Leave Marijuana to the Market

In a January 24 ruling, a Middlesex Superior Court judge lifted Cambridge’s two-year moratorium on certain cannabis sales permits. The moratorium, passed by the Cambridge City Council in September 2019, gave historically marginalized groups — including women, minorities, and those who have been impacted by the war on drugs — a two-year window to be the sole operators of recreational marijuana shops in the city.

Though the moratorium was creative and well-intentioned, it was a complete failure in reality. Not only was it unconstitutional as argued by the judge, but it was also based on economic fallacies and misconceptions of the cannabis market. The Cambridge City Council showed either apathy or ignorance for standard economic theory when crafting the policy. The resulting moratorium helped no marginalized groups and effectively banned the sale of recreational cannabis in Cambridge.

Despite its short-lived nature, the deficiencies of the moratorium are indisputable. Not one recreational marijuana dispensary is open in Cambridge even though 71.3 percent of Cambridge voters supported full marijuana legalization during the 2016 Massachusetts referendum. The moratorium added restrictions on permits — stunting supply in an already over-regulated sector. In other towns, many medical marijuana dispensaries applied for and received permits to sell recreationally. The moratorium prevented Cambridge’s existing medical marijuana dispensaries from pursuing this natural transition. As a result, Cambridge has no recreational dispensaries while weed shops have popped up in surrounding Massachusetts towns.

Though the moratorium effectively constituted a ban on cannabis sales in Cambridge, the intentions of the policymakers were noble. The City Council was trying to address serious issues in the legal cannabis market. White, upper-class entrepreneurs dominate the market in many states. Black people, who suffered disproportionately as a result of the war on drugs, have not reaped the benefits of legalization. Only 1 percent of dispensaries nationwide are owned by black people.

The moratorium righteously attempted to help the victims of the war on drugs reap the benefits of legalization. So, why haven’t minorities utilized the head start?

While the moratorium effectively prevented white males from joining the market, it did not address the underlying issues that have kept minorities out of the legal cannabis industry. Federal banking regulations prevent many cannabis enterprises from receiving loans and opening bank accounts. As a result, it is very difficult to open a weed dispensary without significant liquid capital, which most aspiring small business owners, especially minorities, do not possess. Members of minority groups in Cambridge most likely had difficulty financing their recreational marijuana companies and, as a result, could not benefit from the banishment of competition.

Essentially, the moratorium did not address the fundamental issues of access to capital that have prevented low- and middle-income Americans from accessing the market. Competition was not the fundamental problem in the market, so its absence did not help aspiring small business owners. Though the moratorium did not directly hurt aspiring minority business owners, it did hurt owners of medical marijuana dispensaries and Cambridge consumers.

So, the moratorium failed. Now, what can be done to help both Cambridge’s consumers and historically marginalized groups?

The first necessary step is the deregulation of the cannabis market. Ideally, the striking down of the moratorium should allow for an influx in competition. However, city officials such as Quinton Zondervan have indicated support to appeal the ruling and use other options to “get in the way” of existing medical marijuana dispensaries seeking permits to sell recreationally. These efforts to further delay the implementation of recreational cannabis sales must be strongly resisted. Four years after its popular legalization, cannabis should finally be sold recreationally in Cambridge.

But, what about the historically marginalized people that will likely be left in this free-market framework? The moratorium failed because it did not address the underlying financial barriers preventing middle-class minorities from entering the legal marijuana market. New policies providing tax breaks, subsidies, and access to low-interest loans would alleviate many financial impediments without creating massive market distortions.

Minorities do not need a head start to enter the cannabis market. In fact, structural issues prevent the historically marginalized from capitalizing on head starts. Policymakers should focus on providing owners of weed shops access to loans and the banking system. Allaying the obstructions of banking regulations is the only way to change an industry that has essentially become a white, upper-class marijuana hegemony.

The Cambridge City Council should continue to propose creative policy solutions to complex social issues. However, they should also ensure that future proposals are effective and viable. In this case, the City Council must do a closer analysis of the economic complexities of the cannabis industry to create a policy that gives Cantabrigians access to safe, legal marijuana and grants historically marginalized people the opportunity to open their own profitable businesses.

Jonathan L. Katzman ’22, a Crimson Editorial editor, is a History concentrator in Dunster House.