Cannabis retail licenses: lotteries v. auctions

If you have more applicants than licenses and don’t want to select, why a lottery rather than an auction?

Washington State has more applicants for pot-shop licenses than it has licenses to hand out. So the plan is to cull the ineligible applications and then have a lottery.

A lottery is “fair” in some primitive sense – it avoids charges of favoritism – but it has no other virtue. It simply creates windfall winners and losers. Why not auction the licenses (on, say, a five-years-at-a-time basis) and capture the windfall for the state?

The next hard problem facing  the Liquor Board will be how to allocate the limited square footage of grow space. Again, I’d opt for an auction.

Footnote Bob Young quotes me accurately, but slightly out of context. When I said “What if we gave a pot legalization and nobody came?” I was worried about whether the retail stores would have anything to sell in the first year at prices competitive with the  illicit market and with the medical outlets. The decision to allow outdoor growing will, I think, make that problem go away quickly, and hasten the problem of prices low enough to encourage drug abuse, use by minors, and diversion from legal retail sale for out-of-state distribution.

Second footnote No, I’m not currently an active adviser to the Washington State process. BOTEC has completed all its assigned tasks.