Why local governments should NOT be allowed to opt out of legalization (or prohibition)

I’ve heard it said that if you like federalism, you’ll love localism. The idea is that some of the key benefits of devolving policy onto the states, such as the ability to tailor policies to fit geographic preferences, can be realized to an even greater degree by devolving policy onto localities. If control of marijuana policy is handed to the states, for example, then the people of Mississippi can ban the drug while the people of Colorado legalize it. More people are happy with this outcome than the same policy were foisted on both states. But if local communities within both states were allowed to opt out of the choice made by their respective state majorities, even more people would be happy with the outcome. What is more, since most of the costs and benefits of marijuana likely fall upon people who live near users and distributors (e.g., the cost of drugged driving accidents), such devolution would not present a collective action problem. Perhaps this is why Doug welcomes the idea of legalization states like Colorado giving local governments the ability to ban marijuana in their borders. Let the voters of each locality decide what to do because they’ll ultimately bear the costs and benefits of their choices.

I can see the upside of granting local control. But I think giving local governments a say over whether marijuana is legal has some overlooked costs, and these costs could outweigh the benefits of localism.

First, there is a cost to adding one more decision-maker into the mix. If localities are empowered to ban (or legalize) marijuana, policy advocates will now have to lobby three (or even more) different layers of government to secure their preferred policy outcome. The time and resources spent trying to persuade Congress, the Executive branch, 50 state legislatures (and electorates), 50 state governors, and literally thousands (if not tens of thousands) of localities about how best to regulate marijuana represents a significant cost. Perhaps it’s the price of democracy. But I suspect the arguments that would be made before local city councils would be (and are) largely a rehash of well-worn arguments already being heard on national and state stages: Is marijuana safe? Is prohibition effective? Is this mic on? and so on. I doubt the gains from granting every local government the ability to opt out of legalization (or prohibition) outweigh the costs of having to make the same basic decision again and again and again.

A second related cost stems from the complexity inherent in such a dis-uniform localist regime. This cost will be greater the more leeway local governments have in dealing with marijuana. Indeed, there could be endless variation in terms of how local governments choose to regulate the drug. And such variation wouldn’t necessarily reflect the unique and deep seated preferences of local voters, as opposed to what the different officials assigned to translate mandates into legal text had for lunch. But the variation would increase the costs of compliance, as businesses will have to spend more to understand differences in regulations across the jurisdictions in which they operate.

Third, the variation in local laws makes it more difficult to learn from the experiments now underway. Variation is, of course, inherent in any experiment. Indeed, other states could potentially learn a great deal from the novel policies now being crafted by Colorado and Washington: how much tax revenue can be raised, how much usage will rise, etc., in the wake of legalization. But it’s much tougher for other states to learn when the experiment is not carefully controlled. If the 64 counties comprising Colorado all adopt different marijuana regulations, we may never know whether state reforms have impacted usage rates, driving fatalities, crime rates, etc., especially since some data are simply available only on a state-wide level.

Fourth, the policy choices made by local governments can impose indirect externalities on other parts of the state. For example, if one county were to ban the sale of marijuana, its residents might flock to neighboring counties to buy the drug. To be sure, there’s an upside to this: counties that allow distribution would enjoy a tax windfall from marijuana tourism. But those counties might prefer not to be deluged with the added car traffic and its attendant costs. The problem is, there may be no legal or practical way for them to exclude non-residents from their borders.

Of course, similar problems arise when state governments break from federal policy, but the costs are likely to be much lower given the larger size and relatively small number of state governments. At bottom, I doubt there is a strong normative justification for allowing local governments to opt-out of marijuana prohibition or legalization. I suspect granting them this choice may simply reflect a political compromise, designed to lessen opposition to state legalization in more conservative parts of the states.