Still illegal in Idaho

 Here's a map from The Hill of places where marijuana will be legal to various degrees by the end of this year. Grey states are where marijuana is still entirely illegal.  Despite the best attempts of the previous presidential administration to make America grey again, Idaho is one of only three states that remain grey: they are surrounded by states in which cannabis is legal in some form, and most of Idaho's neighbors have legalized marijuana (even) for recreational purposes (bright green on the map).

But Idaho is holding the line, which seems to be politically popular there.

The NYT has the story:

A Legal Pot Pioneer Was Busted in Idaho With 56 Pounds. He Has a Plan.  By Corey Kilgannon

"In retrospect, the Idaho shortcut might have been a bad idea.

...

"Idaho is surrounded mostly by pot friendly states and is strict about people driving through with the stuff. The authorities are especially vigilant in “corridor counties” along Interstate 84, of which Gooding County — where Mr. Beal encountered the state police — is one.

"Under state law, carrying more than 25 pounds of marijuana is a felony with a mandatory minimum sentence of five years; the maximum is 15 years, with a maximum fine of $50,000.

“It’s one of the worst places in the country to possess marijuana, definitely,” Michelle Agee, Mr. Beal’s court-appointed lawyer, said. “Idaho is stuck in the 1950s as far as marijuana goes. It’s definitely the wrong place, wrong time for a person to be accused of having marijuana.”

...

"Reached for comment, Idaho’s attorney general, Raúl R. Labrador, a former Republican congressman who helped found the conservative House Freedom Caucus, said that legalization in neighboring states had done nothing to deter the strict enforcement of the laws in Idaho.

“We’ve watched how those decisions to legalize drugs have ruined other states, and Idaho demands just a bit better for our citizens and communities,” he said. “If you are trying to transport marijuana across state lines through Idaho, take the long way instead. It’ll save us money on your incarceration.”

Cannabis in US airports

 An anomaly of US Federal law is that marijuana is illegal on airplanes (interstate commerce) even when the airports involved are in states where marijuana is legal.

The WSJ has the story and a picture:

Don’t Put Your Stash in the Overhead Bin. A ‘Cannabis Amnesty Box’ at Chicago’s Midway Airport.  By Bob Greene

Marijuana black market persists in CA (despite the beginning of a legal market)

 The LA Times has the story, about how legalization of marijuana in California so far failed to end the black market, complete with violence in the Southern California desert.

A massacre that killed 6 reveals the treacherous world of illegal pot in SoCal deserts, by SUMMER LIN, SALVADOR HERNANDEZ, KAREN GARCIA

"A Times investigation last year uncovered the proliferation of illegal cannabis in California after the passage of Proposition 64, which legalized the recreational use of marijuana in the state. Although the 2016 legislation promised voters that the legal market would hobble illegal trade and its associated violence, there has been a surge in the black market.

"Growers at illegal sites can avoid the expensive licensing fees and regulatory costs associated with legal farms. Violence is a looming threat at these operations, authorities said, because illicit harvests yield huge quantities of cash to operators who can’t use banks or law enforcement for protection.

...

"In 2019, an audit by the United Cannabis Business Assn. found nearly 3,000 unlicensed dispensaries and delivery services were operating in the state — at least three times more than legal, regulated businesses.

...

"Warrick wouldn’t comment on whether the slayings were cartel-related but said there were “certain things at the scene that show a level of violence that obviously raises some interesting questions for us.”

Banks boycott sex workers even for legal kinds of sex work

 Repugnance isn't erased by legality. Workers in morally contested, repugnant markets may be boycotted by banks even when their work is legal.  Marijuana sellers in states where marijuana sales are legal run into this problem because Federal law still prohibits such sales, but sex workers in legal industries (video sex, porn) and even prostitution in Nevada often can't keep bank accounts, even personal (i.e. non-buisiness) accounts.

The NYT has the story:

Sex Workers Have Been Shunned by Banks, Even When Their Work Is Legal. Financial service companies often avoid what they deem high-risk industries like adult entertainment. When workers lose their accounts, they are left with few options.  By Tara Siegel Bernard

“Despite being a legal establishment, there is, of course, still a stigma attached to the work,” Ms. Cummins, 74, said from Wells, Nev., the only state where prostitution is legal in certain counties. “There is no bank in Nevada that will lend money to a brothel."

...

"Workers in sex-related industries — whether in a brothel or a strip club or selling sexually explicit videos online — often risk their safety and face social and employment discrimination. But a lesser-known struggle is that it’s often difficult to maintain a basic bank account and other financial relationships that most people take for granted.

...

"Financial institutions are responsible for monitoring the nation’s cash flow for potential criminal activities, including human trafficking and money laundering. In the process they’ve also become quasi-law enforcement, making life-altering calls on who can keep banking and who cannot, based on their own calculus about what kind of risk is worth taking.

But without bank accounts, people are unable to accomplish the most basic of financial tasks: collecting, spending and saving their earnings. Once banished from mainstream bank accounts and everyday financial apps Americans have come to rely on, sex workers are left with fewer, and often less attractive, options — turning to crypto, for example, or being forced to rely on others to hold their cash, opening them up to exploitation. 

Magic mushrooms as therapy

 The legal use of psychedelics in therapy is growing.

The NYT has the story:

A New Era of Psychedelics in Oregon. The state has pioneered a therapeutic market for psychedelic mushrooms. Researchers are watching with a mix of excitement and unease.  By Mike Baker

"Stigmatized in law and medicine for the past half-century, psychedelics are in the midst of a sudden revival, with a growing body of research suggesting that the mind-altering compounds could upend psychiatric care. Governments in several places have cautiously started to open access, and as Oregon voters approved a broad drug decriminalization plan in 2020, they also backed an initiative to allow the use of mushrooms as therapy.

...

"For those who have long worked on psychedelics research, the sudden expansion in access in Oregon and Colorado, along with cities like Denver, Detroit, Minneapolis and Washington, D.C., have prompted a mix of elation and trepidation. Oregon has settled on a middle-of-the-road approach, requiring neither a doctor’s supervision nor a specific medical diagnosis, but providing for strict oversight of supply and use.

...

"While some form of legalized marijuana is authorized in all but 12 states, creating a huge, multi-billion-dollar industry, the psilocybin market remains small, with an uncertain financial outlook for those entering it. Only five businesses are approved to manufacture the therapeutic-use fungi in Oregon, with 13 sites approved to host dosing sessions.

...

"Officials in other states are watching what happens in Oregon. Voters in Colorado approved a measure last year to decriminalize psilocybin and to set the state on the path to a legal therapeutic market. In other states, including Texas, lawmakers have authorized studies of psilocybin for treating ailments such as PTSD. The F.D.A. has granted the drug “breakthrough therapy” status, which allows for expedited review of substances that have demonstrated substantial promise.

"But there is uncertainty about the best path forward. California lawmakers approved a bill this year to decriminalize several hallucinogens, but Gov. Gavin Newsom vetoed the measure, saying the state needs to first set up regulated treatment guidelines. The American Psychiatric Association has urged caution, saying treatments should be limited to research studies for now."

Growing pains for legal marijuana, in California and beyond

The market for legal marijuana in the U.S. is suffering from (literal) growing pains, as large scale legal cultivation runs into both crop diseases, and zoning issues.

As a crop that is legal at the state level in many states, but still illegal under federal law, large cannabis farms don't get some of the benefits regarding the spread of plant diseases that are provided for other crops by the U.S. Department of Agriculture.

The WSJ has the story:

Cannabis Industry Confronts Billion-Dollar Threat: Weak Weed. Pathogen spreading among crops is cutting recreational drug’s potency, forcing growers to cull ‘dudded’ plants.  By Dean Seal

"A pathogen is contaminating cannabis crops around the country and threatening to leave billions of dollars of losses in its wake. 

"Cannabis researchers and experts are sounding the alarm for what is known as hop latent viroid, or HLVd, and cultivators are stepping up efforts to discover whether their plants are infected. The pathogen can drastically reduce the potency of the psychoactive compounds in marijuana, a phenomenon that growers have long called “dudding.”

...

"Plant pathologists and cannabis experts say the spread of the viroid was likely accelerated by the popularity of weed from California, which legalized cannabis for medical use in 1996.

"The spread also reflects the evolution of the cannabis business into a major agricultural crop. The risk of a new disease expanding increases for any crop that goes from low to high production, as cannabis has in the past two decades, said Jeremy Warren, Dark Heart’s director of plant science.

“You saw the spread happen in the legal states first, like California, where you started having bigger grows and bigger greenhouses that are making thousands and tens of thousands of plants,” Warren said. “In that system, it’s harder to maintain sanitation and it’s easier for a pathogen to take off.”

"The U.S. Agriculture Department typically sets quality standards and inspection requirements for agricultural products, but marijuana’s illegality at the federal level keeps it out of the agency’s purview."

*******

And big farms mean that agriculture and expensive housing may rub shoulders in California. Here's the Guardian on Santa Barbara County.

A beachside city became California’s legal cannabis capital. Not everyone is stoked  by Nicholas Schou

"Thanks to the most lenient policies in California for recreational marijuana, Santa Barbara county is now the state’s undisputed capital of legal cannabis, boasting more acres than the storied Emerald Triangle of Humboldt, Trinity and Mendocino counties.

"Santa Barbara voters overwhelmingly backed California’s legalisation of recreational marijuana in 2016, with hopes that the cannabis boom would bring tax revenue and new jobs to the county. The transformation has been fast and furious. Santa Barbara county is now home to around a third of all cultivation licenses issued in California, despite making up only 1.8% of the state’s land, with some megafarms stretching over dozens of acres.

"But the sudden influx of growers has inspired a broad coalition of frustration that spans local high schools, uber-wealthy homeowners and the region’s influential wine industry, who argue the pungent industry threatens to ruin their cherished lifestyle in a region dubbed the “American Riviera”.

...

"The tensions underscore a wider drama playing out in California over the promises of legal weed. Despite broad public support for bringing the industry out of the shadows, seven years on the illicit market is thriving, businesses are struggling to turn a profit, and many on the frontlines of the transition say they have yet to enjoy the returns.

"In fact, for the first time, officials in Santa Barbara are acknowledging that if market trends continue, the cost of the program both to public finances and to quality of life may outweigh any actual benefits.

...

"California’s cannabis market has been operating in a quasi-legal sphere since 1996, when medical marijuana was decriminalized. In 2016, advocates for Proposition 64 successfully argued that decriminalizing all cannabis use would create lucrative tax schemes and rewrite the historic injustices of policing such a widely used drug.

"But Prop 64 allowed cities to choose whether to allow cannabis businesses or not. Many refused to, banning both cultivation and dispensaries. Others, with varying degrees of success and scandal, sought to cash in on the “green rush”.

...

"Santa Barbara is alone among counties in that it taxes farmers based on the value of the marijuana they sell, as opposed to the acreage of their farms. While that strategy works when cannabis values are high, the industry has experienced a massive decline in profitability during the past year. With the sale price of cannabis in the state at roughly a third of its value just a year or so ago, many corporate investors have pulled out of the market entirely, and the number of licensed growers in Santa Barbara county has declined by about 25%.

"As a result, the county is expecting to earn just $7.5m in cannabis tax revenue this year, a 54% decline from 2022 and only half the $15.2m that was expected to fund the county’s latest budget, according to a county report."

Drug markets: the replacement of agriculture by chemistry

Labs are replacing fields as the source of addictive drugs. Here are two stories, from National Affairs, and the Financial Times.

The current issue of National Affairs has this essay on drugs, drug use, and overdose deaths:

How to Think about the Drug Crisis by Charles Fain Lehman

"A reported 111,219 Americans died from a drug overdose in 2021. That figure has risen more or less unabated, and at an increasing pace, since the early 1990s. Back in 2011, 43,544 Americans died from a drug overdose — less than half the 2021 figure. Ten years earlier, in 2001, it was 21,705 — less than half as many again. And the problem keeps getting worse: The 2021 figure is nearly 50% higher than it was in 2019.

...

"The National Center for Health Statistics estimates that there were roughly 110,000 overdose deaths in the year ending December 2022 — essentially unchanged from a year earlier.

...

"Historically, illicit drugs — heroin, cocaine, marijuana, etc. — were derived from plants grown in fields or greenhouses. But licit pharmacology has long been able to use simple, widely available precursor chemicals to synthesize the active ingredients in these substances. This sidesteps the complex processes of farming altogether. At some point in the past several decades, drug-trafficking organizations learned to use the same techniques at scale. Using precursors sourced primarily from China, they now synthesize a variety of opioids — the class of drugs that includes heroin.

"The most widely known of these is fentanyl, a synthetic opioid conventionally used in anesthesia that is 50 times stronger than heroin. Some are stronger still — carfentanil, the most potent opioid known thus far, is roughly 100 times stronger than fentanyl. In 2021, synthetic opioids were involved in roughly two out of every three overdose deaths.

...

"Complicating the story further is the increasing purity and declining cost of methamphetamine, another synthetic drug with an exploding death rate. After synthetic opioids, methamphetamine is now the second most common cause of drug overdose death. It's also the only tracked drug where deaths not involving synthetic opioids are increasing. That these two lab-produced substances are replacing "organic" drugs at the same time is not a coincidence.

"Why have these drugs taken over the market? Because they're a much better value proposition for sellers. Synthetic drugs significantly reduce production costs, both because chemistry is less labor- and input-intensive per unit produced than farming and because lab production is much easier to obscure from interdiction efforts that drive up costs. Furthermore, because the potency per dose is higher, drug-smuggling operations can move a smaller amount of fentanyl than heroin for the same profit.

"Of course, the stronger the drug, the higher the risk of overdose. Drug-overdose death rates used to be low in part because for the first century or so of modern American drug use, the potency of illicit drugs was constrained by what traffickers could grow in a field. Synthetic drugs remove this limit."

********

And this from the FT:

How fentanyl changed the game for Mexico’s drug cartels.  by Christine Murray

"In the last decade, fentanyl has become the leading cause of death for young adults in the US. Mexico’s illegal drug trade has also adapted to the shift from plant-based drugs towards synthetics, creating a new, streamlined and highly profitable arm of the illicit business with fewer workers and lower costs — but just as much violence.

"The change has caused friction in two of Washington’s most important relationships, with China and Mexico.

...

"Instead of employing tens of thousands of agricultural labourers, the entire fentanyl industry in Mexico could function with “cooks” estimated to number in the hundreds, who were mostly not qualified chemists, Reuter said. Fentanyl’s growth appears to have hit heroin production in particular, with poppy growing in Mexico still well below its peaks, according to the UN Office for Drugs and Crime."

Marijuana and military recruitment

 Here's a proposal for a bit pf reality-based legislation that has some bipartisan support. DefenseOne has the story:

Proposed marijuana waivers acknowledge blunt recruiting truths. Lawmakers on both sides of the aisle want to remove a barrier to joining the U.S. military.  by LAUREN C. WILLIAMS 

"As the military services struggle to meet recruiting goals, lawmakers in the divided House seem united on a proposed fix: relaxing the Pentagon’s policies on marijuana use.

“I do not believe we should be testing for cannabis [in] people who want to join the military,” Rep. Matt Gaetz, R-Fla., told the House Rules Committee during a hearing on Tuesday. “We should be thinking about cannabis more in terms of alcohol.”

Gaetz testified in support of his amendment that would ban drug testing for marijuana as a condition of enlistment or to become a commissioned officer. 

“We are having a recruiting crisis,” he said, noting that many “people use cannabis under the color of state law.” So far, 23 states and Washington, D.C. have legalized the recreational use of marijuana.

"The Florida lawmaker stressed that his amendment wouldn’t preclude DOD from prohibiting marijuana use for individuals actively serving in the military, but that cannabis testing is “an unnecessary gate” for recruitment. In 2021, Gaetz sought to overturn U.S. election results."

Harm reduction is not a panacea: drug use and drug policy in Portugal, and San Francisco

 The Washington Post has a story about Portugal, and the SF Chronicle has one as well. Both stories touch on the tensions between treating drug addicts with respect, and assuring that cities remain safe and livable.  

Here's the Washington Post:

Once hailed for decriminalizing drugs, Portugal is now having doubts  By Anthony Faiola and Catarina Fernandes Martins

"Portugal decriminalized all drug use, including marijuana, cocaine and heroin, in an experiment that inspired similar efforts elsewhere, but now police are blaming a spike in the number of people who use drugs for a rise in crime. In one neighborhood, state-issued paraphernalia — powder-blue syringe caps, packets of citric acid for diluting heroin — litters sidewalks outside an elementary school.

"Porto’s police have increased patrols to drug-plagued neighborhoods. But given existing laws, there’s only so much they can do. 

...

"Portugal became a model for progressive jurisdictions around the world embracing drug decriminalization, such as the state of Oregon, but now there is talk of fatigue. Police are less motivated to register people who misuse drugs and there are year-long waits for state-funded rehabilitation treatment even as the number of people seeking help has fallen dramatically. The return in force of visible urban drug use, meanwhile, is leading the mayor and others here to ask an explosive question: Is it time to reconsider this country’s globally hailed drug model?

“These days in Portugal, it is forbidden to smoke tobacco outside a school or a hospital. It is forbidden to advertise ice cream and sugar candies. And yet, it is allowed for [people] to be there, injecting drugs,” said Rui Moreira, Porto’s mayor. “We’ve normalized it.”

...

" In the United States alone, overdose deaths, fueled by opioids and deadly synthetic fentanyl, topped 100,000 in both 2021 and 2022 — or double what it was in 2015. According to the National Institutes of Health, 85 percent of the U.S. prison population has an active substance use disorder or was jailed for a crime involving drugs or drug use.

"Across the Atlantic in Europe, tiny Portugal appeared to harbor an answer. In 2001, it threw out years of punishment-driven policies in favor of harm reduction by decriminalizing consumption of all drugs for personal use, including the purchase and possession of 10-day supplies. Consumption remains technically against the law, but instead of jail, people who misuse drugs are registered by police and referred to “dissuasion commissions.” 

...Other countries have moved to channel drug offenses out of the penal system too. But none in Europe institutionalized that route more than Portugal. Within a few years, HIV transmission rates via syringes — one the biggest arguments for decriminalization — had plummeted. From 2000 to 2008, prison populations fell by 16.5 percent. Overdose rates dropped as public funds flowed from jails to rehabilitation. There was no evidence of a feared surge in use.

...

"But in the first substantial way since decriminalization passed, some Portuguese voices are now calling for a rethink of a policy that was long a proud point of national consensus. Urban visibility of the drug problem, police say, is at its worst point in decades

...

"A newly released national survey suggests the percent of adults who have used illicit drugs increased to 12.8 percent in 2022, up from 7.8 in 2001, though still below European averages.

...

"Porto’s mayor and other critics, including neighborhood activist groups, are not calling for a wholesale repeal of decriminalization — but rather, a limited re-criminalization in urban areas and near schools and hospitals to address rising numbers of people misusing drugs."

...

"After years of economic crisis, Portugal decentralized its drug oversight operation in 2012. A funding drop from 76 million euros ($82.7 million) to 16 million euros ($17.4 million) forced Portugal’s main institution to outsource work previously done by the state to nonprofit groups,

...

"Twenty years ago, “we were quite successful in dealing with the big problem, the epidemic of heroin use and all the related effects,” Goulão said in an interview with The Washington Post. “But we have had a kind of disinvestment, a freezing in our response … and we lost some efficacy.”

*******

And here are some related paragraphs about San Francisco, in a story in the San Francisco Chronicle about a concentration of drug dealers from Honduras:

THIS IS THE HOMETOWN OF SAN FRANCISCO’S DRUG DEALERS By Megan Cassidy and Gabrielle Lurie |  July 10, 2023

"Like many other U.S. cities, San Francisco shifted years ago to treating drug use more like a disease than a crime. The heavy policing approach of the War on Drugs era failed to slow dealers or decrease demand while overcrowding jails and disproportionately punishing people of color, studies show.

"Now one of the most progressive cities in the nation is fracturing over concerns that it has become too permissive. What to do about the Honduran dealers is a key political issue as a major citywide election approaches in 2024.

"On a weekday afternoon in June, a man in his early 30s lay motionless on a SoMa sidewalk outside the Federal Building. On his right, a dozen users smoked fentanyl and crack cocaine or hung bent at the waist, heads suspended at their knees. To his left, a handful of dealers, cloaked in black but for the space around their eyes, continued selling while a passerby revived the man with Narcan, the nasal-spray antidote to opioid overdoses, and as paramedics arrived to treat him a few minutes later.

“I’m so mad at them for ruining my neighborhood,” said Kevin DeMattia, who owns Emperor Norton’s bar and has lived in the Tenderloin for the past 25 years. “Businesses are dying because people don’t want to come to the Tenderloin.  They’re ruining the neighborhood in so many ways. They’re poisoning people. … They’re this cancer, this aggressive, metastasizing cancer on the Tenderloin — the dealers and the addicts.”

The future cannabis market?

 The Washington Post has the story on a big bet on the future of the American cannabis market:

Giant California greenhouse signals a big bet on cannabis legalization. One enormous facility on the northern edge of metro Los Angeles reveals expectations of marijuana becoming legal nationally.  By Scott Wilson

"Graham Farrar has placed the bet here. He is the president and co-founder of Glass House Farms, and the company’s greenhouse offers 5 million square feet of indoor space for cannabis production. That comes to just over 114 acres, the equivalent of about 86 football fields.

...

"Far from the misty northern redoubts of the state’s historic cannabis culture, the crop here grows just a few miles from highway-side outlet malls, an expanding regional airport, and the broad blue-stretch and logo-smile of an Amazon warehouse and distribution center.

"Those neighborhood ambitions help reveal Farrar’s own restless intent — to create a national cannabis business, even though his product, while legal in the Republic of California, remains illegal in the United States of America.

“I have the capacity, when the time is right, to produce on a national scale the best cannabis in the world,” Farrar said during a recent tour.

“And when that happens,” Farrar added, speaking of national legalization, “this farm goes from feeling really big to really small.”

...

"Last year, the California legislature passed a bill to allow licensed California cannabis businesses to sell their products in other cannabis-legal states.

...

"In a recent interview, Lee said that allowing trade with Oregon, Washington, Nevada and Colorado — all cannabis-legal states — would pose a risk not “qualitatively” different than what the state or cannabis businesses are taking now by defying federal law.

...

"In this marketing view, California is to weed what Cuba is to cigars."

It's hard to enforce the ban on cannabis in Kansas

 Just as markets need social support, bans on markets need social support.  Even in Kansas, apparently, where marijuana remains completely outlawed. (Kansas borders on Colorado and Missouri, where (even) recreational use of marijuana is legal, and on Arkansas, and Oklahoma, where medical use is legal.)

The Guardian has the story:

A dying cancer patient used cannabis to ease pain. His hospital called the police. ‘You’d think they would have shown compassion’: patient’s son decries Kansas police who issued citation as father suffered.  by Lois Beckett

"Hospital staff in Kansas called the police on a man dying of cancer who was using cannabis products to cope with his symptoms, in an incident that has since sparked outrage and renewed calls to rethink the state’s strict cannabis laws.

"The encounter took place in mid-December, when police in the city of Hays say two officers showed up at the cancer patient’s hospital room to issue him a citation for a drug violation. 

...

"Because of the Christmas holiday, the city prosecutor had not seen the email about dismissing the charge until after the police interaction with the cancer patient had already become a viral news story, the police chief said. He said he personally let the patient know on 27 December that the police department was not pursuing the citation and that he would not have to appear in court.

"More than a hundred people have called or emailed the Hays police department, upset about news reports of officers’ interactions with the cancer patient, the chief said. "

Marijuana legalization advances in the 2022 elections

Time Magazine published this map under the headline "Why Marijuana Had a Terrible Night in the 2022 Midterm Elections"

It doesn't look so terrible to me, so much as increasingly inevitable. The grey states on the map (where marijuana remains entirely illegal) are shrinking steadily: it doesn't appear that opponents will succeed in making America grey again.

 "Nineteen states and the District of Columbia allow recreational use of marijuana; 13 states outlaw it entirely. The rest of the states—including Arkansas, South Dakota and North Dakota—allow its use for medicinal purposes. It remains illegal under federal law."

*********

It's going to become increasingly hard for States to enforce draconian laws against something that is legal in neighboring states.  That doesn't mean that legalization is always going to go smoothly--the end of Prohibition didn't end alcoholism, and the end of marijuana prohibition won't make marijuana chemically safer (in fact competition will develop strains that are chemically more potent).  But removing legal risks from what would otherwise be uncontrolled black markets, and taking them out of the hands of criminals, still seems to have momentum.

The (local) labor markets for terrorists and drug traffickers

 It's so hard to hire good help nowadays, but two papers in the latest Econometrica give us some insight into how that problem is solved in the labor markets for terrorists, and for narcotics.

First terrorism, which turns out to have a local financing element, suggesting frictions in moving money and terrorists...

TERRORISM FINANCING, RECRUITMENT, AND ATTACKS, by NICOLA LIMODIO, Econometrica, Vol. 90, No. 4 (July, 2022), 1711–1742

Abstract: This  paper  investigates  the  effect  of  terrorism  financing  and  recruitment  on  attacks. I exploit a Sharia-compliant institution in Pakistan, which induces unintended and quasi-experimental variation in the funding of terrorist groups through their religious affiliation. The results indicate that higher terrorism financing, in a given location and period, generate more attacks in the same location and period. Financing exhibits a complementarity in producing attacks with terrorist recruitment, measured through data from Jihadist-friendly online fora and machine learning. A higher supply of terror is responsible for the increase in attacks and is identified by studying groups with different affiliations operating in multiple cities. These findings are consistent with terrorist organizations facing financial frictions to their internal capital market.

"I study two aspects of the relationship between terrorism financing and attacks: (1) the correlation between the timing of financing and attacks; (2) the relation between financing and recruitment in generating attacks. To investigate the first point, I follow 1750 cities over 588 months between 1970 and 2018 containing the universe of terrorist attacks (e.g.,more than 14,000 events). I also build a panel with 29 terrorist groups operating in the same number of cities and the same period. To study the second point, I combine data from multiple online fora active in Pakistan disseminating Jihadist-friendly material with the work of two judges and a machine-learning algorithm, leveraging novel techniques from the computer science literature.

"The  natural  experiment  affects  a  specific  form  of  charitable  donation  and  terrorism financing through an Islamic institution: the Zakat. During Ramadan, Muslim individuals offer this Sharia-compliant contribution to philanthropic causes. While the amount is a personal choice, the Pakistani government collects a mandatory payment through a levy on bank deposits applied immediately before Ramadan.1When the tax hits fewer people due to its unique design, there is an increase in donations. This expansion in charitable donations boosts the probability that funds reach terrorist organizations due to multiple extremist groups having a legal charity branch.2 This unintended channel through which the design of the Zakat levy promotes terrorism financing has also been acknowledged by Pakistani government officials in the past.#"

# (cited newspaper article):"Information Minister Pervaiz Rashid has advised people to pay Zakat and charity to institutions which save lives and not to those producing suicide bombers."

**************

And then there's narcotics production and narco-terrorism, which to some extent runs in families.  The paper begins with this quote:

"The only way to survive, to buy food, was to grow poppy and marijuana, and from the age of 15, I began to grow, harvest, and sell.– Joaquin “El Chapo” Guzman, when asked how he became the leader of the Sinaloa drug cartel"

Making a Narco: Childhood Exposure to Illegal Labor Markets and Criminal Life Paths, by Maria Micaela Sviatschi, https://doi.org/10.3982/ECTA17082, ECONOMETRICA: JUL 2022, VOLUME 90, ISSUE 4, p. 1835-1878

Abstract: This paper provides evidence that exposure to illegal labor markets during childhood leads to the formation of industry‐specific human capital at an early age, putting children on a criminal life path. Using the timing of U.S. antidrug policies, I show that when the return to illegal activities increases in coca suitable areas in Peru, parents increase the use of child labor for coca farming, putting children on a criminal life path. Using administrative records, I show that affected children are about 30% more likely to be incarcerated for violent and drug‐related crimes as adults. No effect in criminality is found for individuals that grow up working in places where the coca produced goes primarily to the legal sector, suggesting that it is the accumulation of human capital specific to the illegal industry that fosters criminal careers. However, the rollout of a conditional cash transfer program that encourages schooling mitigates the effects of exposure to illegal industries, providing further evidence on the mechanisms.

"To establish these results, I take advantage of drug enforcement policies in Colombia that shifted coca leaf production to Peru, where 90% of coca production is used to produce cocaine. In particular, in 1999, Colombia, then the world’s largest cocaine producer, implemented Plan Colombia, a U.S.-supported military-based interdiction intervention.One of the main components was the aerial spraying of coca crops in Colombia. This intervention resulted in higher prices and expanded coca production in Peru, where production doubled in districts with the optimal agroecological conditions.2 By 2012, Peru had become the largest producer of cocaine in the world.3 

"This setting yields three useful sources of variation: (i) geographic variation in coca growing  in  Peru,  (ii)  over  time  variation  in  coca  prices  induced  by  Colombian  shocks, and (iii) variation in the age of exposure, exploiting the fact that in Peru children are more  likely  to  drop  out  from  school  in  the  transition  between  primary  and  secondary education at the ages 11–14. I thus define age-specific shocks by interacting coca suitability measures and prices. Differential exposure by age arises since children within a district or village experience the changes in coca prices at different ages and due to variation in coca suitability across districts, villages, and schools."

Legal marijuana in New Jersey

 The NY Times has the story:

Legal Marijuana Sales Will Start Next Thursday in New Jersey. All adults will be able to purchase cannabis at certain medical-marijuana dispensaries starting April 21.  By Tracey Tully

"The first sales of recreational, adult-use cannabis in New Jersey will start next Thursday, marking the culmination of a yearslong effort to legalize marijuana and to curtail the racially unbalanced penalties for possessing the drug.

"At least a half-dozen medical-marijuana dispensaries are planning to open their doors to all adults on April 21 after winning final approval this week from New Jersey’s Cannabis Regulatory Commission.

...

"“The end of prohibition is coming to New Jersey,” said Ben Kovler, chief executive of Green Thumb Industries, which operates both dispensaries. “We’re prepared for a tidal wave of demand.”

"He estimated that New Jersey, the second state on the East Coast to begin adult-use sales, could eventually become a $3 billion industry.

“The war on drugs was a failure for people of color,” he said. “This is going to create a lot of wealth, for a lot of people.”

...

"New Jersey voters approved a referendum legalizing marijuana in November 2020, but it was not until this week that the commission established a pathway for the first legal sales of adult-use, recreational cannabis."

Guns (concealed carry) and marijuana (recreational): two US maps

 In both maps, brown is the color of permissiveness.  E.g. on the northern border, only Maine and Montana don't require permits/prescriptions for either guns or marijuana...

The gun map is from this Washington Post story: Nearly half the country requires no permit to carry a concealed weapon — and it’s a growing trend By Kim Bellware

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from https://mjbizdaily.com/map-of-us-marijuana-legalization-by-state/

Cannabis and the law

 The WSJ has this update:

Push to Relax Marijuana Laws Hits Roadblocks. Biden administration has sidestepped the issue of decriminalizing cannabis despite bipartisan support.  By Alex Leary

"Facing a tough midterm election and divisions in Congress, the Biden administration is sidestepping the politically sensitive issue of loosening marijuana laws even as the idea has gained support of most Americans.

"More than half of U.S. states have legalized cannabis use for some purposes. Lawmakers have proposed decriminalizing marijuana, which would entail reduced penalties for users, and have pushed for giving the industry access to banking services. Those promoting changes include a diverse range of political figures, from former Republican House Speaker John Boehner to progressive Rep. Alexandria Ocasio-Cortez (D., N.Y.).

...

"More than two in three Americans support legalizing marijuana, according to a 2021 Gallup poll. That is up from a decade ago, when half of Americans were in favor, Gallup found.

...

"The House has previously passed legislation to decriminalize it and this month approved provisions to give cannabis companies access to the banking system, as marijuana lobbying has soared in what has become a multibillion-dollar industry.

"But with many Republicans and some Democrats opposed, odds of Senate passage are slim given filibuster rules requiring 60 votes."

Black market marijuana coexists with legal marijuana in Oregon, and competes with it in California

In a growing number of U.S. states, it is legal to grow and sell marijuana. But the price remains highest in the states where it is illegal, and so black markets persist alongside legal markets. 

Politico has the story:

‘Talk About Clusterf---’: Why Legal Weed Didn’t Kill Oregon’s Black Market. Legalization was supposed to take care of the black market. It hasn’t worked out that way.  By NATALIE FERTIG

"Over the last two years, there’s been such an influx of outlaw farmers that southern Oregon now rivals California’s notorious Emerald Triangle as a national center of illegal weed cultivation. Even though marijuana cultivation has been legal in Oregon since 2014, Jackson County Sheriff Nate Sickler says there could be up to 1,000 illegal operations in a region of more than 4,000 square miles. The Oregon Liquor and Cannabis Commission, which oversees the state’s $1.2 billion legal cannabis industry, estimates the number of illicit operations is double that.

...

"What is happening in the woods of the southern Oregon represents one of the most confounding paradoxes of the legalized marijuana movement: States with some of the largest legal markets are also dealing with rampant illegal production — and the problem is getting worse. Oklahoma, where licenses to cultivate medical marijuana are some of the easiest to get in the nation, has conducted more than five dozen raids on illicit grows since last April. In California, meanwhile, most of the state continues to purchase cannabis from unlicensed sources — straining legal operators already struggling with the state’s high taxes and fees.

...

"One of the underlying promises for legalizing cannabis was that legalization would make the illegal drug trade, with all its attendant problems of violent crime and money laundering, disappear. But 25 years into the legalization movement, as 36 states have adopted some form of legalized marijuana, the black market is booming across the country. Legal states such as Oregon and California — which have been supplying the nation for nigh on 60 years — are still furnishing the majority of America’s illegal weed.

...

"Oregon’s weed is some of the cheapest in the nation, and Oregonians predominantly purchase weed from licensed dispensaries. Economist Beau Whitney estimates that 80-85 percent of the state’s demand is met by the legal market. But most of the illicit weed grown in southern Oregon is leaving the state, heading to places where legal weed is still not available for purchase such as New York or Pennsylvania — or where the legal price is still very high, like Chicago and Los Angeles. In Illinois, which legalized medical marijuana in 2013, only about a third of the demand for cannabis is satisfied by legal dispensaries, according to Whitney. Differences in tax rate and regulations plays the major role in differences from state to state, Whitney explains.

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And in California it appears that high taxes on the legal market allow the black market to exist alongside. NBC has the story:

Craft cannabis industry in California is 'on the brink of collapse,' advocates say. Small cannabis growers and operators say the state's hefty taxes are shutting them out despite promises to expand the industry and make it more inclusive.  By Alicia Victoria Lozano

"Last month, marijuana companies warned Newsom in a letter that immediate tax cuts and a rapid expansion of retail outlets were needed to steady an increasingly unstable marketplace shaken by illicit dealers and growers.

"More than two dozen cannabis executives and legalization advocates signed the letter after years of complaints that the heavily taxed industry is unable to compete with the widespread illegal economy, which offers far lower consumer prices and has double or triple the sales of the legal market."

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.

Marijuana black markets are coexisting with (poorly designed, over-regulated, highly taxed) legal markets in California

 The Guardian has the story:

California legalized weed five years ago. Why is the illicit market still thriving? by Amanda Chicago Lewis

"Voters passed a law in November 2016 making recreational marijuana legal. But today, the vast majority of the market remains underground – about 80-90% of it, according to experts.

"Because that 2016 law, known as Proposition 64, gave municipalities the power to ban weed as they see fit, the majority of cities and counties still don’t allow the sale of cannabis, inhibiting the growth of the legal market.

"In the places that do allow pot shops and grows, business owners say high taxes, the limited availability of licenses, and expensive regulatory costs have put the legal market out of reach. 

...

"The story of California’s legal weed chaos dates back to 1996, when voters passed a law allowing medical marijuana. At the time, Bay Area Aids activists saw the way pot relieved pain and stimulated hunger among their emaciated and desperately ill friends. That led to a grassroots campaign to get Proposition 215, a measure legalizing the medical use of cannabis, on the California ballot.

"However, Prop 215 only allowed doctors to recommend that patients and their caregivers grow their own weed. Essentially, it legalized a commodity without legalizing the business side of it.

"For the next 20 years, a laissez-faire, gray market for medical marijuana flourished and became entrenched. With doctors’ recommendations for medical marijuana easy and cheap to come by, cannabis entrepreneurs practiced a lucrative form of civil disobedience, opening dispensaries, manufacturing edibles and growing acres of plants that brought in enough money to offset intermittent law enforcement crackdowns. The industry developed protocols to get a business back up and running right after a raid, such as keeping cash offsite and obscuring ownership through a series of management companies.

"If you could withstand the legal uncertainty, it was a good time to make money in marijuana. By 2010, the city of Los Angeles had about 2,000 pot shops illegally selling cannabis. Statewide, the total illicit market surged, causing Mexican cartels to either stop growing weed or to relocate their grows to California.

...

"For a marijuana enterprise today, becoming legal has often meant sacrificing a good deal of profit. Businesses frequently pay an effective tax rate of 70%, in part because they are breaking federal law and therefore aren’t able to take tax deductions, but also because politicians see the industry as a source of tax revenue and set higher rates.

...

"But the longer we allow cannabis to remain state-legal and federally illegal, the harder it will be to fix. Though botching weed legalization sounds like a trivial issue, it intersects with many of the issues that are fundamental to our lives, from criminal justice to public health, gang violence to economic inequality, the opioid crisis to the wellness craze. Cannabis is the second-most-valuable crop in the country, after corn and ahead of soybeans. It’s the most common reason for arrest in America. And despite marijuana’s dubious reputation, research has shown the plant “may have therapeutic potential in almost all diseases affecting humans”.

Does legal marijuana lead to the use of more dangerous drugs, or increase crime?

 It appears that the short answer is "No," according to this recent NBER working paper

Is Recreational Marijuana a Gateway to Harder Drug Use and Crime?  by Joseph J. Sabia, Dhaval M. Dave, Fawaz Alotaibi & Daniel I. Rees

WORKING PAPER 29038, DOI 10.3386/w29038,  July 2021

Recreational marijuana laws (RMLs), which legalize the possession of small quantities of marijuana for recreational use, have been adopted by 18 states and the District of Columbia. Opponents argue that RML-induced increases in marijuana consumption will serve as a “gateway” to harder drug use and crime. Using data covering the period 2000-2019 from a variety of national sources (the National Survey of Drug Use and Health, the Uniform Crime Reports, the National Vital Statistics System, and the Treatment Episode Data Set) this study is the first to comprehensively examine the effects of legalizing recreational marijuana on hard drug use, arrests, drug overdose deaths, suicides, and treatment admissions. Our analyses show that RMLs increase adult marijuana use and reduce drug-related arrests over an average post-legalization window of three to four years. There is little evidence to suggest that RML-induced increases in marijuana consumption encourage the use of harder substances or violent criminal activity.