Cannabis Economics: Professor Bilodeau Of Indiana University

Professor Marc Bilodeau
Professor Marc Bilodeau

Professor Bilodeau, please tell my readers about yourself. Give them a background as to why you feel strongly about the legalization of marijuana throughout the United States. 

I’m a professor in the economics department at IUPUI.  I don’t smoke marijuana and I would not encourage anyone to do so either (except for medical purposes), but I think smoking marijuana is merely an unhealthy habit (like tobacco), not a crime.  Mostly, what I object to is the “war on drugs” as it has been waged in the U.S. since the ‘80s.  I feel strongly that the “war on drugs” has been used as a pretext to wage a war on young black men in the U.S.  Legalizing marijuana and emptying the prisons of all those who have been convicted of offences involving marijuana would be a first step toward ending mass incarceration and bringing about racial justice in the U.S.

Approximately five years ago you and one hundred other professors throughout the United States supported the legalization of marijuana in Colorado, Amendment 64. Why did you support this initiative and what do you say to the anti-cannabis advocacy organizations that now say legalization in CO has become a detriment. 

See above paragraph.  Legalization in any state creates a breach in the dam.  Much like how the right to same-sex marriage was won first in one then a few states before sweeping the country.  Begin winning marijuana legalization one state at a time, wherever the conditions are favorable, and eventually the whole criminalization regime will get swept away.

We know you can’t definitively answer this, but if you offered an opinion, do you think Jeff Sessions will be successful in tamping down this industry, or do you think the “cat is out of the bag” at this point?

What I don’t know is how long Conservatives can hold up progress on this issue.  There have been many culture wars in this country, e.g., over the prohibition of alcohol in the 1920s, and each time freedom has eventually triumphed.  So I am pretty certain that marijuana will be legalized countrywide eventually, I just cannot forecast how long it will take.

Professor Bilodeau as local governments around the country start to tax marijuana sales, a recent report by Fitch Ratings is suggesting the black market for cannabis will thrive. As a professor of economics do you agree with the report? 

It all depends on how high the tax is.  The higher the tax rate, the stronger the incentive to bring in untaxed contraband from another state or country.  This is true for any good that can be transported easily.  The best way to deal with the contraband problem would be for the states to harmonize their tax rates, or even to ask the federal government to set the rate and collect it on their behalf.  The threat of contraband also means that the tax rate cannot be set prohibitively high. Same thing with taxes on tobacco or alcohol.

What are the economic benefits of legalization?  

The number one economic benefit is that hundreds of thousands of young men would no longer be incarcerated and would be made available for productive employment.  They would also be able to rejoin their family and help raise and support their children.  Poverty would decline.  Lawlessness, crime, and violence would decrease.  Taxpayers would also save the billions spent enforcing prohibition and keeping these young men incarcerated.

As local governments collect tax revenue from the sale of marijuana and the federal government sees how much revenue is being generated do you believe the federal government will declassify marijuana as a schedule 1 drug? 

It would make sense.  It’s just a question of whether American voters are wise enough to elect sensible governments.

With the rise of the “sharing economy” are we going to see an increase in the sale and distribution of marijuana? If so, how do you think this is going to affect state laws? 

I don’t expect much of an increase in sale and distribution of marijuana.  The demand for it is pretty inelastic as far as I can tell.  People who don’t use it will continue not using it, and it’s not like users will begin smoking much larger quantities either.  What we should see is an increase in legal sale and distribution at the expense of black market transactions.

At the time of this interview, marijuana is illegal federally. Banks throughout the country aren’t accepting deposits from cannabis businesses. My question is if the federal government legalizes marijuana do you believe there will be a rush to issue banking services to cannabis businesses or will lending institutions be leery of the industry? 

What banks fear is being found complicit in money laundering operations for which they could be prosecuted.  Once businesses begin generating revenue legally from cannabis or any other source, banks should have no problem providing them with the same services they provide to other industries.

Bitcoin and related cryptocurrencies have been in the news lately if the federal government legalizes marijuana do you believe “online currencies” are still going to play a role in the sale and distribution of marijuana?

Businesses and customers will use whatever currency they feel is most convenient for their transactions. For all I know, legal transactions for marijuana will eventually be done with credit cards like everything else.

What advice do you give to fledgling cannabis entrepreneurs that want to get into the industry?

I’m not a businessman so I am not in a position to give advice except the usual: offer a quality product at a competitive price; grow organic as much as possible, and pay the farmers a fair price.

Given the fact that the U.S. Government has multiple patents on cannabis for medicinal uses such as fighting cancer, epilepsy and more, how can the DOJ have any leg to stand on in continuing to call cannabis a Schedule I Drug with “no medicinal benefits whatsoever?”   The government’s own positions directly contradict themselves.  

Society includes a multitude of people with different goals and desires, often demanding opposite and incompatible policies from their government.  There will continue to be many contradictions in government policies on this and other issues.  Sometimes it’s the only way to placate both sides.

As marijuana/ cannabis becomes more mainstream and the health benefits (mostly verified) of cannabis start to manifest in the minds of people do you see a world were cannabis can potentially help bring down healthcare costs? 

It seems possible and even likely, at least in some far future.  For now, the healthcare industry in the U.S. is mostly for-profit, so reducing healthcare costs is not on the agenda and will not be until major changes in industry structure take place.  The equation is simple: a dollar spent on health care is a dollar collected by a healthcare provider.  So reducing health care costs means reducing the revenue of health care providers.  Why would they be onboard with this? 

Israel Cannabis

What challenges and headwinds do you see for the industry at large?

Identify the states where the conditions are most favorable and make a concerted push for legalization there; win them one at a time.

(Disclaimer: the owner doesn’t endorse or support any of our interviewee’s answers. Their opinions and answers are their own. We simply ask the questions and republish their answers)

3 thoughts on “Cannabis Economics: Professor Bilodeau Of Indiana University”

  1. Because it’s not a drug it’s a plant it’s good for everything pain depression it’s legal in some places it should be legal all over the United States

    1. Ps. It’s also good for & better than Any other drug that’s at the pharmacies with no side effects that’s a huge plus!

      1. Deloras, to say cannabis doesn’t have any side effects would it a bit disingenuous. From smoking or ingesting cannabis one could potentially have an increased appetite, dry mouth, memory impairment, lack of motivation aka ‘couch lock effect’, paranoia, anxiety etc. This largely depends on the strain but generally speaking their are side effects to using cannabis. Some people react differently to certain strains but to say their aren’t any side effects I believe is inaccurate.

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