Month: May 2019

More than a year after marijuana merchants began legally serving recreational customers in California, the number of licensed shops, the volume of sales, and tax revenue are all below projections. Most strikingly, legal cannabis sales totaled $2.5 billion in 2018, which was about $500 million less than in the previous year, when only medical dispensaries were operating.

What went wrong? Nothing really surprising. California is regulating and taxing the hell out of cannabis, which makes it hard for legal suppliers to compete with the state’s longstanding, extensive, and highly developed black market.

To begin with, marijuana businesses need local as well as state approval to operate. As of January 30, according to a Southern California News Group database, just 78 of California’s 482 cities were allowing recreational stores. The Bureau of Cannabis Control recently finalized a rule clarifying that home deliveries are allowed in towns where storefronts are prohibited, which should provide a way around local bans.

Even when there is no local ban, would-be marijuana merchants need permission from the municipal or county government as well as the state, a dual licensing system that doubles the regulatory headaches. Licensees are subject to the Medicinal and Adult-Use Cannabis Regulation and Safety Act, the Bureau of Cannabis Control’s rules, and whatever additional restrictions the local government imposes.

“More and more local governments are coming around, but progress has been slow,” says Dale Gieringer, director of California NORML. He says other regulatory issues include legally mandated middlemen, “excessively costly” testing requirements, and “multifarious petty regulations” regarding storage, security, transportation, labeling and packaging, financial reporting, and waste disposal.

Cannabusinesses are also hampered by a shortage of banking services, since financial institutions remain leery of serving customers who deal in products that are banned under federal law. And if they manage to get licensed, comply with all the relevant regulations, and find ways to pay expenses and process sales, marijuana merchants still must contend with black-market competitors who are not subject to those regulations or to state and local taxes, which can add as much as 45 percent to the retail price. A bill introduced in January would temporarily cut state marijuana taxes, and Gieringer thinks it has “a decent chance” of passing.

“Because we are up against high taxes and the proliferation of illegal shops, it is difficult right now,” the owner of a pot store in Wilmington told the Los Angeles Times in December. “We expected lines out of our doors, but unfortunately the underground market was already conducting commercial cannabis activity and [is] continuing to do so.”

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When rentable electric scooters began appearing on sidewalks across American cities in 2018, some local governments lost their minds while others allowed the new transit tech to flourish, reasoning that these “e-scooters” were no more a public safety concern or nuisance than are bikes.

This summer, cities that welcome innovation could see the next big thing in “micromobility”: rental mopeds.

“This idea of micromobility, I think it’s here to stay in the U.S.,” says Ivan Contreras, co-founder and CEO of Muving, which hopes to bring fleets of canary-colored two-wheeled mini motorbikes to city streets in 2019. The company already operates more than 2,500 rental mopeds across Europe.

Last year Muving launched a pilot program in Atlanta with about 100 such vehicles. By the end of this year, Contreras says, it could be operating in Washington, D.C., with plans to expand into other cities in the South and along the East Coast.

Mopeds have several advantages over e-scooters. They’re larger, which means they’re more easily seen by vehicles, while still being small enough to park unobtrusively. They seat up to two riders and can reach speeds of 30 miles per hour. Each Muving moped will come with helmets tucked into a small trunk behind the seats. Otherwise, they’ll work the same way as most e-scooters: Users download the app, enter their driver’s license and credit card info, and get automatically charged 80 cents per minute.

E-scooters might have an edge for short trips of a few blocks, but Muving plans to fill a slightly different niche for cross-city trips that now often require a bus or Uber.

It’s yet another example of how entrepreneurs are finding “fun and exciting ways to solve” the infamous “last-mile problem,” says Jennifer Huddleston Skees, a transportation policy research fellow at the Mercatus Center, a free market think tank based at George Mason University. “Rather than imposing regulations that can prevent the successful launch of such products, cities should look for ways to work with innovators and think beyond our present transportation options.”

While e-scooter companies took an ask-forgiveness-rather-than-permission approach, Muving is trying to win approval from local governments first. Contreras says cities should be willing to hop aboard, since mopeds not only increase mobility for residents but also help ease congestion, parking, and pollution by reducing reliance on cars.

Cities should indeed stand aside and let residents decide whether mopeds should be part of an increasingly diverse transportation menu.

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“We can’t expect Kim [Jong Un] to believe that we won’t overthrow him if he gives up his nukes, when he sees us threaten to carry out regime-change war in Iran and Venezuela.”
—Democratic presidential candidate Rep. Tulsi Gabbard (D–Hawaii) in a February 26 tweet

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Midnight Cowboy is “our darkest blend yet,” advertises the Portland coffee company Ristretto Roasters. “This full body blend is ideal for those who prefer the smokey flavors of darker roasts.” That would be me. And Ristretto’s Cowboy coffee did not disappoint, offering a rich cup of joe that went down smooth, with a creamy aftertaste and none of the bitter notes that come with my usual Folgers.

Alas, the same can’t be said for a recent Ristretto controversy. Last December, Nancy Rommelmann—an author, an occasional Reason contributor, and the wife of Ristretto’s owner, Din Johnson—launched a YouTube series called #MeNeither, in which she and Penthouse columnist Leah McSweeney discuss, among other things, recent controversies surrounding sexual impropriety and abuse.

The fledgling series’ attempt to be nuanced about issues that many prefer to see in dark blacks and spotless whites got Ristretto Roasters in hot water in very progressive Portland. Some current and former employees blasted off a protest letter to the media regarding the boss’ wife’s ideas. “We believe it is a business owner’s responsibility to create a safe and supportive working environment for their employees,” reads the letter, which goes on to accuse Ristretto of failing on that front because Rommelmann’s YouTube show exists.

Rommelmann had previously been involved in Ristretto’s management. But owner Johnson explained in a letter to The Oregonian that “Nancy is neither an owner nor employee of Ristretto” and “the company has zero involvement with her work.”

Nonetheless, several local retailers dropped Ristretto products, and in Portland many folks promised to boycott. But direct online sales (at rrpdx.com) make it possible for folks far outside Portland to sample Ristretto’s whole bean coffees ($14–$17 per 12-ounce bag) and loose-leaf tea ($20 per tin) while taking a small stand against the sort of scolds who would harm a local business because the owner’s spouse dares to say things they don’t want to hear.

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Police in Normandy, Missouri, issued a warning to a boy for shoveling snow from his grandmother’s home without a permit. The authorities defended the move by saying they’ve gotten calls about teens pretending to offer snow shoveling services while actually casing homes for potential theft opportunities.

The Okaloosa County, Florida, sheriff’s office has charged a teacher and two aides at a school for the disabled with abusing autistic students. Deputies say they locked a 10-year-old and two 8-year-olds in a dark room as punishment. In addition, deputies say they blew a whistle close to one child who is sensitive to noise and held his arms down to keep him from covering his ears.

An Australian police officer has been sentenced to six months in jail for illegally using police databases to snoop on potential dates. Adrian Trevor Moore looked up information on 92 women he found on dating websites. His attorney says he was trying to do “due diligence” before deciding whether to meet them in person, but Moore accessed several women’s information on multiple occasions (in one case, 13 times) over a number of years.

A Lethbridge, Alberta, police officer is under investigation after being caught on video repeatedly running over an injured deer with a police truck. The officer responded to a call reporting an injured animal in the street and decided it needed to be euthanized. Police Chief Rob Davis says officers in these cases typically shoot animals, not run them over.

A city ordinance in St. Peters, Missouri, requires all lawns to be at least half grass—but Janice Duffner says she’s allergic to grass. Her yard is instead filled with shrubs, flowers, and a small fountain. After a neighbor complained, the city ordered her to tear out some rose bushes and plant grass in their place.

The University of Virginia has suspended the Señoritas Latinas Unidas sorority for “hazing”—because it requires members to study 25 hours a week.

After the city of Raleigh, North Carolina, started charging providers $300 per electric scooter (among other regulations), the company Bird added a $2 transportation fee to the $1 it charges local users to unlock its scooters and the 15 cents a minute it costs to ride them. Mayor Nancy McFarlane insists the price increase was a “profit-making decision [that] has nothing to do with our requirements” and that the city fee is not a tax.

Ashim Mitra, a professor at the University of Missouri–Kansas City, has resigned following complaints from graduate students from India that he used them as personal servants. The students claim he threatened to have their visas revoked if they didn’t mow his lawn, care for his dog, and serve as staff at his social events. They also say the university was aware but did not take action because Mitra was so successful in bringing in research money.

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The Dropout, a fascinating new podcast from ABC, charts the rise and fall of the Silicon Valley huckster Elizabeth Holmes and her now-defunct company, Theranos. The show’s weekly installments mix high production values and a wealth of interviews with those who saw the fraud play out in real time.

The narrator, ABC business reporter Rebecca Jarvis, explains how Theranos sold itself as a visionary company that promised to make an affordable, over-the-counter tool capable of diagnosing cancer or diabetes with a single drop of blood. The tantalizing and lucrative product attracted a number of A-list investors and boosters, including Henry Kissinger and Bill Clinton.

They were kept around by another vision Holmes was selling: that of herself as the next Steve Jobs. The Dropout‘s early episodes describe how Holmes tried to copy everything about Apple’s famous founder, from poaching designers from his company to donning his iconic black turtleneck, all while leaning on the “genius college dropout” trope made famous by Jobs and others.

But unlike Jobs’ creations, Theranos didn’t do what it claimed, and the company collapsed in 2018 amid charges of massive fraud. Unfortunately for the investors who shelled out millions and for the patients who used the company’s error-prone product, innovation requires more than mimicry. It’s a lesson that echoes throughout the podcast, serving as a powerful reminder that society-changing products aren’t so easily planned.

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20 Years Ago May 1999

“Earth Day is a designer holiday crafted to dramatize the ascendancy of style over substance, a feel-good feast enabling sentimentalists to live out the ultimate power fantasy: patronizing an entire planet. Nobody has calculated the cost of Earth Day in terms of wasted resources, but during the nearly 30 years since its founding, this foolish fête has surely racked up billions.”
Tama Starr
“April Frauds”

“In 1999, Washington discovered the politics of the insane. President Bill Clinton, fresh from procedural exoneration in a dismal impeachment trial, was credibly accused of having brutally raped a woman 21 years earlier. Then, nothing happened.”
Charles Paul Freund
“The President in the Attic”

“It’s the public policy version of one-stop shopping. Those who manufacture the problem sell you their solution. When a policy flops—hey, who better to peddle the next sure-fire fix? The marketing campaign is impressive and well-established: congressional hearings, press conferences, cable talk shows, the televised speech on C-SPAN.”
Thomas Winslow Hazlett
“Prosecutorial Abuse”

30 Years Ago May 1989

“When the vice president of the United States argues for Stealth weapons technology because he reads about it in a Tom Clancy novel, when television preachers lose their pulpits in sex scandals straight out of a Jackie Collins miniseries, when Spiderman gets married before 55,000 people at Shea Stadium, and when Americans take their drinking-and-driving advice from a dog named Spuds, we can only come to one conclusion: the boundary between fact and fiction has been breached!”
T. Keating Holland
“Modern Living: The Movie”

45 Years Ago May 1974

“The minute the very idea of decriminalizing crimes without victims rears its head, the conservative ‘movement’ falls into pieces, one side, mine, taking a strict libertarian line, the other retreating to the collectivist fold: let us have government enforce morality, by all means, by any means, some say. Mr. Stanmeyer’s forthcoming book should make its case well, as he did in debate with me in Philadelphia. I fear that his view is destined to prevail for some time yet, perhaps for many decades more. It is repugnant to the libertarian mind, but then, the American is no more a libertarian than he is a vegetarian, perhaps less the former than the latter.”
David Brudnoy
“The Individual, the Government, and YAF”

“It is worth noting that, at least since the Renaissance, the frauds and thefts of monetary history have been interwoven with a new element: lunacy. The alchemists of the Middle Ages, for instance, searched in vain for the philosopher’s stone that would change lead into gold. The alchemists of today (often known as ‘new economists’) haven’t found the philosopher’s stone either—but they have found a substitute: the Keynesian stone. It turns gold into paper. Which is not too bad. Paper, after all, is a worthwhile commodity.”
Eugene Guccione
“Gold: Yesterday, Today & Tomorrow”

“Why does our government declare it illegal for us to own gold? Is it not because Congress steadily abdicated its functions in favor of the President until in recent years he became sovereign? He alone engages us in wars. Control of money was given by Congress to the Federal Reserve, a bureaucracy held in fief by the sovereign. Constitutionally both war making powers and the regulation of money are Congressional functions. When power is so centralized, it is fought over by power hungry men. From such conflicts emerge men unfit to govern. Instead they steadily restrict our freedoms so that they can rule without restraint. The freedom to own gold is among the first to be lost.”
Alden Rice Wells
“The Federal Reserve vs. Sound Money”

50 Years Ago May 1969

“Student terrorists have succeeded in bringing down campus after campus in much the same way that any random collection of gas and dust rushes in to fill a vacuum: by default. For decades, the American university has been in a state of virtual philosophical bankruptcy. Eventually an accounting had to come. And it has, in the form of gun-toting, slogan-chanting leftists who, swooping down on universities like vultures, plan to use the charred remains, the burned-out libraries and lifeless classrooms, as revolutionary staging grounds.”
Lanny Friedlander
“No One To Stop Them”

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Most people like new stuff more than they like paying for it. Poll a few thousand Americans about whether they’d enjoy having a BMW, and most would probably say yes. Ask how they’d feel if told it would cost them $40,000, and the prospect of a new 3 Series would likely become markedly less popular.

This facet of human nature explains an iron law of American politics: People like government benefits; they just don’t like paying for them. Ask people whether they like Medicare for All, as the Kaiser Family Foundation did in January, and you’ll find a clear majority—56 percent—giving it the thumbs up. Tell them it would require higher taxes, and support plummets to 37 percent. Everyone wants a BMW; few people want to pay for one.

Granted, single-payer health care is more like a Yugo than a BMW, but the same principle applies. That’s why enterprising lefty politicians are touting an economic theory some say could allow the federal government to fund programs like Medicare for All, enormous new infrastructure, and ambitious environmental legislation of massive scope and untold cost—perhaps without paying for it at all.

Proponents of Modern Monetary Theory (MMT) argue that the government can afford to purchase anything, because it can create unlimited amounts of its own currency. In this model, bond markets and deficits aren’t meaningful checks on government spending. The only real constraint is inflation, which can occur when the economy is at full employment, and which should be addressed via tax hikes and spending reductions.

Essentially, MMT is an argument that inflation and employment should be managed through fiscal policy—spending and taxation—rather than through interest rates set by a central bank, as monetarists like Milton Friedman preferred. It puts Congress rather than the Federal Reserve in charge of macro-economic steering.

In its more nuanced form, there is something to MMT: Strictly speaking, the government always can print more money, though whether it should is another question. And most economists would agree that government spending and taxation do affect inflation.

Some MMT adherents in Congress and online political debates, however, have taken this complex idea to mean something rather more simplistic: Deficits don’t matter. Not right now, anyway, and maybe not ever.

That’s part of what drove a brief squabble in January over whether the new Democratic majority in the House would adopt pay-as-you-go rules, which require offsets—either spending cuts or tax hikes—to new government expenditures, in order to curb the deficit. Speaker Nancy Pelosi (D–Calif.) favored the rule, but a handful of left-leaning up-and-comers including Rep. Alexandria Ocasio-Cortez (D–N.Y.) argued that the requirement would hinder Democratic efforts to pass big-ticket legislation such as single-payer health care. The underlying question—do deficits matter?—will be a part of liberal policy conversations heading into 2020, as Democratic contenders decide whether to back proposals that would radically increase outlays. Leading candidates, including Sen. Elizabeth Warren (D–Mass.) and Sen. Kamala Harris (D–Calif.), have already challenged the idea that new government spending must be offset.

That notable lawmakers like Ocasio-Cortez and Warren are flirting with this notion is, perhaps, a sign of a flaw in MMT thinking: It relies on Congress to raise taxes and cut spending in order to combat inflationary spirals, should they occur—yet congressional adherents are mostly drawn to the allure of being able to spend more without commensurate spending cuts or tax hikes.

It’s an economic theory deployed selectively for political convenience—and also, perhaps, out of envy. For roughly 40 years, Republicans have embraced an overly simplified version of “supply-side economics,” which posits that tax cuts spur economic growth, which in turn generates additional tax revenue. That means tax cuts can “pay for themselves” by leading to more total money paid in taxes, thanks to the growing economy, than what was lost from the rate cuts. In theory that can happen, but only rarely, when tax rates are very high to begin with. Yet many Republicans legislate as if tax cuts always pay for themselves, thus sparing them the political consequences of offsetting lost revenue by trimming spending.

Like the simplified version of MMT, it’s a way of enacting popular policy preferences while pretending there’s no downside. Not only can legislators give the people what they want—they can promise it will be free, and let some future sap deal with the bill when it comes due.

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