Young people 5x more likely to choose weed over cigarettes
Plus, the persistent illicit market in California, and more.
Happy Thursday, everybody.
We’re sorry for the typo in yesterday’s newsletter (bonus points if you can find it and email us back).?
We also use some fun econ stuff to discuss how to move more consumers into the legal market. (Fun might be a strong word, but you get where we’re coming from.)?
Okay, let’s get to it.?
A 6.5-minute read from JB and JR
??What’s the big deal?
Younger Americans are more than 5x more likely to choose weed over cigarettes
Driving the news: Young people like pot — a lot. That much isn’t surprising.
What is surprising, however, is just how much they like cannabis more than tobacco: Twenty-six percent of Americans aged 18-34 say they use cannabis, compared to just 5% for cigarettes, according to a Gallup poll and reported in Marijuana Moment .
That’s more than double since Gallup started polling the question in 2013.
Beyond that, 17% of all Americans said they smoked cannabis in the past week, compared to 12% who smoked cigarettes.?
Still, the Olds — those 55 and over — still prefer good ol’ tobacco, with 13% smoking cigarettes over cannabis in the past week. Overall, half of Americans used cannabis in the past year.?
Back up: It’s the same trend for beer , too. So it’s no wonder that tobacco companies like Altria are lobbying for cannabis reform .?
And other big alcohol and tobacco conglomerates, including Corona beermaker Constellation Brands which owns a big chunk of Canadian cannabis company Canopy Growth, see the writing on the wall.?
In recent years, they’ve poured money into research, joint ventures, and investments into cannabis companies. But numerous regulatory challenges persist for publicly traded companies trying to get exposure to cannabis.?
It’ll be a while before the alcohol and tobacco barbarians, so to speak, storm the cannabis industry gates.??
???Quick hits
Florida lawmakers introduced a bill to cap THC potency in cannabis flower to 30%, and 60% for vapes.?
Massachusetts cannabis sales exceeded $1.56 billion in 2023, a 5% boost over the year prior.?
A Virginia House Committee advanced legislation that would legalize cannabis sales. A separate, similar bill with some key differences, is working its way through the state’s Senate, Marijuana Moment reports .
Crimes around illegal grows persist. There’s a better way
What happened: A recent massacre at an illegal cannabis grow sheds light on how these operations have become crime magnets.
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Six people were found shot to death (and worse) at a grow operation in a “desolate stretch” of Southern California desert, The Los Angeles Times reports .?
Police say the violence likely isn’t linked to Mexican cartels and is perhaps something more local, but they’re still working through details.
What they’re saying: “It doesn’t matter what the product is. If there’s sufficient demand and the thing is valuable enough, you’ll get a black market,” Peter Hanink, a professor of sociology and criminology at Cal Poly Pomona, said.?
Back up: Cannabis has been legal in California since 2018, but the illicit market still comprises a huge chunk of the state’s total cannabis sales, thanks to what many industry insiders and experts say are too-high taxes, onerous licensing requirements, and the difficulties of dealing with the fledgling legal market in general.
But California isn’t alone.
Cultivated readers will recall that Maine is dealing with a similar problem — an explosion of Chinese-linked illegal grow operations all over the state .
Those worries have been elevated all the way to Capitol Hill, as lawmakers have asked the Department of Justice to, do, well, something .?
Our take: The more we see regulated cannabis markets evolve, the more we’ve come to believe that speed, consumer access, and a right-sized tax structure that captures the most revenue while minimizing negative consequences is the way to go for cannabis policy.
While it’s a laudable goal to provide opportunities for those who’ve been imprisoned or otherwise impacted by the War on Drugs and racialized policing, at some point, the legal market needs quality cannabis cheaply and conveniently available for consumers.
Any other goal is really just window dressing without that.
Trying to use legalization as a vehicle to lift people out of poverty while they lose money competing with illicit sellers is an untenable situation, as we’ve seen in New York .?
Many states try to reinvent the wheel with their legalization framework. And, usually with the best of intentions, put far too many restrictions in place on who’s able to sell cannabis in the first place, and how they’re supposed to get the licenses.?
Regulators, mount up: These too-strict regulations are what allows the illicit market to thrive. Regulations add cost and complexity, while creating opportunity for those who want to risk prosecution.
Studies show that higher prices are the key driver of consumers substituting legal cannabis for the illegal stuff — even though most consumers do prefer to buy legal.?
Those higher prices are artificial constructs of too much red tape. The demand for legal cannabis, in other words, is elastic, given that consumers can easily switch to cheaper, illegal products.?
But we understand that these things take time, often years, before the market structure starts to resemble something logical. Cutting down that time, therefore, should be an important goal we hold policy-makers and regulators accountable for.
On the other hand: It’s also disingenuous for legalization opponents to point to these illicit markets as a failure of legalization, which, if you follow anti-legalization groups like Smarter Approaches to Marijuana, you’ll see is a frequent talking point.?
They’re wrong.
It’s not a failure of legalization in general, it’s a failure to learn from mistakes and update policy accordingly. Cannabis policy is alive and breathing, and luckily, we have dozens of self-contained cannabis markets in legal states where we can see what has and hasn’t worked.?
Good cannabis policy can erode illicit markets over time — just look at Canada, though it’s still far from perfect (or even very good, but that’s a different story).?
We’d call for cutting taxes to a more reasonable rate, reducing the barriers to entry on licensing and compliance, and getting more cannabis into legal markets by encouraging more market participation with less regulation. That’s good for all stakeholders.?
Dive further: Read “Can Legal Weed Win? ” for how economists think about this stuff. It’s useful and explains much of what we’re seeing play out.??
???People moves
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Do you have an announcement about a new hire or important promotion? Let us know.
Innovation drives markets! ?? Balancing quality and cost is key, as Seneca once implied - simplicity and fairness can lead to prosperity. ?? #cannabis #economics
Tax Strategist | I help Cannabis businesses reduce their taxes and maximize their profit margin. #CannabisIndustry
9 个月Great insights, Jeremy! Addressing the pricing dynamics in the cannabis market is crucial for successful transition from illicit to legal sales. Your focus on accessibility and affordability aligns with consumer preferences and can drive significant change in the industry."
Making cannabis legal and cheap will cause it to be more available and used more. How is that good? We know that cannabis causes cancer when smoked. We know that it causes memory loss when used regularly. We know that it decreases IQ. We know that it causes psychosis among some users. We know that it increases suicide rates among regular users particularly teens. We know that it is a gateway drug to other illicit drugs. We know the biggest victims of the new Pot Industry are minorities. We know it has no proven medical benefits to people who smoke it. So why would we want a big “safe” “clean” supply of it for people to use? It is inherently unsafe and inherently unclean and legalizing it just increases supply and puts profits in the pockets of drug pushers. Wake up. That’s why it has been illegal.
To say that society needs any cannabis is a joke and wrong. Society does not need to increase the supply of a drug that causes psychosis and suicide amongst our youth. Suicides involving users of THC in Colorado outpace overdoses as the leading cause of death amongst young people in Colorado. Social justice does not demand enslaving our youth to a harmful addictive substance. No mother in the minority community is praying for more cannabis, all of which remains illegal under federal law, to be available to her children. Pushing drugs is pushing drugs. That’s all this post is doing. The illicit market persists because bad guys are involved and they do not want to pay taxes. Simple as that. Policy makers can do one thing: keep pot illegal and try to keep it away from our youth. Fewer schizoprenics and suicides is better.
Chief of Staff @ Jardín; Purveyor of Cannabis Musings; Northwestern Law Adjunct Professor
9 个月UC Davis' Cannabis Economics Group has done some academic studies on the licensed/unlicensed market differences. https://cannabiseconomics.ucdavis.edu/publications/