SINCE late 2012, two states have voted to legalise marijuana for recreational use; licensed shops in Colorado and Washington now sell it to anyone who wants it. Six states have legalised the drug for medicinal use, bringing the total to 23. Most Americans now say they favour legalisation (see chart 1). The House of Representatives has voted to defund federal raids of medical-marijuana facilities in states that allow them. Serious newspapers (though not, alas, this one) have appointed pot critics. And an Oklahoma state senator has campaigned to legalise the drug because in Genesis 1:29, “God said, ‘Behold, I have given you every herb-bearing seed…upon the face of all the earth’.”
When Colorado became the first state to license pot shops on January 1st, tokers merrily queued in the cold for a puff and a place in history. But the mood in Washington state, which opened its shops on July 8th, is more downbeat. Severe shortages meant that barely half a dozen shops opened on day one; including just one in Seattle, the largest city. Several warned that they probably had only enough weed to last a few days.
Colorado’s recreational pot business was built on the back of a well-regulated medical one. Retail licences were initially restricted to dispensary-owners; on January 1st, many stores merely changed their signs. Washington also has a medical-pot business, but it is an unregulated mess. I-502, the voter initiative that legalised marijuana in 2012, charged the state’s Liquor Control Board (LCB) with building a recreational industry from scratch.
Most people think it has done well, but it has not been easy. “We wanted to bring in as many people from the black market as possible,” says Alison Holcomb, a lawyer who drafted I-502. Application fees were kept low, and a lottery determined who would win the limited number of producer, processor and retail licences, regardless of the quality of the applicant. The LCB was overwhelmed by the number of bids—over 7,500—and says it will not finish processing them until early 2015. It has issued only 90-odd licences to producers.
Officially, the LCB hopes that within a year I-502 shops will capture 25% of the market. Others think that is optimistic. For now, prices are high: around $20 a gram, which is twice the black-market (or medical) cost. That partly reflects eye-watering excise taxes: 25% at each stage of distribution, plus normal sales taxes. But wholesale prices are high too, suggesting…