The situation is not unlike Canadian legalization and “BC Bud.”
The latter is a loose-knit group of cannabis farmers, retailers and other vested interests that have been safely producing cannabis for decades and expected legalization to include them.
Canadian legalization was about selling equity than weed. More about setting up a Laurentian elite cannabis cartel. Like every other major industry in Canada – from airlines to telecom to maple syrup.
There are no free and fair cannabis markets in Canada. Or, as we saw this week, in the State of New York.
New York Shuts Down “Illicit” Dispensaries
To sell cannabis in New York, you need approval from the Office of Cannabis Management (OCM). Try to sell cannabis without a thumbs up from the OCM, and you’ll quickly discover that prohibition is alive and well.
This is what New York cannabis entrepreneur David Tulley discovered this past week as New York authorities shut down “illicit” dispensaries, including his “I’m Stuck” cannabis shops.
“Legalizing cannabis in New York was a historic milestone to correct the harms of the past, but there are laws that must be followed to ensure cannabis products are safe and kept out of the hands of minors,” said Attorney General Letitia James in a statement.
“David Tulley brazenly violated our laws, cheated taxpayers, and endangered our kids by selling unregulated cannabis to underage customers. Today’s enforcement action should send a clear message that businesses that are selling cannabis without a license will be stopped.”
Of course, slapping a barcode on a cannabis product and taxing it doesn’t automatically make it “safe.” Nor is it apparent how a capitalist act between consenting adults amounts to “cheating taxpayers.”
“I’m Stuck” Could Face Millions in Fines
According to New York authorities, David Tulley, his companies, and the building owners could face millions of dollars in fines.
Tulley denies selling to minors (under 21 in New York). This claim stems from an Easter egg hunt hosted by “I’m Stuck,” where participants could redeem the eggs for cannabis products. As is usually the case in the cannabis world – adults are not allowed to have fun.
Anything that children also like – easter egg hunts, cartoon characters on candies and chocolate bars – are verboten in the cannabis industry.
But as Tulley told the Associated Press, this is all reefer madness. His stores offered cannabis consulting and education. The cannabis products provided were free samples; hence, state licenses are unnecessary.
“We’re ready to go to war with New York state and we get our day in court on Wednesday … so we’ll be happy to talk to them,” Tulley said.
Authorities have ordered Tulley to appear in court in Wayne County.
New York’s cannabis laws impose a $10,000 fine each day a business sells cannabis without a license. Authorities double this fine to $20,000 per day if the store receives an order to shut down but doesn’t comply.
Tulley’s been ignoring the state’s cease-and-desist orders since February 2022. New York may find that shutting down “illicit” dispensaries is more costly than regulating them.
Just Like in Canada
“It’s critical to crack down on illegal operators who are breaking the law and undermining the success of entrepreneurs and consumers who follow the rules,” NY Governor Hochul said in a statement.
Is it “critical” that New York’s OCM prioritize this? From their point of view – yes, this is critical.
Untaxed cannabis means less money for them. And suppose they allow entrepreneurs like Tulley to operate. What incentive do others have to get licensed, pay fees and taxes, and “follow the rules?”
We find a similar situation in Canada, especially in British Columbia. The federal government left Indigenous Canadians out of the corporate takeover of Canada’s cannabis industry. While some have played the victim and complained to the government, most have taken matters into their own hands.
That is by opening up “illicit” dispensaries or Indigenous cannabis trading posts. Authorities are reluctant (but not opposed) to raiding Indigenous cannabis shops. This has caused some tension with non-Indigenous cannabis retailers, who are licensed and taxed to death by the provincial authorities.
But who decides? City bureaucrats demanded long-term medical cannabis dispensaries either move or shut down completely.
At the same time, others without a legacy (or with actual connections to organized crime) were given a thumbs up.
New York Shuts Down “Illicit” Dispensaries
New York’s shutting down of “illicit” dispensaries provides a textbook example of why governments should not be regulating capitalism.
For one, it corrupts capitalism by incentivizing lobbying and dishonesty. But it also empowers the exploitative actions of a politically-dominant class.
New York already has laws on the books to regulate cannabis. Anglo-American traditions already provide rules that – through non-political forces – ensure reasonable care so as not to injure others and their property.
New York cannabis regulators and police departments shut down “illicit” dispensaries because cannabis legalization isn’t about your right to your body and mind.
It’s about tax revenue. Just like in Canada, where the most profitable cannabis businesses are government monopoly wholesalers.