Will the Bear Market End the “War on Drugs”?

Will the Bear Market End the "War on Drugs"?
Marijuana legalization has come a long way (in a short time), baby

By Robert Folsom, courtesy of Elliott Wave International

In 1996 California voters approved Proposition 215, which extended legal protection to doctors who recommend and patients who use marijuana for medical reasons. This inspired the "medical marijuana" movement, though it made only sporadic progress in the decade that followed. Beyond a few mostly Western states, the movement found meager legislative support.

Until around 2007, that is.

In 2007 and 2008, legislatures in 27 states considered bills related to marijuana — each one sought to relax or eliminate the current penalties for use and/or possession in those states. The trend continued into 2009 and 2010. This past March saw the most far-reaching legislative proposal yet, again in California: the state legislature will vote on a bill to allow adults over 21 to personally possess and cultivate marijuana. It would also implement a regulatory regime that taxes pot sales by licensed vendors.

The trend itself may not be news to you, even if you don’t know all the particulars. This past January, an ABC News/Washington Post survey found that 81% of Americans support the legalization of medical marijuana (up from 69% in 1997). The same survey found 46% support "legalizing small amounts of marijuana for personal use" (up from 22% in 1997).

Still, you may not have gotten the memo about this past Tuesday (April 20) and the event known as 4/20, aka "Pot Day." Participants made a public show indeed of how much this day means to them: behold the crowd gathered for the occasion on the campus of the University of Colorado.

Yes, that cloud is exactly what you think it is.

This apparent willingness toward tolerance and use also extends to controlled substances which create clouds only a user might see. Earlier this month The New York Times reported the experience of a retired clinical psychologist who was deeply depressed while going through treatments for kidney cancer:

"Nothing had any lasting effect until, at the age of 65, he had his first psychedelic experience. He left his home in Vancouver, Wash., to take part in an experiment at Johns Hopkins medical school involving psilocybin, the psychoactive ingredient found in certain mushrooms."

The article said that one year later, the gentleman’s "profoundly transforming" hallucinogenic encounter had helped him "overcome his depression." What’s more, his story is by no means unique: "Researchers from around the world are gathering this week in San Jose, Calif., for the largest conference on psychedelic science held in the United States in four decades."

Now, please know that I do not wish to make light of cancer, depression, or the taking of psilocybin. My purpose is not to condone or condemn pot smoking (okay, I did inhale… but that was a long time ago).

Instead, I want to show that the timing of this trend is no accident. Above I noted that 2007 began a measurable change in attitude — that is, a change in social mood.

The July 2009 issue of The Socionomist published Euan Wilson’s "The Coming Collapse of a Modern Prohibition," which showed how the large trend that now drives the financial markets also drives public sentiment today regarding marijuana. Sound far fetched? Well, the analysis and charts in the article draw a clear and persuasive parallel with the repeal of the 21st Amendment (alcohol prohibition), as part of a survey of prohibition/repeal efforts in the 20th century.

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