As I mentioned in class, the issues over distributors in alcohol are becoming important considerations in the marijuana legalization space. New laws are being written in many states to hit ballots in the coming years, and it'll be interesting to see in how many places distributors are able to claim a stake in the value chain.
As we evaluated the option in Colorado, we discussed a number of the pros and cons, but what I found most interesting was how it provided a platform for the state to discuss our philosophy on commercialization overall. How do we want the industry to grow? How can regulation hamper or help certain entities in the value chain to grow quickly and amass political clout that might hinder more effective safety regulations in the future? Do we want more smaller players or just a few strong ones? Who would be easier to regulate and which would enable us to more quickly implement safety rules? Do we want to encourage growth of large companies in Colorado now while we're ahead of the curve that will enable economic development in the state in the future as other states legalize? There are just a few of the many, many questions that the distributor lobbyists forced our office to consider.
The arguments for the inclusion of distributors are varied, but there's no question that distributor lobbyists are pushing hard. I found a great article summarizing some of the issue here in California.
The issue has cropped up all over the place, including in Michigan and in Nevada just to name a few. As you see many (some say 11 this year alone) states go to ballot with legal marijuana in this presidential election year, it's worth paying attention to the structure of those new industries and whether we've learned anything from the post-Prohibition structure we've created in alcohol.
I think this is a fascinating topic and thanks for sharing more about your experience Riley. In particular, the wine industry seems to illustrate how profoundly difficult it is to change regulations that may no longer serve the function that they were designed for once they have been in force for many years and incumbents hold such concentrated political power.
ReplyDeleteIt was pretty horrifying in class on Friday to hear Katie share how easy it was for distributors to have her license pulled and nip her growing New Vine Logistics business in the bud. I would be very curious to understand better what exactly transpired, but I have to wonder whether the regulator, in addition to being easily influenced by the powerful distributor lobby, has also developed a desire to preserve the status quo.
It seems like two things that those who are defining regulations for a new industry would seek to avoid are 1) creating a structure where a few large players or one step in the value chain can concentrate a huge amount of market power and 2) creating a regulatory framework and a structure of regulators who are motivated to maintain the status quo.
Does anyone have good examples from other industries where this has worked either well or poorly?