Steven Malanga joins Brian Anderson to discuss his essay from the City Journal winter issue, “Gone to Pot,” and the failures of the marijuana legalization experiment.
Audio Transcript
Brian Anderson: Welcome back to the 10 Blocks Podcast. This is Brian Anderson. I’m the editor of City Journal. Joining me on today’s show is my colleague, Steven Malanga, he’s been on many times. He’s a senior fellow at the Manhattan Institute and City Journal’s senior editor. He writes about a host of policy issues including state and local governance, economics, immigration, and much else. His work has appeared regularly in the Wall Street Journal as well as City Journal and other outlets. So today we’re going to be discussing his feature essay from our latest issue, our winter issue. It’s called “Gone to Pot,” and it’s on the failures of our experiment with widespread pot legalization or marijuana legalization. So Steve, great to have you on.
Steve Malanga: Good to be here.
Brian Anderson: So pot’s now legal in, I think, around half the country. Advocates promised many benefits from this with few downsides. Their argument was that marijuana was already in wide use and it was known to be safe. So I wonder, what are we seeing initially over the period in which legalization has taken place in terms of that safety question, and how was the pro-legalization lobby so successful in getting the public on board with this agenda?
Steve Malanga: Well, let’s start with the way they promoted legalization was basically that we need an end to the punitive treatment of those people who smoke pot. They shouldn’t, for instance, be arrested. This would be especially beneficial in minority communities because too many minorities were being arrested for pot usage. Since pot was kind of accepted in the black market, if we legalized it, what we would do is we would regulate it so that it would be better regulated because it would be legal and that also, states would benefit from revenues that came from this. Basically, it wouldn’t necessarily mean, since pot is widely available, they said, it wouldn’t necessarily mean that more people would start smoking it if it were legal. We would just bring it out of the shadows.
So that was the claim. It was both, I guess to a certain extent, a social justice issue because of enforcement in minority communities. But it was also an economic issue, if you will, the idea that we’d bring it out of the shadow and we’d tax it. Now, that was very successful. Purposes here what we’re talking about is legalization of the recreational use of marijuana. And one of the reasons it was successful was before this, there was a campaign that succeeded in 14 states in legalizing marijuana for medical use. And that sort of normalized the idea that marijuana might be okay to be legal. Because after all, if you’re using it for medical reasons, there must be some value to it.
Now, the fact of the matter is that the Food and Drug Administration, or no federal agency, has ever in fact endorsed marijuana as a legal aid for medical use. All of the approvals of marijuana at the state level have been through legislative campaigns or through ballot initiatives. And one reason they went that way is because the advocates knew that the FDA would never approve marijuana for legal medicinal use because there is not really much evidence. It’s very, very narrow. The United Kingdom, for instance, which doesn’t endorse medical marijuana except in very, very limited circumstances, and they studied the support on this, and they basically said that the only way we would endorse medical marijuana is for people, advanced stages of cancer, for instance, where essentially they’re just looking for some late-term pain relief.
But it was that campaign that succeeded in some states, which began in people’s minds to say, “Well, maybe this should be legal for recreational use because it’s already legal for medicinal use.” So that’s kind of how we got to the point where the first recreational campaigns, which began in 2012 started. And now we’re 12 years along, and 24 states, encompassing more than half the population, now have legalized it for recreational use.
Brian Anderson: What we’re seeing though, to get to that question, some concerns over the health effects of this widespread legalization. There’s been some who’ve argued that it’s triggering higher incidence of mental illness. In other words, this hasn’t been really this kind of boon to people’s health whatsoever, right?
Steve Malanga: Yes. What I would say is that there’s a stark contrast between what the advocates promised and what we’ve actually seen now that we have this very large population of states. And it’s kind of like a controlled experiment, because you have states that have legalized it in some places, and right next door, another state has not legalized it. So we’re able to compare this. And there’s quite a bit of research, medical research, which I point out here. A couple of things, first of all, the idea that usage would not surge when we legalize it, particularly because of the way we legalized it, we legalize it by allowing things like advertising for it in marketing. We’ve made this, well, I want to exaggerate too much, but it’s like a version of Walmart, if you will, out there in terms of the marketing of it and so forth.
And it’s clear that we have seen gains in usage, which is the first concerning issue when you begin to look at this. There have been a number of recent studies or surveys which show, for instance, that among people age 19 to 30, marijuana usage has increased from 28 percent to 42 percent of the population since 2012. Among those 35 to 50, it’s increased from 13 percent of the population to 29 percent of the population. More concerning is that about 10 percent of people in the 19 to 30 category say they use it on a daily basis, which is a big problem, because marijuana like other drugs, you build up resistance to it, which means the more you use it, the more you need to use more. And that’s what creates some of the negative health outcomes that we’re seeing right now.
There’s clearly been an increase. That increase has particularly been concerning with regard to people, workers because just a couple of years ago, we basically hit a 25-year high in terms of workers testing positive for marijuana. That’s more than doubled since 2012. And that’s concerning because you have many industries in America, obviously, driving a truck, construction work, working on an assembly line where employers don’t want people with marijuana in their system. They don’t want people using drugs in general. They also don’t want people drunk on the job. That’s one level of concern.
And the reason that concern is legitimate is we’re also seeing more and more studies about the potential long-term health outcomes for this. And this includes rising incidence of schizophrenia or marijuana-induced psychosis episodes. That’s been studied in Canada. It’s been studied in Denmark. Estimated that about 25 percent of all schizophrenic episodes, young people in Canada, is induced by marijuana use. That’s very concerning because once you’ve had a single schizophrenic episode, particularly one that requires hospitalization, you’re much more likely to have multiple ones and to develop long-term health problems. That’s all concerning because we’re just seeing the direction of more and more people using it and more and more people using it regularly, and as a result, the negative health outcomes are growing.
Brian Anderson: So in addition to this range of health concerns you’ve described, advocates were also saying that as you mentioned at the top, pot legalization would bring financial benefits to city and state in terms of tax revenues. It would also free up law enforcement resources, the argument went, redirecting them to fight more serious crimes. So this was a kind of win-win arrangement that helped states with their budgets. Several years into this experiment now, how are these promises working out? Have any states or communities seen financial benefits from legalization to date?
Steve Malanga: Well, the first thing, a compelling argument was not even so much the revenues, but the fact that we would end the war on drugs and the war on pot. The idea was, and this was an argument that was advanced by a lot of libertarians and even Republicans. Like in Colorado for instance, some Republicans, elected officials, that was one of the first states to do legalization of recreational. And they spoke out saying, “It’s time to end the war on drugs and end the black market. There’s no reason for that.” That hasn’t happened. The irony is legalization has created what we call the Black Market 2.0. And that’s because when you legalize something and you tax it and you regulate it, which is what, of course, the state’s all promise, you raise the cost of it.
And so in the process of increasing the number of people who are using this drug, we’ve also created another black market, a new black market, which a lot of transnational gangs are now exploiting here in the United States. And they use the open borders of the last few years to infiltrate the country, if you will, and set up growing operations, illegal growing operations in everywhere from Washington state to California to Oklahoma to Colorado. So we’ve got a new kind of a Black Market 2.0. And there’s a real irony that in California, invested all this new money in fighting the illegal marijuana trade. And the principal advocates for this were the legal marijuana growers and sellers themselves because they were being undercut in the marketplace.
Now, these were the people who told us that the black market was going to go away several years ago, and we would save all this money from having to fight it. And instead now, they’re urging that we spend money to fight it because they can’t make money. That’s led to the subsidization of marijuana businesses across the country, which is one of the greatest ironies in all of this. We now have tax dollars being used in California, Illinois, New York, in order to subsidize pot operations because the business isn’t as good as they thought it was going to be.
And when you combine that with the fact that one of the issues, one of the social justice issues that was pitched to voters was that what we would do, make sure that minority entrepreneurs would be given money and given licenses because the minority communities had been disproportionately hurt by pot enforcement, and this was going to be like a form of reparations. So now what we’re doing is we’re subsidizing pot operations in minority neighborhoods using taxpayer dollars, even as we read more and more about how health effects of marijuana. Which raises not just traditional kind of economic issues of whether government subsidies of private businesses work, but it raises moral issues also.
For instance, I’ll give you an example. In New York State, they went a step further. They created a program which subsidizes at junior colleges kind of majors in pot as a commodity. Everything from how to grow it to how to market it. This is especially focused on community colleges, which disproportionately have minority enrollment. The science journal Addiction, by three addiction experts, said they’re very troubled by this trend, that it seems like we’re almost focusing the growth of the pot industry on minority communities. That’s morally questionable. And the same thing is going on in California. They have like a hundred million dollars pot of money that they use to stimulate the growth of the industry.
Now, one of the reasons the industry isn’t growing in California is because communities were able to opt out. Two-thirds of California communities, mostly white suburban communities opted out of pot, saying, “We don’t want shops in our community.” So this money is disproportionately going to urban areas. And I think at some point there’s going to be, we’re going to step back and say, “What did we do? We did this with taxpayer money. That’s extremely questionable.” So that’s kind of the situation now.
And of course, when you think about all this, the fact that we need to subsidize this, that tells you that the amount of revenues that we’re getting for it are diminutive. And it’s not only that, but Federal Reserve Bank of Kansas studied this. And one of the conclusions they came to is that we’re not even getting as much money as we think we are, because when you legalize pot, it leads to a decline in taxes, sales taxes, on other products like cigarettes and alcohol, so that the net gain from pot isn’t nearly what people thought it was going to be. And obviously, the fact that we’re subsidizing it in many places to try to increase its economic impact, tells you that’s what’s going on.
Brian Anderson: Let’s hear a bit more, Steve, about why the black market has continued to be so strong given that there are now legal options in many states.
Steve Malanga: Well, what’s really strong is the market for growing this. And what happens is it’s very, very hard to control this. I’ll give you a perfect example. I wrote a story several months ago, several issues ago, about the illegal immigrant crime in America. So one of the big areas of crime is these transnational gangs have imported hordes of workers. And using their money, they bought up farmland around America and are using that for illegal grows. Some of this is happening in Washington State. There was a tremendous series in the Washington newspapers, a scary series about people in the corners of the state where gangs came over and essentially bought land. Suddenly there was this outbreak of all kinds of lawlessness.
The investigative newspaper site, ProPublica did a whole piece on what happened in Oklahoma where Chinese gangs using workers who came in through the border have gone up to Oklahoma and they have created hundreds of farms. They’re growing the stuff illegally and then sending it into states where it’s legal to sell because they can undercut the legal market. There are no restrictions on kind of pot they sell. And so for instance, the THC content can be much higher, which attracts some people. Plenty of room for an illegal market in this because you basically just have to grow it. And we have, it’s been hilarious in California. I mean, it’s kind of sad, but in California, one survey found acres and acres of illegal farms on government national parks. So this is a problem around the country. America’s a very big country with a lot of farmland. This has become a profitable crop for a lot of illegal growers.
Brian Anderson: A final question, Steve, what do you recommend we do about this? Florida recently, one of the first states where legalization was put on the ballot and decided against it. So it does seem like perhaps there is a growing public recognition that, at least in some areas of the country, that this might not be a good idea. What is a more sensible path forward? It’s unlikely that we’re going to criminalize pot again in any widespread way, I think. But what’s your take?
Steve Malanga: So part of the problem is we in America and in the States have gone for the most extreme solution. We swung from one extreme to the other. A lot of advocates who were against legalization were for decriminalization, which is different. Canada went through a three-part phase of decriminalization and then gradual legalization. They did it gradually so they actually made it possible to compare what happens when you move from one to the other. And clearly, when you move to full on legalization, the way we have here, that’s what’s most problematic.
Europe is the best example because many countries in Europe have decriminalized pot, but very, very few of them have gone all the way to the extent that we have where you legalize a trade with stores and licenses for growers. I mean, instead basically it’s legal. It’s not criminal to possess certain amounts of marijuana in places like Germany, but they don’t have this full on legalization. So decriminalization was the path that we certainly should have taken, even if it was just an interim step so that we could sensibly do that.
But now we’ve got this, I mean, the states are really divided because half of the states have full on legalization, and many other states have almost no legalization. There were actually, not just Florida, but three states rejected legalization. The Dakotas also in the last election. We do see a recognition by people that there are harms of full on legalization. Most of those states and advocates in those states should be looking at sensible ways to decriminalize without fully legalizing. In the states that already have legalization, I mean, that’s like a cat that’s out of the bag now. It’s going to be hard to put it back in the bag anytime soon.
But I would say a couple of things. One of the things is that we were told that legalization would bring safer products. That has not happened. The THC content, what really creates the buzz, if you will, from marijuana, is very high as people are fond of saying, “This is not your grandfather’s marijuana.” This is much stronger. And that’s a problem. Vendors have fought against in most states, putting restrictions on THC. Science will say that no one knows what’s a safe level of THC, but we know that what’s the level in a lot of legal marijuana now is way too high.
So the first step I would think in a lot of these states would be better regulations and lower levels of THC, and then we go from there. Eventually, I think you slowly unwind the legal market, default to criminalization. And the other thing we have to do is stop government subsidizing this. I imagine there’s going to be a time 10 to 20 years from now when some communities around America are going to be suing their state government asking for reparations because the state government essentially, economically developed with taxpayer money, the pot business in their neighborhoods. And like I said, that’s not only economically questionable, it’s morally questionable.
Brian Anderson: Well, thanks very much, Steve, for walking us through this debate. The essay is a superb overview. It’s called “Gone to Pot,” and it’s in our most recent issue, our winter issue. Don’t forget to check out Steve Malanga’s other work on the City Journal website too. We’ll link to his author page in the description. You can find City Journal on X @CityJournal and on Instagram @CityJournal_MI. If you like what you’ve heard on today’s podcast, please give us a good rating on iTunes. Steve Malanga, thanks again. Always great to talk with you.
Steve Malanga: All right, thank you.
Photo by: Lindsey Nicholson/UCG/Universal Images Group via Getty Images