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A bad week for government management of economic activity

Orrin J. H. Johnson
Orrin J. H. Johnson
Opinion
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The Nevada Legislature building as seen in Carson City on Feb. 6, 2017.

“State of Emergency?! Because you ran out of WEED? Ha, ha!” So went the text from an old (non-Nevadan) buddy of mine earlier this week, after seeing our state become the butt of some less-than-flattering national news coverage.

Hey – remember when people said legalizing it would rid us of black markets?  Ha, ha!

This shouldn’t be hard. There’s nothing new or novel about growing a crop, processing the harvest for market in some way, and making it available to consumers for sale. I mean, I know we don’t have that many farms in this desert state, but still. Agriculture is sort of human civilization’s thing, after all, at least originally.

The only difference between marijuana and any other crop is that it’s an intoxicant. OK, fair enough. We want some additional regulatory safeguards so kids aren’t buying it at the Mini-Mart along with gummi worms and MAD magazines. But we already do that (more or less) with booze, porn, cigarettes, guns, slot machines, and even spray paint. So that requirement shouldn’t be a show stopper, either.

Nonetheless, after gangbuster sales the first week, retailers were running out of product. Why? Because we decided to add all sorts of unnecessary regulatory layers to our marijuana production-distribution-sales loop.

I say “we” very deliberately, because this wasn’t some secret legislative back-room deal in Carson City. It was all of us, together. Well, those members of our citizenry who voted for Ballot Measure Question 2, most of whom never bothered reading the fine print.

(This reminds us of two things:  One, that ballot initiatives are a foolish way to implement public policy, especially on complex regulatory issues, and two, that people super eager to get their hands on weed ought not be counted upon to pay attention to fine print.)

Not to worry, though.  The answer to an excess of regulations is… emergency regulations!!!

The proposed regulation would create a structure for the taxation department to determine whether there are an insufficient number of liquor distributors to serve the market based on factors such as historical demand for marijuana and operational needs of dispensaries including 24-hour deliveries. That could pave the way for marijuana businesses to enter.

Vagueness in state regulations on how to make that determination of insufficiency was one of the flaws cited by the judge who ordered the injunction.

Do you know who is really good at determining how many businesses are necessary to meet consumer demand? Consumers and businesses.

Too few retailers/producers/distributors? Green-thumbed entrepreneurs are (or should be) free to profit from that demand. Too many sellers? The “excess” businesses will improve, find new markets, or fold – and no regulatory body has to lift a finger. A person who grows weed also wants to distribute and sell as much as she can? The government has no reason to care one way or the other, as long as the taxes flow into the state coffers.

And guess what?  Due to the status quo, those taxes we didn’t have last month but are now utterly and irrevocably dependent upon are now no longer freely flowing. Another all-too predictable “success” for central economic planning by the government.

I’ve said it many times in this space, and I’ll say it again – the only purpose of this body of pot distribution law is to prop up a corrupt system wherein a tiny number of well-connected businesses who could never survive in a free market get statutory protection against legitimate and almost certainly superior competition.  I mean, the first (and one of only two) liquor distributor who has gotten a license to date is called “Crooked Wines”.

Given the protectionist and fundamentally unfair nature of the entire “booze distributors get first crack at marijuana profits” thing, one could almost be forgiven for thinking that name has some hidden layers of meaning…

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And then, of course, comes the news that Faraday Future won’t be building a factory in southern Nevada after all, after a special legislative session pledged millions of dollars to that company to get them here. Fortunately, according to state officials, the deal was structured such that we wouldn't technically lose any taxpayer money if this were to happen.

But when the state government looks like over-eager suckers lining up to fund the next Springfield Monorail (again – see Raiders Stadium), it makes us a target for other too-good-to-be-true “investment” schemes and erodes the confidence of other, more stable potential investors. And the too-common practice of crafting business-specific regulations, as we’ve done with Tesla and others, not only creates a confusing legal mess, but is fundamentally unfair to the Nevada businesses large and small who are already here.

It was a bad week for people who favor robust government control of Nevada’s economy, or the nascent industries so important to its growth.

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Cars that haven’t been built yet, and a “new” vice – this week, the predictable government failures to take an active role in managing various consumer industries has been relatively harmless.

Not to worry, though.  Seeing how the state struggles so much to provide consumers mere luxuries, thank goodness no one would ever think it was a good idea to give that same government a distribution monopoly on far more critical “goods” like education, publicly available transportation options, or health care services.

Orrin Johnson has been writing and commenting on Nevada and national politics since 2007. He started with an independent blog, First Principles, and was a regular columnist for the Reno Gazette-Journal from 2015-2016. By day, he is a deputy district attorney for Carson City. His opinions here are his own. Follow him on Twitter @orrinjohnson, or contact him at [email protected].

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