The Worst of Both Worlds: The Wild West of the 'Legal' Marijuana Industry

Abstract

As states have legalized marijuana, they have created a booming industry that operates in violation of the federal Controlled Substances Abuse Act. Like the tobacco and alcohol industries, this new legal marijuana industry has the potential to do great harm to American consumers and communities if it is not disciplined and restrained in how it sells and develops its products. Unfortunately the federal government has not yet stepped in to regulate the industry and state governments have imposed only limited controls. In addition, because of the increased threat of criminal and civil liability hanging over the industry, it has been largely shut out from attracting professional stakeholders including banks, venture capital firms, and professional managers which could help impose market discipline. In order to achieve the policy goals behind legalization of marijuana it is important that states do everything they can in the short term to regulate this industry so that it develops in a responsible manner. One of the things states can do is promote the integration of professional stakeholders into this industry. This essay explores what it means to be a “professional” in the marijuana industry and how more professionals could help mitigate some of the harm this industry poses to the public.

Keywords: marijuana, corporation law, marijuana industry, marijuana legalization

JEL Classification: K2