From victims to pawns: New York on marijuana

New York Governor Kathy Hochul recently announced creation of a $200 million fund dedicated to investing in the cannabis industry in New York. The generous interpretation of events is that Governor Hochul has a big heart, even though her head is nowhere to be found. The cynical interpretation is that after spending decades generating revenue and expanding government power by waging war on marijuana users, politicians have now found a way to generate revenue and expand government power by redressing marijuana users.

Through this fund, New York intends to fund 150 marijuana pharmacies across the state. Crucially, the foundation will focus on dispensaries that will house minorities affected by New York City’s criminal system when marijuana was illegal. According to Lieutenant Governor Antonio Delgado, “Our responsibility is to create a socially responsible cannabis industry… that will provide jobs and opportunities to minorities who have long been subjected to unfair (hemp) law enforcement…”

The mood is commendable, but the efforts are erroneous. If the goal is to compensate people whose lives and families were destroyed by the state under previous marijuana laws, why allocate money to run marijuana pharmacies? Only a few of these marijuana law victims are allowed to run a business, and only a few of them are available to run that particular business. A much better solution would be to reimburse marijuana victims for the time New York kept them under lock and key and let everyone decide what to do with the money.

But this investment initiative aims to “create jobs,” the governor says. Creating jobs is easy. It is difficult to create jobs that provide more value than they consume. And the latter is not something the government is good at, because government is there to tell people what to do and take what they want. Creating jobs that provide more value than they consume requires persuading consumers to voluntarily give up their money by offering them something they like even more in return. This almost always requires keeping the government away from decision makers, rather than anchoring it in licensing, oversight boards, and political appointments.

It would have been better to just write checks to the people who were persecuted by the State of New York. But that wouldn’t serve the interests of politicians and bureaucrats – and that’s really what these efforts are about. Marijuana dispensaries will generate hundreds of millions of dollars in licensing fees and taxes for the state. This money will replenish the budgets of bureaucrats and will give an opportunity to distribute favors to politicians. Politicians and their privileged voters win here.

But when it comes to compensating victims of the marijuana war, something is better than nothing, right? Ultimately, the governor said, the fund will help create “jobs and opportunities for those who have historically been disproportionately targeted for cannabis infringement.”

Not so fast.

According to State Senator Liz Krueger, the investment fund and its curator, the Cannabis Advisory Board, are playing a critical role in “creating a legal cannabis market based on social justice…”. Not to mention that even proponents cannot come to a common and logically coherent definition. “social justice”, a market based on anything other than profit and fair competition will fail at best. Why? Since the competing markets that are based on profit and competition will take him to the purge.

At worst, for a market based on social justice to survive despite its inability to compete, it must limp as a permanent tutelage of the state. Although they never admit it publicly, this worst-case scenario is exactly what politicians want. By creating a marijuana industry under the tutelage of the state, politicians have built themselves a gold mine. There will be decades of funding handed out to select players. People who can influence voters and contribute to campaigns will be appointed to the supervisory boards.

Politicians want the high-end industry to limp and be under the constant tutelage of the state. And how better to create such an industry than to set a goal for it – any goal – other than self-sufficiency. Social equality is a particularly good contender because it can mean so many things, but at the same time mean nothing.

We should applaud New York State politicians for wanting to make up for the billions of dollars they have spent over decades trying to destroy the cannabis industry and the lives and families of those who work in it. But the sudden moral awakening of politicians would be much more plausible if their efforts were directed towards doing the maximum good for the people they harmed, rather than doing the maximum good for the political class under the guise of helping their former victims.

Anthony Davis

Anthony Davis

Anthony Davis is the Milton Friedman Distinguished Fellow at the Foundation for Economic Education and Associate Professor of Economics at Duquesne University.

He is the author of Principles of Microeconomics (Cognella), Understanding Statistics (Cato Institute), and Cooperation and Coercion (ISI Books). He has written hundreds of articles published in, among others, the Wall Street Journal, Los Angeles Times, USA Today, New York Post, Washington Post, New York Daily News, Newsday, US News, and the Houston Chronicle.

He is also the co-host of the weekly Words & Numbers podcast. Davis was the CFO of Parabon Computation and founded several technology companies.

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