have little business experience, have little incentive to do things right and face few consequences if things go wrong.

The amount of marijuana supply should be dictated by demand, and nothing else. In fact, if it is dictated by other considerations, there will be shortages.