The U.S. Drug Enforcement Administration has made moves to reclassify marijuana , making it a type of legal but regulated medicine, like Tylenol with codeine or some steroids .
With the reclassification, 26 states where cannabis is currently illegal will need to decide whether they want to take action to stop the sale of cannabis in their state or figure out how to regulate the newly legal drug.
A few states, such as North Carolina, have laws on the books saying cannabis will automatically become legal once the federal change goes into effect.
But the regulation of cannabis is nothing new in Colorado and Washington. These two states have more than a decade of experience writing and enforcing laws to control the marijuana marketplace.
I’m an economist who specializes in forecasting how various regulations affect industries such as legal recreational marijuana, alcohol, and tobacco. Let’s take a look at how Colorado and Washington approached the problem — and what other states can learn from their experience. Early adopters
In 2012 , Colorado and Washington became the first two states to legalize marijuana , but their regulatory approaches were different.
Colorado implemented laws more favorable to competition by allowing unlimited marijuana retailers. Competitive markets with many businesses are generally believed by economists to be better for consumers because they lower prices and increase the quality of the goods and services offered.
Washington took a different approach by limiting the number of retailers and restricting competition, an approach designed to maintain higher prices to deter overconsumption . Too much cannabis use can lead to burdens on society , such as increased healthcare costs and negative effects on adolescents , so legislators may have been motivated to curb it.
At first glance, you’d expect Colorado’s laws to lead to significantly lower marijuana retail prices. But during 2022, average marijuana prices were actually slightly higher in Colorado than in Washington. Regulations in each state have changed only modestly since 2012. So why didn’t Colorado’s freer marketplace lead to lower prices, as an economist would expect? Limited versus unlimited retail licenses I believe the explanation lies in three […]
Pot Laws Are About To Change in 26 States — Here’s What To Expect