What is the City & County of San Francisco’s solution to the problem of its bloated bureaucracy? Consider cutting back to essential services and lowering taxes and letting The City’s residents pick and choose the projects they choose to support? No, our leaders feel hiring more bureaucrats and paying them high salaries makes more sense. We’ve seen this pattern again and again over the years, and they just did it again. Last month the Board of Supervisors voted unanimously to create the Office of Cannabis, which is supposed to be a “one-stop shop” to handle cannabis business applications, serve as a “conduit” to state regulatory departments, and handle complaints. The vote was completely expected as Mayor Lee had already earmarked $700,000 in his $10,106,950,947 2017-2018 budget for this purpose. The new Director of the Office of Cannabis will be paid $207,677/year, and 3 new helpers will be hired for a total of $472,465 to “issue, deny, condition, suspend, or revoke cannabis-related permits in accordance with applicable laws and regulations.” The mayor also earmarked $665,227 in the new budget for five new Department of Public Health employees for handling the permitting for medical cannabis dispensaries. All this flurry of activity precedes recreational sales of marijuana becoming legal on January 1, 2018 following the passage of Prop 64 last November. After all, without all the rules and regulations of government dictating to buyers and sellers of recreational pot how to conduct business, the sun just might not rise in the east on New Year’s Day of 2018.
If “one-stop shopping” was the goal, San Francisco’s officials are off to a poor start. San Francisco already has a 22-member Cannabis State Legalization Task Force and a separate Medical Cannabis Task Force. The Cannabis Legalization Task Force was scheduled to be terminated this month, but once created, government bureaucracies do not die an easy death, and this layer of redundant bureaucrats will now be around until at least the end of 2018, if not longer. Furthermore, the medical marijuana dispensaries in The City are being overseen by the San Francisco Public Health Department, and we know the health department will never go away. And of course, the Planning Commission is heavily involved in granting conditional use permits if cannabis businesses want to set up shop anywhere in The City, so it is unlikely the Office of Cannabis is going to get those bureaucrats out of a very crowded kitchen.
And who will pay for all these busybodies? The official word is that the taxpayers will not get stuck with the tab, but rather the fees for permits paid by the cannabis businesses will fund the new department’s operating budget. In principle Libertarians agree that user fees are a fairer way to pay for government services since only those who use the service will end up paying for the associated cost. However, in this case, we see a few problems. First of all, while the bureaucrats are expecting an explosion of new businesses coming this way on January 1, what if the anticipated stampede doesn’t materialize? They would already have hired all these new, highly paid bureaucrats with not enough business to fund their salaries and benefits. In a normal business, pink slips would be forthcoming, but government is immune to the normal rules in the real world, so in the end, it would be the taxpayers paying for the dead weight. The other likely scenario is that the fees will be passed along to the ultimate consumers, but the fees will be so high that the pot prices will not compare favorably with the black market. Already there is speculation that 29% of cannabis users will choose to continue to purchase under the radar if the cost of new regulation requiring testing, tracking, and taxes hits the 15% rate or more. This is precisely one of the major reasons the Libertarian Party of California, which has been staunchly opposed to drug laws for decades, nevertheless opposed Prop 64 last year. A golden opportunity to open up all kinds of business opportunities for a segment of the population that obviously wants to purchase this product will be squandered by crushing bureaucracy and regulation.
Some of the possible avenues legalization could have opened up would have been in the areas of delivery, cannabis events, cannabis online exchanges and marketplaces, on-site consumption, and branded merchandise. Just as many consumers these days prefer to buy online and have goods delivered to their residences, so it could have been with cannabis, but it is extremely unlikely the Office of Cannabis will allow such delivery services. Just a few years ago, cannabis events were very popular until state cannabis regulations (in states that legalized pot) put a stop to any sort of gifting of cannabis. Likewise, online exchanges could have been a great way to put willing buyers and sellers together, but no doubt the Office of Cannabis will feel its job is to “protect” unsuspecting consumers from “unscrupulous” sellers, so in-person transactions will most likely be the only way for consumers to get what they want. Many folks enjoy consuming pot in a social setting, but no state currently allows public consumption of cannabis, so it is unlikely the Office of Cannabis will allow such socializing (though of course you can currently walk downtown any day of the week and on most any street the strong scent of marijuana is clearly permeating the air). Lastly, selling branded pot merchandise could have been a way for cannabis businesses to earn a few extra bucks, but the State of California is trying to stop cannabis businesses from selling any branded merchandise, let alone branded merchandise with a pot theme. As always, at all costs, the “children” (including grown-up adult ones) must be protected from the poor choices they might make.
Supervisor Ahsha Safai’s comments when the Board of Supervisors voted to create the latest bureaucracy are telling: “So the idea is—how are we going to manage that growth? What’s the right number? What’s the right amount for San Francisco?” Our leaders actually think they’re smart enough to figure out the “right” amount of cannabis businesses needed to satisfy the demand coming on January 1. How typical of all central planners. The taxi medallion mess in all major US cities is a perfect illustration of the futility of trying to find “the right number.” For all their planning—and the havoc it caused—in the end, it was the free market that satisfied consumers the most, despite the non-stop attacks from the government bureaucrats and the government-sanctioned taxi companies.
For those who feel that if the Office of Cannabis had not been created, a “Wild West” might have ensued, indeed, that might have happened at the beginning, but if too many pot stores had popped up all at once, then those who served their customers the best would have survived and the others would have gone out of business before long. The market would have adjusted itself—without the unnecessary busybodies at City Hall. Furthermore, if cannabis businesses had been foolish enough to set up shop in hostile residential neighborhoods, angry residents of the neighborhoods could have solved the problem themselves the old-fashioned way by boycotting the businesses, without blocking the entrances to the businesses, rather than rallying government bureaucrats for “help.”
In the end, the new Office of Cannabis will just be more highly paid busybodies inviting unnecessary contention in the neighborhoods, wasting taxpayer money, and scaring away new business that could have brought in more commerce and value to the community. All this to “protect” the general population from something that any middle school kid can get hold of pretty easily these days.