• ​Central planning and cannabis

    Following the legalization of recreational cannabis in mid-October, retailers, including the government’s own online store continue to be plagued by an ongoing shortage of product. While these types of hiccups may be excused given cannabis has only been legal since October 17th, it also serves as great evidence for the shortcomings of central planning and the incredible efficacy of free market, supply and demand principles. It also reminds me of one of my favourite quotes from the great economist Milton Friedman.

    “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.”
    Bill C45, the Cannabis Act was first introduced in the House of Commons in April of 2017. With the Liberals strong majority, it was of course passed in November of 2017 giving producers and retailers the certainty needed to begin making the necessary investments and preparations for when cannabis would become legal to buy. There were many unknowns and responsibilities passed to the provincial and municipal levels of government as the Liberal’s rushed to fulfill their campaign promise.

    It is up to the federal government to decide who can grow the cannabis, the provincial government for the wholesale and distribution of retail cannabis products and the licensing of retailers, and the municipalities to determine where the stores can be located.

    Here in Alberta the NDP government in their wisdom decided the government would be responsible for online sales, taking away a substantial business opportunity from the private sector while simultaneously competing with the privately-run retail outlets. More than one month since the 1st day of legalization, the government-ran https://albertacannabis.org is out of stock, the few retail outlets that have been granted permission to open are mostly out of stock, and licenses for new retailers wanting to open are not being granted.

    As a result, it is very reasonable to assume the black market continues to thrive as the ever resourceful and productive traffickers maintain effective and efficient supply chains, fulfilling their customers demand, offering competitive pricing, all while achieving higher margins.

    It is also worth noting that Canada being the loose federation of provinces that we are, are worse at trading with each other than foreign nations. Unsurprisingly no (legal) cannabis sales are permitted across provincial boundaries.

    Regardless of the varying personal opinions on legalization, its universally agreed that the goal of keeping drugs out of the hands of kids is a good one. It should also be agreed that it is not government’s strong suit to create business friendly regulatory frameworks or centrally manage anything.