Why the market should control the number of dispensaries
Everywhere you look, you’ll find a broad range of different rules and regulations surrounding dispensaries. Some dictate where they can buy products, manage potential health risks with inspections, and determine the hours in which business can be conducted, but one of the most controversial restrictions to be applied is a limit of the total number of dispensary licenses that are awarded in any given area.
Not all places do this, but it's an idea that’s being tried and tested in both Canada and several US states as a way to manage the new cannabis industry. At first temporary explanations behind the move, such as a lack of legal supply, made sense, but now that Canada alone sits on millions of dollars’ worth of pot products, many are questioning the true motivations, especially after witnessing the destruction that follows with this kind of government intervention within the cannabis market.
What does an arbitrary limit on cannabis store licensing do?
Governments from all over have provided vague explanations for maintaining limits. One of the most sensationalized in the beginning was the rationale that allowing too many dispensaries might lead to a sudden spike in use, something that to anti-cannabis advocates pose as a serious public health issue that could spiral out of control, if not for a limit on access.
This theory has clearly been proven wrong, as we’ve watched approval for legalization and cannabis use statistics climb ever so slowly at the same expected rates they have for more than a decade, even in countries like Canada, where there is now a robust selection of cannabis store options for most residents. At this same time, we’ve witnessed the struggle of enthusiastic entrepreneurs who’ve been effectively blocked from a market that is controlled by a monopoly, and those who’ve made it aren’t much better off.
A limit on cannabis store options suffocates competition when there are still millions of consumers who have very little access to the green market, creating very real cannabis deserts that spread for miles, reducing opportunities for sales. It forces the companies that make it to stay small, limiting additional revenues that could be used for technological advancement, and it’s all for nothing because the people get absolutely nothing other than a potentially long journey just to visit a weed dispensary.
Available cannabis selection also suffers because with less demand comes more cut corners for green businesses to stay alive, along with prices that can stay sky-high when there is no competition within a reasonable traveling distance. When shops are too limited, there is virtually nothing to motivate dispensaries that are already in business to operate in a way that truly benefits consumers’ because their loyalty is not necessary when you’re the only store within miles to sell cannabis.
What happens when we let demand control the number of cannabis stores?
When we allow demand, which comes from the people to control how many dispensaries live or die, it increases competition, inspires innovation, and significantly eliminates many of the barriers that still stand in the way of residents living in legal regions and their access to affordable legal cannabis products. It’s everything that most consumers, advocates, and business people dream of, and it’s also the only way for the market to succeed.
There are very few types of businesses that are ever governed by such strict limits, with alcohol-serving establishments and adult venues mainly impacted, and while it might not be a terrible idea to limit businesses that have proven to increase crime or public discomfort, it should be the creation of red-light districts and dispensaries that can and should be allowed to flourish, because they’re safe.
