Feds Worry That Legal Pot Will Be Too Cheap and Too Expensive

Since the Obama administration has not responded
in any substantive way to the impending legalization of marijuana
in Colorado and Washington, we must look elsewhere for clues to its
thinking. Judging from an October 2010 “fact
” about marijuana legalization prepared by the Office of
National Drug Control Policy (ONDCP), thinking may be
too charitable a description. The ONDCP warns that
“legalization would lower price, thereby increasing use.” As if
that’s a bad thing. A rational calculus would count greater
consumer satisfaction and savings from lower prices as benefits of

In any event, by the end of the fact sheet the ONDCP has stopped
worrying that “legalization would cause the price of marijuana to
plummet” and started worrying that the price would be too high—so
high that Mexican cartels, operating under the same legal and
practical constraints they face now, could beat it. The ONDCP says
“legalization would do little, if anything, to curb drug violence.”
One reason: “Under the most commonly proposed legalization
regime—one that imposes high taxes on marijuana—violent drug
cartels would simply undercut legal prices to keep their market
share.” So according to the federal government, the price of pot
will plummet following legalization while remaining above the
black-market level. Pot will be dangerously cheap yet dangerously
expensive at the same time. So the Obama administration admits that
marijuana legalization can do miracles.

[Thanks to Allen St. Pierre for the tip.]