The Economist (2014, June 21). “Why Pot Is the New Pizza. Dope to your door: The economics of home-delivery marijuana.” The Economist.
Government regulations can dramatically influence how a product is bought and sold. With the recent revolutionary changes in marijuana laws in the United States—in just a few years, the buying and selling of marijuana has gone from a felony offense to completely legal in some areas—economic observers have been fascinated by the question of how the market for marijuana will change. The drug is still illegal at the federal level, and different states are setting up very different systems of regulation. The new marijuana industry is a perfect laboratory for economists, particularly those (such as The Economist magazine) who are interested in the social and ethical side of economic questions.
The title of this article does not mean to imply that marijuana will become as universally consumed as pizza; the article is merely about marijuana delivery services. The Economist reports that a former pizza delivery boy named Evan Cox has started a marijuana delivery company in Seattle called Winterlife that earns a million dollars a month and employs fifty people:
Delivering dope is like delivering pizza, but easier. “You don’t need to keep your product warm, so you don’t need to return to base nearly as often,” says Mr Cox. “Your customers can peruse your menu but choose from your actual available selection at the time of arrival.”
On the other hand:
Mr Cox operates at the edge of the law. Although it is legal to buy marijuana in Washington state, the person who delivers it could be guilty of a felony. That hasn’t stopped Winterlife from attracting competitors. Mr Cox has registered as a business with the city and state, but he cannot open a bank account, thanks to federal rules. In April, he paid $167,000 in sales tax to the Washington State Department of Revenue—in cash.
Most observers would probably admit that this is not a likely to be a stable regulatory framework in the long term. The laws surrounding marijuana remain contradictory, so it’s uncertain how the industry will respond.
Of course, if the legality of marijuana is still in conflict, it’s only because the voting public’s opinions on marijuana remain unresolved. Many people still see marijuana as a harmful, addictive drug that ruins lives. Even those in favor of legalization often view the drug as not completely harmless and would like to see restrictions on its production and sale—perhaps comparable to the restrictions on alcohol. Despite the recent legalization in some states, there is still a lot of debate about whether and how marijuana should be legal.
For example, one observer cited by The Economist argues that delivery services are preferable to brick-and-mortar marijuana storefronts, because the latter would be seen as a blight on the neighborhood. In other words, if marijuana is going to be legal then it would best remain out of sight. On the other hand, many people don’t see any such stigma at all in the visible public sale of marijuana.
Questions for Reflection and Discussion
- Do you think marijuana should be legal? Why or why not?
- If you do think marijuana should be legal, how would you choose to regulate it? For example, how would you feel if a marijuana shop opened right next door to you?
- What do you think will happen to marijuana regulation in the next few years? Do you think a more conservative federal administration will someday crack down on state-level legalization?
As legalization of marijuana comes suddenly and erratically, it remains uncertain how marijuana markets will respond and what kind of regulations and marketing tactics the public will prefer. One interesting development, apparently, is the rise of the marijuana delivery service.
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