Legally fragmented markets for marijuana create unusual alliances

 Who will be most in favor of eliminating the federal ban on marijuana in the US?  Not necessarily growers and sellers in the many states in which marijuana can legally be grown and sold.  There are some advantages to being in a legal market that is illegal elsewhere (and not just because of the possibility of illegally selling at the higher prices that black markets command...)

The WSJ has this story:

Cannabis Overhaul in Washington Is Only Getting Harder. Legalization agenda could be complicated by states that want to defend their nascent marijuana industries and associated tax revenues  By Carol Ryan

"To date, 18 states have legal adult-use cannabis industries, according to the latest tally from the Marijuana Policy Project. As the drug can’t be transported across state borders while it is still federally outlawed, anything that is smoked within a state has to be grown and sold locally. These independent fiefs, which are growing bigger every month, would be disrupted by national legalization.

"One of the biggest concerns is what happens when cannabis can be traded across the country. More mature marijuana markets such as California and Oregon see interstate commerce as an opportunity to get excess stock off their hands. For recent converts such as New York and New Jersey, a gush of cheap outside inventory would be a threat to their nascent industries. This is particularly sensitive for small, minority-owned cannabis businesses that are being given priority for licenses but would be rapidly undercut.

"States also want to protect the tax windfall that cannabis creates. Illinois has collected more taxes from cannabis than liquor every month since February, according to the Illinois Department of Revenue. Since 2014, when legal sales began in Colorado and Washington, cannabis has raised $7.9 billion in taxes for states, according to the Marijuana Policy Project. Sales levies should stay with local markets, but those associated with production could be hard for certain states to hold on to if the drug is federally legal. Cultivation is likely to shift to warm and low-cost states where cannabis can be grown cheaply outdoors."

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And then there's Oklahoma. The NY Times has the story:

How Oklahoma Became a Marijuana Boom State. Weed entrepreneurs have poured into Oklahoma from across the United States, propelled by low start-up costs and relaxed rules.  By Simon Romero

"Ever since the state legalized medical marijuana three years ago, Oklahoma has become one of the easiest places in the United States to launch a weed business. The state now boasts more retail cannabis stores than Colorado, Oregon and Washington combined. In October, it eclipsed California as the state with the largest number of licensed cannabis farms, which now number more than 9,000, despite a population only a tenth of California’s.

"The growth is all the more remarkable given that the state has not legalized recreational use of marijuana. But with fairly lax rules on who can obtain a medical card, about 10 percent of Oklahoma’s nearly four million residents have one, by far the most of any other state.

...

"That unfettered growth has pitted legacy ranchers and farmers against this new breed of growers. Groups representing ranchers, farmers, sheriffs and crop dusters recently joined forces to call for a moratorium on new licenses. They cited climbing prices for land, illicit farms and strains on rural water and electricity supplies as among the reasons. In some parts, new indoor farms are using hundreds of thousands of gallons of water.

...

"But unlike local businesses, where the customers are typically residents, critics assert that growers in Oklahoma are producing far more marijuana than can possibly be sold in the state and are feeding illicit markets around the country.

"Because of lower costs for licensing, labor and land, growers can produce cannabis for as little as $100 a pound, and then turn around and sell that for between $3,500 to $4,000 a pound in California or New York, said Mark Woodward, a spokesman for the Oklahoma Bureau of Narcotics.