Friday, February 20, 2009

Cannabis Bonds

So, in true stoner fashion, let's just put two and two and two together and get four.
  1. Pot is illegal and hence highly profitable.
  2. The profitability of pot (etc ...) leads more capital to be devoted to its cultivation.
  3. Given the illegality, the growing excess profitability of pot production is captured by criminals.
  4. Much high-grade is produced in California.
  5. California spends a lot of money putting people in jail for expressing their entrepreneurial talent via the cultivation of cannabis.
  6. In essence, California is spending money subsidizing the successful cannabis entrepreneurs by creating, via legal stricture, the value that they exploit, while at the same time taxing the poor exploited cannabis consumer to fund the jails that are the strict corollary of his (or her) being forced to overpay for his (or her) Bob Hope.
  7. California is broke.
  8. I shoulda been a politician.
  9. California could a) increase its income b) reduce its expenses and c) have more stoners by simply legalizing and taxing the production of marihuana because this would allow the state to simultaneously c) reduce the total frictional costs in the pot economy (no more need for that expensive hair-trigger shotgun system (or Dick Cheney) to guard your patch) hence lowering the price and spurring demand b)  eliminate the need to feed, water, and iron the orange jumpsuits of the aforementioned failed entrepreneurs and a) capture some of the remaining economic value added of the pot market for itself.
  10. California could capitalize these savings upfront, as so many states have done with the tobacco settlements, by issuing bonds backed by the future cannabis tax revenues, which would of course help a lot with its current brokeness (see 7 above).

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