Debate Forum 10/27

Monopolies, or monoplease?

By Tim Walker

What if the consumer is shopping for the cheapest price on his monthly digital cable service? Or the best deal on satellite radio? Or, in the state of Ohio, he wants a number of options when visiting a casino? In each of these situations, choices are limited. Why? These industries are established monopolies. Merriam-Webster defines a monopoly as: “exclusive ownership through legal privilege, command of supply, or concerted action.” Monopolies, it has been assumed, are bad—bad for our country, bad for the economy, and bad for consumers, as the monopoly can charge whatever they want for their services due to the total lack of competition, resulting in price-gouging.

Here in the United States, our government has, on occasion, made a great deal of noise about protecting the common man from the evil of the monopoly. In a high-profile case that was eventually settled out of court, tech giant Microsoft was investigated and prosecuted for violations of U.S. antitrust laws… namely, it used its corporate muscle to force Internet Explorer down people’s throats while crushing competing browsers. AT&T was splintered in the ‘80’s, and airline and media mergers are frequently investigated, all by the Federal Trade Commission. Hearings are held. Politicians and talking heads pontificate on the nightly news. Protecting consumers, it well seems, suddenly becomes the prime motivation for our elected officials. And yet…

One of the hotly debated points of Issue 3 in Ohio is that it will create, by a constitutional amendment, a marijuana monopoly—ten grow sites, all privately owned by investors in collusion, and no guarantees for any more. In certain situations, monopolies—much like the proposed marijuana monopoly—are sanctioned and approved by the very government that makes so much noise about fighting against them. In addition to the casinos and cable companies already mentioned, examples of legal monopolies might also include city bus services, county water services, and the US Postal Service. Would a monopoly on legal marijuana sales really be all that different?

Opponents to the idea of protected monopolies say that in such situations, price gouging is inevitable. When the state approves of a monopoly, they say, the consumer is suddenly at the mercy of the service providers. Past experience shows that when a business is in a position to maximize profits, they will do exactly that, always at the expense of the little guy.

Proponents of legally mandated monopolies argue this simply is not the case. The existence and success of our state casinos, they say, has shown us it is possible to run an industry, free of competition, and succeed while still catering to the consumer and providing reasonably-priced services. Cable service providers like Time-Warner regulate themselves, they say, and enjoy good profits while still providing excellent service. Antitrust days have come and gone, and our long history of fearing the evil monopoly is now in the past.

Tim Walker is 50 and a writer, DJ, and local musician. He lives with his wife and their 2 children in Dayton, where he enjoys pizza, jazz and black t-shirts. Reach him at TimWalker@DaytonCityPaper.com.

 

Blunt idiocy

By Ben Tomkins

I’ve always found it odd that measures like the legalization of marijuana are legislated as amendments to state constitutions rather than simply ironed out as law. I suppose I don’t view it as something that needs to be enumerated by a state as a fundamental right so much as just made a law because nobody cares any more. Free speech, no discrimination based on sexual orientation…smoke all the weed you want. That’s not quite the same, right? It’s a little weird.

Anyway, the fact that Ohio’s legislature has chosen to legalize marijuana is admirable, but doing so by obviously and blatantly rolling over and showing their soft tummy fur to a corporate collective is about as sick a political move as I’ve ever seen. I’m not even high, and the entire time I’ve been writing this I keep hearing “Piggies” from the White Album repeating over and over in my skull:

“Everywhere there’s lots of piggies living piggy lives.

You can see them out for dinner, with their piggy wives, clutching forks and knives.

To eat their bacon.”

Seriously. It’s so disgustingly obvious and slimy that it’s an embarrassment. It’s literally establishing a cartel just as the forum center says. I can’t imagine a conversation where Ohio was legalizing alcohol and allowing Budweiser and Coors to be the only two companies that were allowed to brew. However, it’s even worse than that. There’s a linear supply chain outlined that makes it impossible for any startup to even try to get a foot in the door. In America…  Here’s the text, in case you haven’t read it:

(F) Establishment of Marijuana Growth, Cultivation & Extraction Facilities

The growth and cultivation of marijuana and medical marijuana, and the extraction of cannabinoids from marijuana and medical marijuana, for sale and medical use within this state shall be lawful only at licensed MGCE facilities. Subject to the exceptions set forth herein, there shall be only ten MGCE facilities, which shall operate on the following real properties: [lists the 10 properties].

But there’s the word “and” in there, which means that small businesses only doing one of those three things can still play ball right? No, and kiss our asses:

(G) Establishment of Marijuana Product Manufacturing Facilities

The manufacturing, processing and packaging of marijuana-infused products, including medical marijuana-infused products, shall be lawful only at licensed MPM facilities pursuant to a licensing and regulatory framework established by the Commission by May 30th of the year following adoption of this section. MPM facilities may also manufacture, process and package marijuana accessories. Such facilities may sell marijuana-infused products made only from marijuana purchased from licensed MGCE facilities.

OK, that hurts, but at least you’re going to let people sell whatever they want, right? No, kiss the other cheek:

(H) Establishment of Retail Marijuana Stores

Marijuana and marijuana-infused products may be sold to individuals 21 years of age and older only by licensed retail marijuana stores. Such stores may sell only marijuana purchased from licensed MGCE facilities and marijuana-infused products purchased from licensed MPM facilities, and shall sell no other goods or services except for marijuana accessories and related products. No retail marijuana store shall allow to be consumed any marijuana or marijuana-infused product that has been opened on the premises.

So there you go. That’s your government. I can’t imagine, even at a politician’s most cynical, alcoholic moment of weakness that they’d be able to summon the antacid-laced intestinal fortitude to raise their hand in public and vote something like that into a state constitutional amendment without shooting themselves in the head. At first, I didn’t even believe it because it’s so stupid, but I guess I can’t really blame ResponsibleOhio for taking advantage of it. If someone gives you a bag of gold, you don’t flush it down the toilet, right?

All of that crap being said, here’s my advice:

Pass the bill. Pass it, get your medical marijuana—or as it’s actually listed even more embarrassingly in your baby fresh amendment, “marihuana”—get your recreational weed, get all of the wonderful oils, resins, candies and trinkets that go along with it, and make sure you’re sober enough to take it before the Supreme Court. The Sherman Act is going to result in a summary judgment in about five seconds, all of the nonsense is going to be excised like a malignant tumor and, in the process, the Supreme Court is probably going to say something so contemptuous about your state legislature that it’s going to be bordering on a diatribe. Trust me—it will be hilarious.

Besides, in the meantime, your little cartel will probably be putting out some great stuff, and you won’t have to deal with warehouse real estate values tripling for a few years because everyone is slurping it up for grow houses until the market levels off. Give it a few years. It will sort itself out in court, and if you smoke enough, you won’t even notice.

As far as I’m concerned, it’s like the Affordable Care Act except with laughable pandering. Change rarely happens exactly the way you want it today. You pass the bill you can pass that gets enough of the job done so tomorrow you can fight it out knowing the big issue isn’t in play any more. If it’s really killing your buzz, get more weed.

Ben Tomkins is a violinist, teacher, journalist and critically acclaimed composer currently living in Denver, Colorado. He hates stupidity and generally believes that the volume of one’s voice is inversely proportional to one’s knowledge of an issue. Reach Ben Tomkins at BenTomkins@DaytonCityPaper.com.

 

The curse of cartels

By Dave Westbrock

The word “cartel” is defined as “an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition.” On Nov. 3, Ohio voters will determine whether or not our state constitution will sanction the cartel of 10 investment groups to control the distribution of marijuana (State Issue 3). Think of the two most notorious cartels we have known in this generation. How about drug cartels, which this ResponsibleOhio initiative constitutes?

Wikipedia defines a drug cartel as “any criminal organization”—in this case, wannabe legal—“developed with the primary purpose of promoting and controlling drug trafficking operations.” ResponsibleOhio investors are criminal with respect to federal law.

What about the petroleum cartel, which held most industrial companies hostage in order to enrich Arab oil barons? In autocratic societies, mercantilism, now known as crony capitalism or, more extremely, fascism, is the coin of the realm. In Russia and most Middle Eastern oil countries, the price of oil is set by the dictator in league with other cartel members to set prices not for their fellow citizens but purely for their own greed. The U.S. has now been able to free oil markets with resultant higher wages for workers, more jobs and cheaper oil prices.

Cartels do not add to the general welfare of any country, just the drug barons. The U.S. Justice Department estimates that the Sinaloa Cartel headed by that upstanding Mexican citizen, Joaquin Guzmán (El Chapo) annually rakes in between $18 and $39 billion just in the U.S. In Ohio, legalization is estimated to bring in upwards of $500 million. One cannabis stock, Medbox (MDBX), rose from $23 to $93 in a matter of five trading sessions just less than a year ago.

What of the social and economic costs of legalization? That which is known is scary enough, but what is unknown is downright terrifying. Marijuana use will increase after legalization with attendant negative effects. Economic costs are difficult to determine but cost increases from the government perspective are related to initiation of cannabis drugged driving statutes and enforcement, including deaths from impaired drivers. In the latter regard, no models are available to even determine how to determine what constitutes impairment in light of strict DUI laws. Work related accidents and productivity impacts have not been adequately determined, which strengthens the argument that legalization should await analysis of those costs. Cannabis use among the unemployed in 2010 was estimated at 17.5 percent compared to full-time employees at 8 percent, according to the National Survey on Drug Use and Health.

Taxation is a significant stimulus to legalize pot. In Colorado, state government experienced a 5.7 million shortfall based on tax revenue against the costs of regulation. Despite estimations, tax revenues are difficult to calculate accurately, and in modern American “anything goes” society, why not legalize and tax prostitution or polygamy?

Public health costs are potentially enormous, particularly in the age of Obamacare. Based on increased use, admissions for dependency are estimated to increase fourfold. Much is based on increase use with decline in price and increase in addiction. Notwithstanding, addictive qualities that may impact employment, family support systems and the prevalence of abuse estimated to 4.5 million—a figure greater than the total users of cocaine and narcotic analgesics combined. Chronic weed users can expect lung disease as early as 20 years sooner than tobacco users. Additionally, impaired immunity, infertility and DNA damage are proven. Ammonia levels are 20 times higher than tobacco smoke, as are levels of nitric oxide and hydrogen cyanide.

The impact on teens may be catastrophic. Alaska legalized cannabis use in 1970 only to reverse course in 1990, when teen use increased to twice the national average. Negative effects are particularly evident in adolescents. Proponents argue that distribution will be strictly enforced to prevent adolescent use. Acquired learning disabilities, poor concentration and lack of motivation and permanent impairment of brain development are documented, as well as permanent psychosis, depression and suicide. Marijuana annually accounts for 99,000 admissions to emergency rooms around the country. It is the most common drug identified in fatal motor vehicle accidents.

From the standpoint of welfare of local communities, states and the federal community, the economic, public health and productivity costs of cannabis legalization are unacceptable.

Dr. Westbrock has been in private medical practice for 35 years. He was the Republican candidate for the U.S House of Representatives in 1994 and 1996. He has written and lectured extensively on the subject of healthcare reform and healthcare policy. He can be reached at Dave.Westbrock@DaytonCityPaper.com.

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Tim Walker is 51 and a writer, DJ, and local musician. He lives with his wife and their two children in Dayton, where he enjoys pizza, jazz, and black T-shirts. Reach DCP freelance writer Tim Walker at TimWalker@DaytonCityPaper.com

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