The Milk Police

Bad boys bad boys
Watcha gonna do, whatcha gonna do
when they come for you
Bad boys, bad boys
Watcha gonna do, watcha gonna do
when they come for you

-Inner Circle, Bad Boys (Cops Theme) Lyrics

Federal agents just dedicated a year to bringing an Amish farmer to justice for selling unpasteurized milk to willing, fully-informed customers.  Acting on behalf of the Food and Drug Administration (FDA), armed federal agents took down the one evil society has striven to defeat since the dawn of this great nation: rogue dairy farmers. Touché, federal government. You may have topped yourself.

The raid occurred on April 20th, after a year-long undercover sting operation of federal agents pretending to be customers. Pennsylvanian Amish farmer Dan Allgyer was not duping anyone, fully disclosing the nature of his product. There were no complaints about his product. These were willing customers engaging in voluntary transactions; just simply not transactions our federal government approved of.

This is the nanny-state in full gear, and hopefully someone in Washington can see that this may not be the best use of government time and taxpayer money (oh wait, at least one person does: Ron Paul). The phrase “federal raid” is reminiscent of the kind done in the War on Drugs, where horrific occurrences like shooting family dogs have taken place. Certainly when milk is the product of discussion, police state raids on peaceful businesspeople are the stuff of dictatorships, not free societies.

The commerce clause has long been used by the feds to regulate any aspects of interstate commerce it pleases. The FDA issued warnings to Allgyer about his milk a year prior to the raid, and Allgyer continued selling the product. The Justice Department eventually filed a complaint accusing Allgyer of distributing unpasteurized milk across state lines, opening the door to shut him down per the commerce clause. The FDA specializes in food and drug safety and points to the commerce clause as its justification for such appropriations of government resources as Operation Amish Milk.

Presidents have a long history of bypassing the Legislative branch to institute new regulations. Ron Paul explains further:

As we have seen, if the executive branch feels hamstrung by the fact that our framers placed lawmaking authority in the Legislative Branch, they simply make their own laws and call them “regulations.” We all know how the Environmental Protection Agency (EPA) uses such bogus regulation authority to harass, hinder, and shut down countless other legitimate businesses. Sadly, Congress has been far too lax for far too long as the executive branch continues to encroach on its areas of responsibility and thereby undermines our system of government.

There is a simple solution to the unpasteurized milk market: if Americans want unpasteurized milk, they can buy it. If they don’t, they’ll bypass the Amish farm in Pennsylvania and pick up pasteurized milk at the store. We really don’t need drawn out investigations, sting operations, and raids of honest business folks.

Like a variety of aspects about our food supply, some people choose to research what will be healthier for themselves and their family. Milk is no different. Not only has Dan Allgyer had the right to conduct an honest business taken away, his customers are having the right to drink unpasteurized milk taken away. Well, only in theory. I guess the unpasteurized milk market will be driven further underground than the Amish farms.

Photo Credit: Wisconsin Historical Images
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California Proposition 19: Regulate, Control and Tax Marijuana

Look at Prop 19 go; already boosting economic activity.

Californians will cast their ballots November 2nd to decide if they want their quasi-legal marijuana industry to look a lot like the alcohol industry. In a state where a contrived headache can get a doctor to put a medical marijuana card in your hands, and access to legal pot, this doesn’t seem like too far of a jump. California Proposition 19, the Regulate, Control and Tax Cannabis Act of 2010, would aim to control cannabis like alcohol, redirect police resources to, I don’t know, violent crimes and such, and generate billions of dollars in revenue for a state swimming in red ink.

The once-proud state has become the punchline to many jokes. I guess that’s what happens when you print up $3.6 billion in IOUs to pay off contractors. This occurred during a lengthy budget impasse last year while investors holding state bonds were paid on time, following state Constitution guidelines. This is funny money economics in the Golden State. Without a budget since July 1st of this year and a $19.1 billion shortfall, California is now testing the waters for $5 billion in short-term loans from Wall Street banks. Any budget the Governator puts together will surely only be a band-aid. The next California governor, either former Governor Jerry Brown or former eBay CEO Meg Whitman, will face another shortfall. Jerry seems to be in the lead as of now.

What is the main advantage to regulating the marijuana industry? Well, the people who choose to consume the drug will know exactly what they’re putting in their bodies. When weed comes to you via a drug dealer near the merry-go-round in a dime bag, the actual contents isn’t as well known. Is it laced with some elicit substance? Does it meet USDA organic standards? Nobody can be sure. People would consume higher quality and healthier product in a marijuana regulated world. Regulating the growing and packaging process of marijuana is probably unnecessary in the long-run. Simply legalizing the substance, bringing it above ground, and unleashing a free market would result in respected growers, distributors, and retailers. These stakeholders would be beholden to competition and reputation in an interconnected digital world. You need to have very good reasons to inhibit a marketplace, and even then, the unintended (and unseen) consequences can far outweigh the benefits. I stick to the idea that the web, product reviews, social networking, texting, email, etc., all accessible from the smartphone in your pocket, provide more than enough resources to get meaningful information on products and services. Not to mention, like most industries, poisoning your customers isn’t good for business.

Prop 19 would control marijuana like the alcohol industry, setting the legal age for possessing cannabis at 21. People would be able to legally possess up to one ounce, to be consumed at home or in a licensed establishment; again, just like grandpa’s cough syrup. If for no other reason, Prop 19 should be passed to put to an end to the argument between pot heads and binge drinkers over which substance is “okay” to partake in. Both substance abuses will be legal, and now equally douchy. Like alcohol, the clear age barrier between children and adults allows government to penalize those selling marijuana to minors. Smoking of marijuana in public establishments could be banned while minors are present.

I think it’s safe to say that the police have enough on their plate without having to deal with non-violent, consensual crimes. With shrinking budgets, police resources are becoming more finite all the time. CAnorml.org estimates that marijuana legalization would save more than $200 million per year in police enforcement costs. As for drug dealing, violent drug cartels generate vasts amount of their revenue from the illegal U.S. marijuana market, often by moving product over the border. Is violence caused by the prohibition or the plant? The White House estimated that as much as 60% of the drug cartel’s revenue in 2006 was from the illegal U.S. marijuana market.

Let’s not forget that California is broke. Beyond the $19.1 billion shortfall referenced above, a recent Stanford University report concluded that California’s public employee’s pension fund was an astronomical $500 billion dollars underwater! It’s time to raise new revenue streams, and fast. Assuming California doesn’t pull a transaction tax out of its hat like the federal government, it needs to come up with something. It just so happens that marijuana is a $14 billion per year industry in California.

Sin taxes are a hotly debated issue. Products like tobacco and alcohol can be taxed without seeing demand erode as quickly, due to their inelasticity. In other words, because of the drug’s addictive qualities, consumers aren’t as sensitive to price changes. Often non-participants of the singled out “sin” are all for taxing it to the hilt. California’s tax collector, the Board of Equalization (BOE), estimates that controlling and taxing cannabis could produce $1.4 billion per year in revenue. CAnorml.org has even more optimistic estimates saying that revenues of $1.5-2.5 billion per year might ultiimately be realized. Combine the potential savings and new revenue with spin-off industries like coffeehouses and tourism, and it gets very difficult to justify not doing this. Prop 19 would create tens of thousands of jobs, billions more in new wages for workers each year, and the above referenced spin-off industries to tax. I don’t know if legalizing marijuana is innovative, but California could use a different model.

Not surprisingly, the beer industry is opposed to Prop 19, likely because Californians might substitute some of their beer dollars for cannabis.

The benefits of Prop 19 are pretty obvious, especially as they pertain to a state already with legalized medical marijuana. Really the only downside of retail pot sales outlets is that it could potentially allow easier access for children. Like “shoulder-tapping” for boos, or hitting up your friend’s older sibling to make a liquor store run, it is one more avenue to get product illegally in the hands of children. From a parent’s perspective, that’s not encouraging. However, to state the obvious, if someone really wants to smoke pot, they’ll find some with little to no trouble. Most of the time, it finds them before they make a preemptive decision. Prop 19 will simply require parents to get more involved and more vocal with their children about the pros and cons of using substances; which they should already be doing. Parents make the biggest difference with their kids no matter what the issue. Parents should remember that the pot their kids may decide to smoke will be less harmful, come from less dangerous places, and incite less violence.

If marijuana is legalized in California, it will be interesting to see the federal government’s reaction. They have used the commerce clause in the Constitution to justify inserting themselves into just about everything at the state level. Something tells me they won’t be pleased, but like California, maybe they’ll decide to focus on bigger problems. Prop 19 polls have been all over the place thus far. Polls in which Prop 19 tend to be winning are “robopolls,” where an automated voice call has you push a number on a phone to respond. In the polls where Prop 19 tends to be losing, actual humans ask the respondents questions. This in and of itself is interesting psychology.

Let’s hope that we can peel away one component of the War on Drugs in California.

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The Power of the Commerce Clause

Who needs health insurance anyway?

The interpretation of the Commerce Clause of the U.S. Constitution has been a wild ride with serious implications. The clause grants Congress the power to “regulate commerce . . . among the several States”. For decades it has been used to justify the federal government’s regulation of certain aspects of the economy. Recently, ObamaCare legislated the individual mandate, which will fine people for not obtaining health insurance beginning in 2014. The administration points to the Commerce Clause as their Constitutional right to impose the individual mandate and referred to the fine as a “tax” in court to defend the action as government’s “power to lay and collect taxes”.

Arguments over intent of the Commerce Clause, and its practical application to modern America, have gone on for years. But it isn’t really subjective intent of the founders that matters here. It is words on the page, and what those words meant in the context of their time to the people who would vote to ratify the Constitution. At the time of the founders, “to regulate” meant to “make regular”. In other words, to prevent states from imposing trade barriers on each other. And, in fact, “commerce” at the time meant “trade”. So industry wasn’t subject to federal trade concerns until beaver pelts were being sent across state lines.

The Commerce Clause is pretty clearly written to make interstate commerce regular. Ironically, this has been one major thorn in the side for affordable health insurance. Each state has its own health insurance mandates and rules. They protect domestic insurers from competition by barring entry to products licensed by other states. Some states require that you pay for more expensive policies with coverage you don’t want, such as acupuncture or chiropractic. The end result is state-by-state health insurance oligopolies.

In the world of legal medical marijuana in California, the feds involve themselves by shutting down dispensaries or busting individual citizens for smoking medical marijuana at home. It is deemed an “economic activity” and justified by their interpretation of the Commerce Clause. As the administration fights the flurry of state lawsuits coming in for the individual mandate, and California braces for a vote on Proposition 19 in November to legalize marijuana, we’ll all see just how far the feds can stretch the Commerce Clause.

Some people think the Constitution should have little to no bearing over modern governing. After all, times have changed. But if the words in the Constitution mean nothing, or whatever today’s courts want them to mean, government has a license to do whatever they want; or certainly extend themselves into what should be our private lives.

The clause written as a restriction on states has given Congress the go ahead to regulate noncommercial, local, and purely private behavior. In the following video, John Eastman (Chapman University Law Professor) and Erwin Chemerinsky (Founding Dean, University of California, Irvine School of Law) discuss whether the government has abused the Commerce Clause:

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