To say that Missouri’s medical cannabis rollout has been rocky is an understatement. First, enormous public controversy emerged when 85 percent of applicants for marijuana business licenses were denied. Second, with limitations on the number of producers and retailers, consumers have faced high prices, inconsistent quality, and other difficulties in accessing legalproducts. However, we can learn some significant lessons from places that have already legalized — most notably our neighbor to the north, Canada.
Twenty years ago, the Supreme Court of Canada ruled that medical cannabis could be used for HIV/AIDS and a variety of other illnesses. That moment ultimately set the table for the legalization of adult-use recreational cannabis 17 years later. A lot can be learned from the Canadian experience, especially the numerous mistakes that have been made since 2018.
Unfortunately, it looks like the state of Missouri is replicating many of those errors. The first and most glaring mistake is the application of pharmaceutical-grade production regulations for medical cannabis. This is problematic for a few reasons.
While medical cannabis is medicine, there is no need for it to be regulated in a similar fashion as narcotics. Any risk-based assessment would clearly demonstrate that there just isn’t a need for this level of scrutiny from regulators, especially given that alcohol is not regulated in this manner.
Beyond being heavy-handed, these pharma-grade restrictions act as a significant barrier to entry and run the risk of preventing the legal medical market from being able to scale up if recreational cannabis is legalized, either by state ballot initiative in 2022, or if the federal government takes a leadership role on this issue.
In fact, this is exactly the mistake that Canada made when it passed the Cannabis Act in 2018. Prior to the legalization of recreational cannabis, federally regulated licensed medical producers were forced to comply with pharma-grade production regulations, which artificially inflated operating costs and inflated prices for patients. When recreational cannabis became legalized, those licensed producers struggled immensely to scale up their operations to meet the new spike in demand, which caused shortages, exorbitant prices, and poor product availability.
This is the situation Missouri will be in if it continues down its current path in regards to rigid production restrictions. By looking north, legislators in the Show Me State could see that those rules and regulations created a laundry list of negative externalities, all of which were easily avoidable with a more appropriate regulatory framework.
Another significant issue with Missouri’s current setup for medical cannabis is the existence of license caps for producers, processors, and retailers. Beyond being subject to human error, a cap-based system is susceptible to gross conflicts of interest and cronyism. Over 800 lawsuits have been filed over license denials, and last week a $28 million judgment was handed down against Wise Health Solutions, the company tasked with scoring these applications. This judgment came after an arbitrator described Wise Health Solutions as negligently performing its role. Numerous other American states have seen similar controversy over license caps, including Missouri’s neighbor, Illinois.
The Canadian example showed clearly that license caps are the wrong approach. There is no federal cap on producer licenses in Canada, and several provinceshave uncapped their retail license approval process. Ontario’s conservative government decided almost immediately after forming a government that the retail market for cannabis would be uncapped, with the attorney general stating: “Not having a cap on cannabis retail outlets will mean that the cannabis market will be able to accurately respond to market pressures and demand for the product. This is a huge step in regards to combating the illegal market.” These pro-market initiatives are in large part why the legal market in Canada outsold the illegal market in 2020.
At the end of the day, over-regulation makes it harder for patients to access their medicine and incentivizes buying from the black market, which wastes valuable police resources. Even worse, heavy-handed regulations make it harder for ordinary folks to capitalize on the economic growth that comes from either medical cannabis or recreational cannabis, and this is especially true for minority populations who have been disproportionately impacted by the failed war on drugs.
Luckily for Missourians, there is a chance to open the medical cannabis market and lay the groundwork for a fully functional recreational market. Republican Rep. Shamed Dogan had introduced a House Joint Resolution that would entirely avoid the consequences of over-regulation. This is something that both free-market Republicans and social justice Democrats should endorse.
Originally published here