As the U.S. Senate inches ever closer to passing a marijuana legalization bill, proponents of legal pot are preparing for a celebration they believe is coming shortly. If you are among those proponents, be careful what you wish for. Pot legalization will bring as many negatives as positives to the market, including killing local dispensaries across the country.
There may be plenty of things cannabis legalization proponents do not like about current federal laws. But one of the biggest beneficiaries of the current legal environment is the local dispensary or pharmacy operator. Federal restrictions have limited corporate expansion by necessity. Once federal legalization goes through, the shackles currently binding the hands of corporate operators will fall off.
A Glimpse of It in Pennsylvania
If you would like a preview of what could happen to cannabis pharmacies and dispensaries around the country, take a good look at Pennsylvania. Growers and dispensary owners in the Keystone State recently filed suit alleging that regulators have violated their own laws regarding license restrictions. In so doing, they have threatened small, local operators unable to compete with corporate interests.
One of the plaintiffs in the lawsuit, an independent grower in Johnstown, has had to either lay off or reduce the hours of half its workforce. Why? Because his operation cannot compete with out-of-state growers.
State law limits the number of companies that can possess both dispensary and grower/processor permits to no more than five. But the state has granted six out-of-state companies those licenses. Furthermore, five of the six operate more than fifteen dispensary locations despite state law prohibiting it.
Little Incentive with Legalization
States have plenty of incentive to protect local growers, processors, and retailers as long as cannabis remains illegal at the federal level. Local production and distribution eliminates the conflicts with federal law that come about when out-of-state interests move in. But legalize marijuana at the federal level and those conflicts disappear.
Should that happen, state regulators will have very little incentive to keep the lid on corporate interests. In fact, the opposite will probably prove true. They will have more incentive to promote corporate interests because those interests will drive both tax revenues and political contributions.
The Other Side of the Coin
Federal legalization would undoubtedly take the reins off corporate interests. They would be free to make their best efforts to dominate the market. That may be bad to smaller, locally owned businesses, but there is another side to this coin: supply and demand.
Utah is one of the states that tightly regulates every aspect of medical cannabis within its borders. For example, there are only fifteen licensed medical cannabis pharmacies in the state. Deseret Wellness is one of them. They operate locations in both Provo and Park City.
Unfortunately, most of the state’s pharmacies are located in the Wasatch front region. This leaves rural residents underserved. To make matters worse, there are only a limited number of growers licensed in the state. To date, they have not been able to meet the demand. They simply aren’t supplying enough cannabis.
Corporate operators can likely solve the supply and demand issue fairly quickly. So while the corporate influence may be bad for local businesses, it would probably be good for Utah patients.
Whether you view corporate influence as good or bad, it will be one of the natural results of federal legalization. Once corporate operators no longer need to worry about violating banking and interstate commerce regulations, they will be free to exploit the cannabis market to their own benefit. That is exactly what they will do.