In NY, if some weed stores fail, Taxpayers pay the bank that loaned the funds for the stores

Plus the bank gets the property and a pool of taxpayer funded money for any late payments

Intoxicants of any kind almost always have some form of crony capitalism associated with them. Alcohol (because it is the most widely used intoxicating drug) is the worst. Each state has its own way of shaking down that particular vice industry. (Not that the industry for the most part has much problem with it these days, at least not the big companies.) In my home, the Commonwealth of Virginia, we have state operated and owned stores that sell liquor because, well, Prohibition a long time ago and because it is a cash cow for the Commonwealth.

A great example of crony booze is the Bootleggers and Baptists equation. “Baptists” traditionally wanted alcohol sales banned on Sundays (at least). This worked to the benefit of bootleggers who then had a day where they enjoyed a monopoly on the sale of alcohol. “Everyone” was happy. This general situation has been exploited by various groups for decades. (A version of this can still be seen in some US counties even today.)

Red counties are dry. Yellow counties are semi-dry. Blue are wet. — Image: Wikipedia

There are many other examples. The Opium Wars. The drug war in this country of nearly one hundred years which was and is riddled with probably hundreds of special interests exploiting laws or loopholes or both.

We have actually made some progress however.

Cannabis, by far the world’s favorite illicit drug (and also probably the least dangerous) has been widely decriminalized/legalized in the US just in the years since we’ve been writing at Against Crony Capitalism. This is a good thing. People shouldn’t go to jail for using marijuana. There is no reason, good reason for that. Pot also helps some people get off hard drugs like opioids and helps others with a myriad of ailments, often at a fraction of the cost of prescription drugs.

But with this progress have come new challenges and lots of opportunities for people and politicians to make bank off of “the herb”.

Attached is one such example in New York. The governor has championed an “equity fund” for those “most impacted by the drug war” so that they can get in on the legal reefer action. Certain people from certain neighborhoods historically most impacted by the drug war who want to open licensed cannabis dispensaries can get loans through the “equity fund” to start a legal weed business. This fund is financed with a private bank.

However, the money the state is saying dispensaries will likely make does not line up with reality. Legal pot stores are very expensive to run. One reason is because weed is still illegal federally (why is this still so?) so these budding stores can’t deduct their expenses from their federal taxes. That’s a tough one for a retailer.