Who’s Against Legal Marijuana?

The public choice school of economics says that businesses try to influence laws and regulations to their benefit and their competitors’ detriment. This is called rent-seeking. It also holds that regulators often are captured by those they are supposed to regulate. One way to use this information is to look behind the headlines and surface arguments to see what is really going on. The debates over legalizing marijuana are a good example. These debates once were the province of true believers on both sides. The pro-legalization forces believe adults should be allowed to make their own choices, and the anti-legalization forces generally believe that more people will abuse drugs if they are legal.

Recent evidence is that the debate now is influenced by less-pure motives. This article points out that the alcohol and pharmaceutical industries are backing the anti-legalization movement, because they don’t want competition. There’s some evidence that prescription medicine abuse declined in areas where marijuana or medical marijuana was legalized.

Research about the impact of marijuana legalization on consumer habits is split. Daniel Rees, a professor of economics at the University of Colorado Denver, has claimed that consumers will substitute marijuana for alcohol when given the chance. But tax revenue in Colorado, which legalized pot in 2012, suggests consumers have continued to purchase alcohol at almost the same rate as before legalization.

Paul Varga, the chief executive of Brown-Forman, told investors during an earnings call in August 2014 that marijuana legalization was emerging as a “big threat.” But four months later, in another discussion with investors, Varga backpedaled a bit. “I wouldn’t say I’m losing sleep over the legalization of marijuana,” he noted. “But I’m paying attention to it.”