Defining War Down 1

Why do we call things wars that aren't?

We at Scragged have wondered for years what our society's drug laws should say, and occasionally discussed the matter without really reaching a firm conclusion.

As difficult as it is, we believe that we have to think about this unavoidably important issue affecting millions of lives.  We were reminded of gravity of this particular issue by reports that Mr. Joaquin Guzman, a.k.a. "El Chapo," boasted of paying the President of Mexico $100 million to reduce security on the Mexican side of our border to make it easier for him to spirit his products into our vast market.  The fact that these drugs are illegal has boosted prices high enough to give drug gangs the resources to mount credible challenges to the governments of Mexico, Columbia, Guatemala, and Honduras, and have more or less subsumed the government of Afghanistan.  On top of that, we find newspapers claiming that as many as 130 people per day are dying from drug overdoses which is even more than die from all forms of handgun use.

As depressing as it may be, we decided to take a look at the results of our current regulatory regimen and search for the key issues.  We were constantly reminded of H. L. Mencken's adage, "For every complex problem, there is an answer that is clear, simple, and wrong."

He also said, "The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos."  This observation is the major driving force between liberal efforts to de-platform or shout down conservatives who point out that their clear, simple, vote-getting answers to complex problems are simply wrong.

For decades, advocating changing the law to legalize drugs such as marijuana was more or less taboo with only a few "dangerous men" arguing in favor.  We aren't sure what moved the Overton window far enough that legalization could be discussed - we suspect that it was the prospect of reaping millions of dollars of new tax revenue while denying revenue to drug gangs - but medical marijuana is now legal in many states.  Casual consumption is OK in states such as Colorado and California and in the entire country of Canada.

Pot is still illegal as far as the feds are concerned.  That keeps banks and credit card companies from doing business with American pot shops so they deal in cash.  Tax authorities aren't accustomed to having taxes paid with garbage bags full of cash - most businesses pay by check - and the potential for robbery as well as skimming is enhanced by the ongoing state / federal disconnect.  Advocates for "people of color" are asserting that minorities should be favored when giving out licenses to open pot shops which makes an already complex licensing process even more cumbersome.

In some jurisdictions, pot taxes are so high and there are so few legal shops offering such restricted hours that people have continued to buy on their favorite street corner.  The NY Times reports that in some parts of the California, the illegal market has grown since legalization.  The LA Times estimates that partly because of "huge levels of taxation and regulatory woes that we think add 77% to the cost of a gram in the legal market versus what it costs on the open market," $8.7 billion of illegal sales will be twice the volume of legal sales in 2019 in spite of 583 licensed pot shops in California and 263 licensed home-delivery firms.

The more we looked into the War on Drugs, the more complicated it became.  As happens from time to time, we had to break the article into two.  The first article introduces the current situation.  The following article goes back into the past to explore the War on Alcohol and shows how the way prohibition ended might shed light on finding an armistice in our destructive War on Drugs.

How We Got Here

For most of American history, anyone could create any sort of nostrum or gadget and sell it to anyone credulous enough to buy.  Some of these concoctions might have helped with certain medical conditions, but most were harmful: the derogatory term "snake-oil salesman" comes from that era.

Since there were no drug laws at all, opium and other powerful mind-altering substances were also legal.  Everything was sold over-the-counter or off the back of a Yankee trader's wagon, for good or ill.

The problem is that even drugs which really can cure disease cause enormous harm if used improperly.  The harm done by free-for-all "snake oil" marketing was so great that the Federal Drug Administration (FDA) was established by the Food and Drugs Act of 1906.  This was the first of more than 200 laws applying standards of effectiveness and safety to new drugs and medical devices.

Over the years, the FDA's power and scope has grown, not just with more regulations, but with outright bans as well.  Cocaine and other coca products were made illegal by the Harrison Narcotics Tax Act in 1914.  Cigarettes, smokeless, and roll-your-own tobacco, never before considered to be a medicine, were placed under FDA regulation in 2009 with the specific intention of discouraging their usage as much as politics would allow.

Before the 1914 Narcotics Tax Act, anyone who became addicted to something could purchase it freely - whether that be tobacco, alcohol, marijuana, opium, heroin, or anything else.  Competition kept prices down, so addicts did not have to engage in crime to feed their habits; many were still capable of functioning in society.  Whatever harm they might have done to themselves or their families could generally be kept under control.

When the hippie movement of the 1960s first started experimenting with mind-altering substances, their drug of choice was marijuana.  This made sense: what could be more counter-cultural by definition than adopting the weed railed against in such classics as "Reefer Madness"?  By itself, this didn't lead to consequences much worse than the Summer of Love.

As the movement expanded, though, far stronger drugs such as the psychotropic LSD, DMT, and psilocybin were used.  The results were so harmful that President Nixon declared drug abuse to be "public enemy number one."  He started the "War on Drugs" in June 1971 and increased federal funding for drug-control agencies and drug-treatment efforts.

This wasn't entirely without scientific backing, as many would have you believe.  Opium damages the eyesight and causes depression.  Alcohol damages the liver - there were far fewer cases of liver damage during prohibition than before or after.  Tobacco is associated with lung cancer.  Although we're unsure of the effects of marijuana because nobody has done much research, it seems to be associated with depression and impaired walking and driving.  Driving while stoned is known to increase the risk of accidents, although less than driving drunk does.

Medical Rule One - Do No Harm

The logic of making drugs illegal or regulating their purchase is that society would suffer less harm than would occur if the drugs were not controlled in some way.  This seems a straightforward argument - drugs hurt people, so banning them will get rid of the hurt - but it isn't nearly that simple.  As with every complex problem, there is an answer like the "War on Drugs" that is simple, attractive, and wrong.

When these drugs became illegal, everybody didn't just immediately start obeying the law.  Instead, the drugs went underground.  Now illegal, the price rose.  This made it harder for addicts to pay for a habit out of earned income.  Being driven to crime makes it hard for addicts to function as taxpaying adults.

The Wall Street Journal summed up the dilemma by discussing the life of William Wilberforce, who is credited as being the prime mover behind the worldwide abolition of slavery.  After explaining how his addiction to opium damaged his health, the Journal said:

He was spared much of the stigma, shame and isolation that come with opioid addiction today. Addiction worsens with disconnection. Wilberforce never went to prison, never needed to buy drugs illegally.

These are consequences society has chosen to impose on people with addictions. You can be addicted without suffering them. The world would not have been a better place had Wilberforce languished in prison instead of fighting the slave trade.

The fact of Wilberforce's addiction completes his story rather than tarnishing it. His losing fight against addiction shows the fullness of his humanity and should help us see the humanity of those who struggle in the same way in the modern world. The opioid crisis claims the lives of some 130 people in America daily.

We should look again for inspiration to the man who helped end the slave trade in Britain to change our society and show that an addiction need not be a death sentence[emphasis added]

The Journal wrote that Mr. Wilberforce was unable to overcome his addiction no matter how hard he tried.  They have a good point in observing that addiction to an illegal drug is, today, often a death sentence.  With no regulation of quality, packaging, or ingredients, illegal drugs are as dangerous as the old-time snake oils, to say nothing of the inherent risks involved in dealing with violent criminals pursued by armed police.

Our opioid crisis which, according to the Journal, kills 130 people daily, isn't caused by diverted prescription drugs.  It's due to measures intended to prevent the abuse of prescription opioids.

The Washington Post wrote "Largest U.S. drug companies flooded country with 76 billion opioid pills, DEA data shows".  Their article was based on a detailed analysis of data generated when manufacturers ship controlled substances to drug stores and other places where drugs become available to the public.

America's largest drug companies saturated the country with 76 billion oxycodone and hydrocodone pain pills from 2006 through 2012 as the nation's deadliest drug epidemic spun out of control.  [emphasis added]

These drugs were prescribed by federally-licensed doctors, and the prescriptions were filled at licensed retail outlets.  Drug companies argue that they sold only to federally-authorized customers and followed all applicable laws, and they have a point.

Various state attorneys general argue that drug companies should have known that there was no possible way that 76 billion pills were needed for legitimate pain relief, and should have limited shipments regardless of the apparently legitimate prescriptions.  They, too, have a point - although only the Feds knew total opioid sales because all of the drug companies were careful not to let their competitors know their individual sales figures.

The only reason we now know the total sales is because 2,000 lawsuits have been consolidated into one and the lawyers compared notes from discovery.  Drug companies have responded to vehement criticism by, for now, blocking shipments to outlets suspected of abusing their pills.

The problem is, the drug companies didn't have to block shipments to doctors convicted of fraudulently prescribing them - those doctors lost their licenses and are in jail.  By definition, blocking access to prescription opioids prescribed by suspected, but un-convicted, frauds, has made it harder for people in severe pain to get the pain relief they need to function - unless you think that every single patient of every single doctor suspected of opioid fraud, is a phony?

Anyone with a knowledge of Adam Smith should have been able to predict the consequences: making quality pills manufactured in FDA-regulated facilities harder to get has raised the street price of reliable, high quality pills obtained illegally.  This forced addicts to switch to cheaper illegal drugs such as heroin laced with fentanyl.

Fentanyl is a synthetic opioid that is 80-100 times stronger than morphine and can be manufactured relatively easily.  Its effective dose - that is, the amount that makes you high - is very close to its lethal dose, the amount that will kill you.  Put in just a little too little and it doesn't work.  Put in just a little too much and it kills the customer.

It appears that most of the opioid deaths we're seeing are due to overdoses caused by poor quality control in the illegal drug pipeline.  FDA-approved drugs and doctor-prescribed doses don't have this problem to nearly the same degree.  This fact argues that we should make it possible for addicts to get high-quality pills, but in its infinite wisdom, our Congress has strictly limited that solution.

Defining "War" Down

The fundamental driving force behind the severity of our drug problem is that we've defined our attitude toward illegal drugs as a "war."  Everybody knows that many Constitutional guarantees are suspended during a "war," just as Pres. Lincoln suspended habeas corpus during the Civil War so that he could lock up his enemies without trial.  The Civil War, WW I, and WW II were wars by any definition, but using the term for lesser conflicts brings great peril.

For example, the American Bar Association pointed out that:

Yaser Hamdi was seized while fighting for the Taliban in Afghanistan and was transferred from the U.S. base at Guantanamo Bay to the Norfolk Naval Station brig after authorities discovered he was a U.S. citizen born in Louisiana.

Whatever you may think of Mr. Hamdi's behavior, the fact remains that he was a natural-born United States citizen.  He may have been guilty of treason; but until this has been proven in open court and a conviction has been obtained, he ought to enjoy all the rights and privileges of any other U.S. citizen such as yourself, including the presumption of innocence.  Instead, our government decided the crimes of which he stood accused didn't deserve a proper trial in a proper court under the long-accepted laws of due process.

This violation of Mr. Hamdi's constitutional rights was justified by saying that by fighting against America in the War on Terror, he had become an "Enemy Combatant" entitled only to rights granted under the laws of war and the Geneva Convention as opposed to our broader Constitutional rights.  If he was a foreigner, they'd have been right - but he wasn't.  We strip United States citizens of their rights, aside from a court conviction carried out with all required due process protections of the accused, at the gravest peril for all of us.

But that's what we've done, not just with the "War" on Terrorism, but with the "War" on Drugs, precisely because we're used to the idea that wars necessarily do that.  Defining our response to illegal drugs as a "war" has two invidious effects:

  1. Mr. Nixon's "War on Drugs" included extra funding for drug-control agencies and drug-treatment efforts.  Over time, treatment funding has been reduced while control funding has increased.  This shifts drugs from a medical problem to a law enforcement problem which prefers incarceration to treatment.
  2. Defining action against illegal drugs as a "war" made it clear that the usual rules protecting citizens from abuse by law enforcement agencies did not apply when drugs were involved.

So where have these two driving forces taken us?

By Any Means (BAM) Squads

One of the defining aspects of a war is that pretty much anything goes to defeat the enemy once the decision is made that we're involved in a war as opposed to a police action or anything else.  When Mr Nixon declared War on Drugs, Law Enforcement Officers (LEOs) all over the country felt that they were authorized to suspend constitutional guarantees to defeat this new enemy.  The By Any Means (BAM) attitude has infused LEOs even in Texas, the poster child state for independence and self-reliance.

A construction worker friend left a Texas job site and turned right to go home.  A police officer pulled him over, spread-eagled him across the back of his truck, patted him down, handcuffed him, put him in the back of the patrol car, swabbed the inside of his mouth, and searched his truck without asking permission.

He was acutely sensitive to his constitutional rights and took a description of the outrage to the local sheriff's department.  The desk sergeant saw that the LEO was with the local BAM squad and directed our friend to the drug policy unit.

The BAM squad honcho pointed out that if the swab had turned purple, our friend would have been arrested immediately.  "What about the search?  Where's the probable cause?" "The legislature says that if it's drugs, we can do that."

Our friend didn't check out the law to find out whether it actually said that or not.  The important thing was that the BAM squad believed that they had the right to violate most of the Constitutional guarantees against unreasonable search and seizure in the name of the war on drugs and were acting accordingly.  BAM squad members believed they could pull over anyone for any reason and search for drugs, and that's exactly what they did.

This kind of wide-ranging and arbitrary police power is no small matter - it offers far too many opportunities for mischief.  The New York Times published "Baltimore Police Officer Charged With Fabricating Evidence in Drug Case" which said:

A Baltimore police officer has been indicted on criminal charges after a body camera video taken a year ago appeared to show him staging the discovery of a bag of illicit drugs near an arrest scene.

Even if the squad car had a dash-cam running while the BAM agent searched our friend's truck, it wouldn't have shown the LEO pulling drugs out of his pocket and claiming to have found them in the car.  Even if the swab showed that he hadn't been taking drugs, planted evidence would have caused him extreme difficulties while boosting the LEO's performance rating.

This is not to say, like so many Democrats and their activist supporters, that all police are racist Gestapo.  It isn't even to suggest that most or many are.  The problem is that we've created systems and incentives that tend to lead to bad outcomes even when the people participating them are of good intent, and make bad outcomes far worse when they aren't.

In the next article in this series, we'll go a bit further into the harm wrought by the War on Drugs, then looks at the War on Terror and the War on Alcohol to see what lessons might be learned.

Will Offensicht is a staff writer for Scragged.com and an internationally published author by a different name.  Read other Scragged.com articles by Will Offensicht or other articles on Law.
Reader Comments

Excellent as usual. I hope the next essay will cover the question of does the tax payer actually pay for these opioids ? Specifically, it is my understanding that Medicaid and various state versions of it cover the costs of pain killers... irregardless of quantity. And that the consumers of illegal drugs are mostly on some sort of welfare program...that helps pay for the drugs. It would seem that a good place to start would be to stop the subsidies.

August 22, 2019 8:43 AM

I think a major concern is totally ignored by everyone - and it's personal responsibility for what you do, and your commitment to a civil society. Societies cannot survive if people are so self-consumed that they put themselves before their community. Since prohibition was overthrown, the civil contract among peoples has been: You are responsible for your actions when you step out the door. If you are drunk and injure someone with your car, or if you fail to do your job properly, of if you are mean to your family--SOCIETY will look down on you, and punish you. Today, the societal control is being lost. So many people are self-absorbed--no personal interactions because people don't go to church, families are almost non-existent, schools teach kids to use technology more and more - which keeps them from personal interaction; i.e., people simply don't interact together much anymore. And most drugs tend to encourage self involvement versus partying or having fun. This is a culture war - not a drug war. And until that is realized, we will lose the war.

August 22, 2019 9:51 AM

I've said from the beginning, they went at this, and probably the other"wars on...", from the WRONG direction. They should have been starting in pre-schools and day care centers, then early grades, teaching kids how to NOT EVER NEED or WANT "drugs" to obliterate reality, by teaching them healthy coping skills. Where there's no desire for a product, there's no market to sell it and the trade dries up. Regulating doses and purity isn't a bad thing. People learned centuries ago that fox glove helped some cardiacs, but the natural plants' dosages vary widely, and like many another "good" thing, the wrong dosage can kill just as dead as a narcotic. So regulation, in that respect isn't the issue, and carefully monitoring the prescription, dosage and use of narcotics to prevent accidental addiction is also a good thing, applicable to any and all drugs with addictive potentials, such as hypnotics and tranquilizers. But by the time the individuals are addicted, it's really too late: stopping is an arduous and painful process few are willing or able to work through.

August 22, 2019 3:00 PM

There are ongoing casulaties in the War on Drugs. They could not be making raids like this unless it was defined as a "war."

https://www.foxnews.com/us/ex-houston-cop-murder-botched-drug-raid

Ex-Houston police officer charged with felony murder in dA former Houston police officer has been charged with two counts of felony murder in connection to a botched narcotics raid earlier this year that left two people and their dog dead and four officers wounded, authorities announced Friday.

The Harris County District Attorney's Office announced the charges against Gerald Goines. A second former Houston police officer, Steven Bryant, has been charged with felony tampering with evidence.

"The eyes of this community and the nation are on this case; it is critical to the public trust that we reveal the true facts about what, how and why two civilians were killed in their own home by members of the Houston Police Narcotics Squad 15,” Harris County District Attorney Kim Ogg said. "These two charges of Felony Murder and Tampering with a Government Document against former Officers Goines and Bryant are the beginning of holding those responsible accountable.

"This is the start, the tip of the iceberg, in terms of how deep and wide we are investigating," Ogg added. "We will find the truth about this entire matter."

Both former officers surrendered to authorities Friday afternoon and appeared at a bond hearing. Details about the bond hearing were not immediately known. Goines faces up to life in prison if convicted, while Bryant faces up to two years in state jail.

The Jan. 28 raid resulted in a firefight that killed residents Dennis Tuttle, 59, and Rhogena Nicholas, 58. Goines was one of the four officers wounded. Tuttle and Nicholas were alleged to have sold heroin, a claim their family and friends have denied. Police found small amounts of marijuana and cocaine in the house, but no heroin.

In a subsequent investigation, police accused Goines of lying in a search warrant about having a confidential informant buying heroin at the home. Goines later acknowledged there was no informant and that he bought the drugs himself. Both Goines and Bryant were relieved of duty after the shooting and later retired.

An independent review of the incident by Nicholas’ family cast doubt on initial claims by police that Nicholas was shot and killed by officers who saw her trying to take away a fellow officer's gun.

Legal counsel for Nicholas' family -- Michael Patrick Doyle of Doyle LLP, in Houston, and Charles C. Bourque of St. Martin & Bourque LLC, in Houma, La. -- issued a statement to Fox News on Friday, saying, "The indictments today of former HPD Gerald Goines and Steven Bryant are important developments, but they should be only the beginning of the pursuit of justice in the police killings of Rhogena Nicholas and Dennis Tuttle."

"The Nicholas family’s search for the truth of what happened to Rhogena also continues. Our independent investigation is focused not only on HPD Narcotics Squad 15, but also about the conduct, pattern and practices of HPD before, during and after the out-of-control, unjustified execution of Rhogena in her own home," counsel noted.

"We still seek a court order for sworn depositions of HPD Captain Paul Q. Follis and HPD Lieutenant Marsha Todd, and HPD police department personnel involved in the management of HPD Narcotics Squad 15," counsel said. "We believe the court has sufficient basis to order the depositions requested to investigate possible wrongful death, civil rights and other legal claims."

"Finally, the Nicholas family is grateful for the work of the Harris County District Attorney’s Office, as well as all city, state and federal law enforcement personnel committed to a complete investigation of this terrible incident. They remain hopeful that the justice system will succeed in helping prevent other families from ordeals like theirs," counsel added.

<snip>

August 23, 2019 8:09 PM

The NY Times claims that Seattle has figured ouot how to end the "war on drugs." THey make it clear that drugs are winning the war. They are, in effect, following a de-facto legalization path. This is in the Opinion section, not the news section.

https://www.nytimes.com/2019/08/23/opinion/sunday/opioid-crisis-drug-seattle.html

Seattle Has Figured Out How to End the War on Drugs

While other cities are jailing drug users, Seattle has found another way.

Anyone caught here with a small amount of drugs — even heroin — isn’t typically prosecuted. Instead, that person is steered toward social services to get help.

This model is becoming the consensus preference among public health experts in the U.S. and abroad. Still, it shocks many Americans to see no criminal penalty for using drugs illegally, so it takes courage and vision to adopt this approach: a partial retreat in the war on drugs coupled with a stepped-up campaign against addiction.

The war on drugs has been one of America’s most grievous mistakes, resulting in as many citizens with arrest records as with college diplomas. At last count, an American was arrested for drug possession every 25 seconds, yet the mass incarceration this leads to has not turned the tide on narcotics.
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The number of opioid users has surged, and more Americans now die each year from overdoses than perished in the Vietnam, Afghan and Iraq wars combined. And that doesn’t account for the way drug addiction has ripped apart families and stunted children’s futures. More than two million children in America live with a parent suffering from an illicit-drug dependency.

So Seattle is undertaking what feels like the beginning of a historic course correction, with other cities discussing how to follow. This could be far more consequential than the legalization of pot: By some estimates, nearly half of Americans have a family member or close friend enmeshed in addiction, and if the experiment in Seattle succeeds, we’ll have a chance to rescue America from our own failed policies.

In effect, Seattle is decriminalizing the use of hard drugs. It is relying less on the criminal justice toolbox to deal with hard drugs and more on the public health toolbox.

Decriminalization is unfolding here in part because of Dan Satterberg, the prosecuting attorney for King County, which includes Seattle. It’s also arguably underway because of what happened to his little sister, Shelley Kay Satterberg.

At the age of 14, Shelley ran away from home because her parents wouldn’t let her go to a concert on a school night. It was a rebellion that proved devastating. She was away for several months, was gang-raped by two men, was introduced to hard drugs and began to self-medicate with those drugs to deal with the trauma of rape.

As Dan Satterberg rose through the ranks of prosecutors, Shelley Satterberg wrestled with addiction. She was never arrested or jailed (middle-class drug users often avoid police attention, which focuses on marginalized people who use or sell in public).

Dan told me that he was angry at Shelley — angry that she had made terrible choices, angry that she had hurt their parents. But over time he also concluded that his own approach of prosecuting drug users accomplished little, except that it isolated them from the family and friends who offered the best support system to escape addiction.

In 2015, Dan took Shelley to Navos, a nonprofit that provides mental health and addiction services. She was able to stop using street drugs and gradually put her life back in order. Dan saw that treatment made a huge difference in Shelley’s life and became a believer.

Yet it wasn’t enough. Shelley died of a urinary tract infection last year at age 51, a consequence of previous drug and alcohol abuse.

Google Seattle LEAD program

August 24, 2019 9:32 AM

NPR says California is getting a LOT less tax revenue from pot than expected. NPR says they've raised the second-least amount of revenue among the legalizing states, ahead only of Massachusetts.

Some people have given up their medicinal usage licenses and switched to the cheaper illegal market. Somehow, I don't expect CA to catch on and lower taxes.

https://www.npr.org/2019/08/23/753791322/california-says-its-cannabis-revenue-has-fallen-short-of-estimates-despite-gains

California's cannabis excise tax generated only $74.2 million in the second quarter of 2019, the state says, announcing numbers that are short of projections that were set months ago. It's the latest sign that the country's largest marijuana market has struggled to take off since sales of recreational pot became legal last year.

The second-quarter figure reflected a gain over the $63.1 million excise revenue from the first three months of 2019. But earlier this year, the results prompted Gov. Gavin Newsom to revise his office's estimates of how much money the state would net from its cannabis industry.

"In January, Gov. Gavin Newsom's proposed budget forecast $355 million and $514 million in excise tax revenues for fiscal years 2019 and 2020, respectively," as member station Capital Public Radio reported.

In May, Newsom's budget lowered its expectations for the cannabis excise tax, to $288 million in the current fiscal year and to $359 million in 2020.

Compared to other states, California's legal cannabis market has stumbled rather than soared. When California moved from a loosely regulated medical marijuana system to a fully regulated retail system in 2018, it watched legal sales drop to $2.5 billion, from around $3 billion the year before.

"After adjusting for population, the Golden State raised the second-least amount of revenue from cannabis taxes during the second quarter among states with legal sales, ahead of only Massachusetts," according to the Institute on Taxation and Economic Policy.

The result was a departure from the spikes seen in states such as Colorado, Washington and Oregon after those states legalized recreational markets.

"What had happened was that those markets typically doubled in the first year," says Tom Adams, of the cannabis industry research firm BDS Analytics. In those three states, he adds, they "posted 50 to 90 percent compound annual growth for three years straight."

As for what's holding California back, Adams says licensed stores can be hard to find, because many local areas have refused to allow retailers to open. And then there are the tax and regulatory costs: In addition to requiring wholesale distribution, California imposes a number of levies on the cannabis industry.

"It's typically 9% to 11% retail sales tax" in California, Adams says. But local city and county governments can impose their own taxes on cannabis products, and those rates vary widely.

California also imposes a 15% excise tax, along with a cultivation tax of $9.25 that growers must pay for each ounce of dried cannabis flowers.

Of the decision to levy a set tax that's based on weight rather than on a fluctuating market price, Adams says that if "instead of going with a percentage of revenue tax you go with a per ounce tax, that gets painful really quickly."

Confronted with high taxes in the legal market and new requirements for getting an annual medical marijuana card, many cannabis users in California have turned to the illegal market. The number of medicinal customers has shrunk drastically in the past year, Adams notes. And he says the state's rules about keeping inventories separate for recreational and medicinal sales have either increased costs or prompted some retailers to abandon the medical market altogether.

... five years from now, the illicit market will account for 53% of all cannabis sales in California.

By contrast, "States with more supportive regulatory regimes expect illicit sales to make up less than 30%" of sales.

August 24, 2019 9:17 PM

Forbes is commenting on the ongoing lawsuits. The drug companies are claiming theysold legitimate products to approved drug stores which fulfilled prescriptions written by licensed physicians.

There is some talk that their systems for flagging suspicious orders might have been less rigorous than required.

https://www.forbes.com/sites/rachelsandler/2019/08/26/johnson--johnson-ordered-to-pay-572-million-in-landmark-opioid-case/

Topline: A judge in Oklahoma ruled Monday that Johnson & Johnson will have to pay the state $572 million for its role in fueling the opioid crisis—the first decision in a court case attempting to hold a pharmaceutical company accountable for the spread of the highly addictive painkillers

The $572 million payout is far less than the $17.2 billion the state originally asked for.

Oklahoma's will use the settlement money to fund addiction treatment programs.

The decision is a hopeful sign for thousands of similar lawsuits against pharmaceutical companies around the country, including a number of cases going before a federal judge in Ohio.

J&J shares shot up more than 3% in after hours trading following the ruling.

Johnson & Johnson said in a statement it would appeal the decision.
The state of Oklahoma argued that Johnson & Johnson (and its pharmaceutical subsidiary Janssen) created a “public nuisance” by deceptively advertising opioid painkillers to doctors. The same legal argument was used to fight Big Tobacco companies, and the decision provides a legal roadmap for for other cases against pharmaceutical companies.

In defense, Johnson and Johnson said it’s not responsible for the crisis, and only produced less than 1% of opioids in the state.

“Janssen did not cause the opioid crisis in Oklahoma, and neither the facts nor the law support this outcome,” said Michael Ullmann, Johnson & Johnson's general counsel. “We recognize the opioid crisis is a tremendously complex public health issue and we have deep sympathy for everyone affected. We are working with partners to find ways to help those in need.”

Key Background: Oklahoma originally brought the lawsuit against two other pharmaceutical companies, Teva Pharmaceuticals and Purdue Pharma, but both settled before the trial started.

August 27, 2019 9:47 AM
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