Prop 19 Politics

I’ve been hanging out in San Francisco the past few weeks and one topic that keeps coming up is Prop 19. It’s a measure on the California ballot this year that basically makes it legal for adults to grow/possess/smoke marijuana. I was having a drink with my friend Judy last night, and she made me realized a few things that sort of blew my mind.

I’ve always been a little live and let live around the pot issue; you like it fine, you don’t like it fine. I though it was novel that they might legalize the substance and tax it to help California climb out of the financial gutter. With that in mind, it didn’t seem like the worst thing in the world. It also seems like in some ways it could mellow out the drug war that we fund so ferociously on the border. Anyway, musings aside I started to think about what the business around the legalization would mean and it was sort of jaw dropping. The issue seems like a pretty crazy social iceberg.

Let’s play this through. Lets say Prop 19 passes (which by the way, looks like it won’t). If it were to pass, it would basically create an instant industry. I get that there are all sorts of illegal pot practices, but if it became legal large corporations like RJ Reynolds and Altria would immediately enter the space. They would set up shop with so much capital to operate you wouldn’t even remember it was supposed to be a local business growth initiative. If they can make a tobacco operation profitable, they would go bananas growing marijuana – much higher profit, much smaller operation. Much like factory food, they would systematize and standardize the product; it would eventually get cheaper and stronger, etc. And, if the measure held, they would lobby for national legalization. It would be pretty impossible to keep California from become the pot supplier to rest of the US. So even if it didn’t pass, people would buy it on the web.

As this all started to sink in, I realized that there’s just a massive irony to the story for me. This Proposition is sponsored by this progressive pro-pot activist in Oakland. (How he got thousands of pot-heads motivated to get enough signatures to force a state ballot proposition, I have no idea.) If that initiative passes, there’s a good chance he could create a market so appealing that bigger players would move in and put him right out of business. Most companies have a really hard time sizing new, untested markets. This markets been more or less sized through the war on drugs.

I don’t think I can think of any single event that has the potential to instantly create an industry. And to top it off, from a business perspective the measure seems like it would cause more problems for the people who hoped to benefit from it the most. We live in interesting times.

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