Anthony Wile: Hello, Mark. It’s been over a year since we last interviewed you. Give us an update on your recent work.
Mark Thornton: I was asked to debate the War on Drugs at Oxford Union in June of last year. I was happy to see such a political elitist institution interested in debating the War on Drugs. Maybe the new requirement for paying tuition is having a positive effect or it could be just part of the worldwide trend against the War on Drugs and political institutions in general.
Recently, I was asked to speak to the Atlanta Economic Club at the Federal Reserve Bank of Atlanta. I spoke about the Skyscraper Curse, a topic that I was criticized about by the Economist magazine. It’s a topic that I have been talking about often these days as we look out at a pending Skyscraper Signal in Saudi Arabia and the collapse of the world economy.
Anthony Wile: We continue to follow the cannabis trend at The Daily Bell, and given your focus on "the economics of prohibition" over the years, would like to talk with you about several recent developments, especially in regard to two areas – the economics of prohibition and tariffs and price controls. When we talked with you in March 2014 you talked about "UNGASS 2016 and the Enormous Benefits of Legalizing Marijuana." Given the progress to date, what do you expect to come from UNGASS 2016? And how would you assess the working sessions being hosted around the world in preparation for the UN General Assembly Special Session (UNGASS) on Drugs, in April 2016?
Mark Thornton: Well, I have heard about the leaks and those leaks seem quite promising. I believe they basically confirmed what we hoped and expected from UNGASS 2016. It is complete reversal from 1998. In 1998 the report said that policy could achieve a drug-free world. That is an insane position to take, like no more storms, no more automobile accidents. It is the Pollyanna delusion. In 2016 we expect the UNGASS to issue a harm reduction recommendation where illicit drug consumption and possession would not be criminal acts that could lead to a prison sentence. This is a sane policy position. Prison sentences for illicit drug users are clearly harmful to the consumer (who now has a criminal record) and to government (cost of courts and prisons, etc.) and it does not deter consumption, or crime, or other negative consequences.
It is not the correct position of full legalization, but decriminalization has achieved good results in Portugal and Ireland has announced its intention to follow Portugal’s lead. With UNGASS 2016 recommendations we can expect many more counties to follow suit with legalization of marijuana and decriminalization of the hard drugs. Many governments have already turned a blind eye towards illicit drug consumers in anticipation of UNGASS 2016 and are ready to enact harm reduction policies such as decriminalization, marijuana legalization, and needle exchange programs. So I am hopeful that we will see a windfall of policy liberalization in many countries and then political change in countries that do not follow suit.
There will be some pushback from countries like the US, Iran, and Saudi Arabia. The for-profit prison companies in the US will spend lots of money trying to defeat public opinion. Someone should keep an eye on them and their political and lobbying spending. If politicians knew that anyone accepting for-profit prison money would be outed as an ally of crony capitalism, it could be helpful.
Anthony Wile: What about individual response from member nations? Many have already implemented new regulations but I’ve stated my expectation that many changes will likely need to be made to at least parts of those regulatory regimes post-UNGASS, in order to come in line with treaty agreements.
Mark Thornton: Yes, it will be a messy process. Government always is a mess. Some will stick with the War on Drugs, some will adjust within the new framework, and others will venture outside the new guidelines and treaty agreements. As I mentioned, Ireland has already jumped the gun in preparing for full decriminalization. There will be experimentation and lots of reviewing of the evidence. I am sure there will be reform efforts that fail, but overall I am not worried about the long term because we have solid evidence from Portugal.
Medical marijuana legalization has been a big success. Recreational marijuana legalization has been a big success, rather than the disaster that was predicted, for Colorado and Washington. Marijuana and hemp are going to be big businesses in areas as diverse as medicine, textiles, chemicals, building materials, and fuel. They can be grown in diverse climates without herbicides, pesticides, fertilizers, and without much labor.
It is a "master ingredient" like petroleum, except it’s renewable. So it’s appealing to our progressive and environmentalist friends and it’s the type of thing that will turn the current and future generations of entrepreneurs to create a giant leap in human progress. I think this potential will force regulators to innovate and fix problems in their systems.
Anthony Wile: I’ve also cautioned excited investors to take a deep breath and wait a bit for the market to shake out, for this very reason. Comment?
Mark Thornton: It is wise to caution investors. Any new product or ingredient experiences a great deal of chaos in the early years. I expect thousands of new and existing businesses to get involved in cannabis and hemp, everything from retailing recreational marijuana, to new cutting-edge medical applications, to competing with the petrol-chemical industry. Initially there could be hundreds of firms in each "product space," but over time each will come to be dominated by a small number of firms. Think about automobiles, soda drinks, and personal computers. They started out with more than a hundred entrants and ended up with just a couple of primary domestic producers. Therefore, it is very difficult to pick winners at this early stage. By the way, there are no Tweets with #marijuanaprofits yet!
Anthony Wile: An argument is made that conflates legalization efforts with promoting the "normalization" of drug use. We suggest, rather, that ending prohibition simply accepts human nature for what it is and enables any adult person seeking to utilize the cannabis plant for either medicinal or adult use recreational purposes in a safe and maturely managed manner. We suggest maturity prevail in this conversation. Recently, the pro-legalization campaign in Ohio featured "Buddie," a marijuana mascot on street corners and public areas in view of children and families, in essence promoting cannabis use. This is quite reminiscent of the "Joe Camel" tobacco advertising that was dangerous and offensive, long ago relegated to the dustbin of history as an unsuitable figure for big tobacco. This kind of promotion is certainly not consistent with public values. Perhaps that’s part of why they lost the vote.
Would you agree that the main objective is to remove the black market from the equation but not to encourage drug use per se or to focus on expanding the usage of cannabis? Does anyone really think a costumed marijuana bud is going to fly?
Mark Thornton: Yes, I completely agree. I argue that the policy of government prohibition causes us all much harm and provides no benefits. Legalization creates opportunities for many economic benefits. However, when it comes to using marijuana for recreational use I am not an advocate. It may be less dangerous than alcohol, but that does not mean I recommend consuming it. It is a drug after all.
The situation in Ohio is important to discuss. The recreational legalization measure on the ballot was recently defeated and properly so. It would have changed the state constitution and put 10 monopoly marijuana growers into the constitution! These 10 monopolists were the ones that wrote and paid for the measure to be put on the ballot. They are the ones that paid for "Buddie" to be on the streets of Ohio. Naturally, crony capitalist/monopolists want to encourage consumption of their product. It is just shameful.
It is important to note that the defeated ballot measure was opposed by many advocates of legalization. Another measure to prevent any monopoly from being written into the state constitution was also passed by the voters. Hopefully, legalization will come in the next round of voting in Ohio. Overall, I consider the ballot results a great victory.
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