“One of the biggest mistakes it to judge policies and programs by their intentions instead of their results.” –Milton Friedman
A perfect case study is the Illinois law that legalized recreational cannabis on January 1, 2020. The 610-page law spells out details about regulation, taxation, authority and governance, public health and safety, and expungement or pardons of prior low-level cannabis convictions. But the glowing orb at the center of this legislative creation is “social equity”. During the decades of the War on Drugs, some people suffered more than others. Heralded as a national benchmark for inclusion and equity, this bill would make amends. Such was the stated intention of the bill’s sponsors.
The bill lays out how the state of Illinois intends to make sure that social equity applicants will reap the profits of the retail cannabis industry. When applying for a dispensary license, preference will be given to those who were arrested or incarcerated for cannabis related laws, their families, people in their broader communities, residents of high-poverty neighborhoods, minorities, females and veterans. The law’s language is explicit. The state wants to reduce barriers to entry and establish a legal cannabis industry that is accessible to people adversely impacted by the enforcement of cannabis-related laws.
And then, in a total contradiction to its claimed intent, the law erects massive barriers to entry and makes owning a retail dispensary practically impossible.
First, it specifies that the state of Illinois will only grant 500 licenses. Seventy-five were to be granted in 2020, and another 110 granted in 2021, with the remainder doled out at some future time. (As it happens, none of the licenses have yet been granted due to political and bureaucratic bungling, but that snarl is tangential to the one I am untangling here.)
Second, the law specifies that it costs $5000 to merely apply for a license. Applicants must submit an excessively detailed business plan with the application fee.
Third, if the applicant is one of the lucky few to be granted a retail dispensary license, that license will cost $60,000, renewable at $60,000 every two years.
For comparison, in Illinois there are no caps on the number of state retail liquor licenses. There is no fee to apply, and the annual cost of the retail license is $750.
Only those who, like Alice, have climbed through the Looking Glass could convince themselves that accessibility is opened and inclusivity is broadened by severely restricting the number of dispensaries. I reached out to legislators, journalists, the cannabis business association, and a venture capitalist. No one could (or would) give me an explanation for the limit on licenses.
The cap on the number of retail licenses is only part of the problem. Many social equity applicants would be priced out of the market by the exorbitant licensing fees and myriad regulations for operations. Here, however, in a nod to the absurdity just created, the law establishes a Cannabis Business Development Fund. The fund’s purpose is to provide low interest loans or grants to social equity applicants to help them pay for the expenses of operating a dispensary. This has the stench of the reviled company store model. The state sets high prices for the desired goods while simultaneously offering financial help if the applicant grovels before the Cannabis Business Development Fund committee. The law attempts to mitigate its own internal flaw with a solution likely to result in favoritism and ultimately corruption.
If this Illinois law was an isolated example of counter-productive legislation, it would not be a snarl worth untangling. But it is not an isolated example. Legislative intentions have created a thicket of occupational licensing laws. That thicket is overgrown with a kudzu-like layer of applications, fees, and filing procedures. While not as blatant as actual caps, these barriers make it really difficult for an average person to work in their desired occupation or trade. Want examples? In Minnesota a barber has to complete 18 times as many hours of training as an EMT. If you want to install security alarms in Texas you need two years of experience. You need a license to be a florist in Louisiana. The list of licensed occupations in Illinois is 13 pages long. (I could do this all day.)
At the federal level things are no better. For instance, the American Jobs Plan being debated right now, which is commonly referred to as the Infrastructure Bill, proposes to raise corporate taxes by $1.5 trillion (with a “T”)—yet contains $400 billion (with a “B”) corporate kickbacks. This is crazy at best and corrupt at worst. It is the Cannabis Business Development Fund concept on steroids.
Make no mistake; the unfortunate results of legislation are often not unintended consequences. Any babysitter who has only two cookies while watching three kids could have predicted the outcome of the cap on dispensaries. This isn’t rocket science. Bills are deliberately wordy and convoluted, the better to obscure the intentional intentions. I don’t know if the road to Hell is paved with good intentions. I do know that intentions—good or otherwise—are clogging the road to prosperity for millions of average, working class Americans.
Good luck to the Illinois social equity applicants. It’s a jungle out there.
