There is an ongoing debate on Proposition 2 dealing with medical marijuana. Opposition groups want voters to vote against the proposition, but at the same time they propose that improvement and/or changes to the existing law and the proposition, if approved by voters, should be made by the legislature. They claim that they are not opposed to the medical use of marijuana, but they are fearful that the passing of Proposition 2 will lead to the recreational use of marijuana.

The economic motive is to have a profit-making state monopoly, as is made clear in the report by The Salt Lake Tribune, Oct. 4, 2018. The news story verified my initial hunch about the profit motive of opposition groups. They would like to have the opportunity to get the amendment passed in the Utah Legislature for the state monopoly, if voters support Proposition 2.

First, let me state my reading of Proposition 2 as reported by Ballotpedia. If the proposition is approved, 1) private facilities will be allowed to grow, process and sell medical cannabis under the state regulation, and 2) people with “certain illnesses”, with state approval, will be allowed to obtain and use medical marijuana, and in limited circumstances will be allowed to grow a limited quantity of marijuana plants. There is a very heavy involvement of the state, except for the fact that the private sector, not the state monopoly, is allowed to provide marijuana for medical use.

State monopoly in the liquor business has become a profit-making venture, and the state has visions of another profit-making venture. The traditional excuse is that state control of liquor protects young people from alcoholism, an idea not backed by facts.

UDABC always pats itself on the back about profits from liquor sales and its contribution to the general revenue. The Utah Legislature also likes the idea of increasing liquor revenues to add to the state’s general fund. The fund is used for many other expenditures that politicians like, even though they claim that it is meant primarily for schools.

Politicians and their supporters do not realize, or perhaps they do, that state monopoly results in worse economic outcomes for consumers than competition and is even worse for consumers than private monopoly. At least private monopoly is threatened by new business entry that may undermine the monopoly power and hence abnormal profits of the incumbent. The private market with multiple sellers leads to competition and lower prices. Under Proposition 2, the state’s regulatory authority in the medical marijuana market would minimize the threat of recreational use. State monopoly does not guarantee complete absence of abuse either.

Another fear tactic that is used against medical marijuana is that marijuana is more addictive than alcohol. It is not supported by facts (see businessinsider.com, Aug. 28, 2018). A recent study in the medical journal, The Lancet, Sept. 22, 2018, finds that worldwide alcohol use was the leading health risk factor and cause of death among people 15 to 49 years of age. Utah Department of Health reports that among high school students, alcohol, as opposed to marijuana, was the most commonly abused substance in the Spring of 2017.

I am sure if Proposition 2 passes and is implemented some teenagers, as well as adults, might abuse marijuana. However, just like in liquor sales, state monopoly in medical marijuana sales is not the solution. It compounds the problem in the functioning of free markets with regulation to prevent public harm. The public interest is not served by state monopolies, since monopolies fix prices and are cost inefficient. Higher prices also increase the tax burden because sales tax is a percentage of the price.

I hope that reason and logic prevail once the voters decide to vote for Proposition 2, and that opposition groups seriously consider that under state regulation public interest in Utah is well served, if the private market is allowed to function in selling medical marijuana to those who need it for medical purposes.

Mathur is former chairman and professor of economics, emeritus, Department of Economics, Cleveland State University, Cleveland, OH. He also blogs at mathursblogonomics.blogspot.com.

(1) comment

Sabbatical

" but they are fearful that the passing of Proposition 2 will lead to the recreational use of marijuana." I'm concerned about that too...just what we need, a driver on the phone and recreational marijuana...think about it!

Mack

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