The Iron Law of Liberalization

Why laxer drug laws increase potency

This morning a friend sent me this recent Wired article, entitled “Psychedelic Mushrooms Are Getting Much, Much Stronger.” It reports, well, what it says on the tin:

Earlier this year, Julian Mattucci, also known as “God Emperor Myco,” was creating new generations of spores from some Psilocybe subtropicalis mushrooms that he had procured online from a popular supplier. … After three cultivation cycles, the self-taught mycologist—who runs the Colorado-based psychedelic research company Imperial Labs—decided it was time to try what he had produced. An experienced psychonaut, he was astonished. “It floored me: I’ve never been hit like that by mushrooms,” Mattucci says. He consumed them fresh in a dose that would be equivalent to no more than 1.5 grams of the dried fungi, which is significantly below the amount generally required to “break through” and have a significant trip. “I knew that they had to be really powerful, because I couldn’t get out of my bed for about three or four hours. The first hour or two felt like a DMT experience.”

It’s the type of super-strong mushroom trip that people are increasingly reporting. New cultivation methods are making psychedelic mushrooms stronger, and fiendishly potent varieties are kicking in faster and lasting longer—even if you eat only a fraction of what you would with another variety. Subsequent testing showed that one batch of Mattucci’s mushrooms contained almost 5 percent psychedelic alkaloids, which was once unheard of within the Psilocybe genus. Typically, mushrooms contain 1 percent of these psychoactive compounds, although species like Psilocybe azurescens are generally stronger, and some varieties within the Panaeolus genus are even more potent.

The article goes on in this vein, quoting people from within the industry confirming that this is a general phenomenon. From the perspective of psychedelics policy, this is an issue because high potency may be associated with “long-term negative psychological responses” to psychedelic use.¹ But from the perspective of drug policy in general, it’s notable as yet another example of the way in which potency has tended to rise with liberalization of our drug laws.

As regular readers of TCF know, the past half-decade has seen a wave of psychedelic legal liberalization. Psilocybin (magic mushrooms, i.e.) is legal in two states, with Massachusetts considering legalization in November. A number of other jurisdictions have implemented decriminalization statutes, which have brought with them a flowering black market.

What that semi-legalization has bred, if Wired’s coverage is to be believed, is the professionalization of psychedelic mycology. When shrooms were still underground,² cultivation was overseen by untrained amateurs working under conditions of heavy restriction, limiting rates of innovation. But as psilocybin has gone mainstream, even the grey-market tinkerers have gotten more sophisticated.

The arrival of such methods means the era of amateur “bro science” in psychedelic mycology is over, Mattucci says. The age of uninformed tinkering and anecdote-driven science is giving way to cultivation driven by deeper and more complex scientific—and mycological—knowledge. “This is only the beginning” of super-strength potencies, Mattucci says, “and it’s going to be pretty insane over the next decade.”

Just wait to see what the loosely regulated state-legal cultivators will turn out.³

The phenomenon, it may not surprise readers to learn, is not exclusive to mushrooms. Everyone is belatedly starting to worry about the rising potency of marijuana. As I noted in the Times magazine, liberalization has lead to an increase in the quantity of THC: “According to the National Institute on Drug Abuse, average THC concentration has risen from around 4 percent in the mid-1990s to 15 percent in 2021. Legalization has also permitted the production and sale of high-potency concentrates, with THC levels as high as 80 percent.”

Such high-potency products were, if not unheard of, then much less common prior to liberalization. As with shrooms, illicit cultivators of marijuana are simply less sophisticated than (state-)legal ones. They know less about producing higher concentrations of THC, or about refining plants into shatter, high-THC gummies, etc. They also are less likely to have access to the resources necessary to carefully breed plants to optimize THC concentration.

The same thing, I might argue, is happening with the other vice that we have recently liberalized: sports gambling. Gambling can’t be measured by concentration per dose, of course. But liberalization has lead to a more reinforcing product experience—more frequent advertising, and a more direct method of delivery (via phone apps, i.e.). And people are certainly spending much more, in aggregate, on gambling than they were before liberalization.

I bring all of this up, of course, because it recalls a cardinal argument of advocates of drug liberalization, the so-called “iron law of prohibition.” First formulated by Richard C. Cowan in a 1986 National Review essay, the iron law posits that “the more intense the law enforcement, the more potent the drugs will become.” The given reason is, in essence, that for a given prohibition-imposed cost of distribution, a more potent product is more efficient: easier to smuggle, less of a problem to lose, and retailing at a higher price per volume smuggled.

Source

From an economics perspective, the Iron Law is not total bunk. It’s an application of the Alchian–Allen theorem: if you have two goods that are substitutes, one of lower quality and one of higher quality, then an equal increase in the fixed cost of both will cause consumers to substitute to the higher-quality product on the margin, because the ratio of the prices of the high-quality product to the low-quality product decreases. In the case of the Iron Law, enforcement imposes some fixed cost on both high- and low-potency substitutes; increasing the intensity of enforcement lowers the relative cost of the higher potency product.⁴

This can be true, but still be only one of the ways in which prohibition affects potency.⁵ And some other effects of prohibition can end up swamping the Alchian-Allen effect, such that reducing the intensity of enforcement—liberalizing—yields higher potency even as enforcement-imposed costs fall.

In particular, what we’re seeing in the liberalizing vice markets—marijuana, gambling, and now psychedelics—is the effects of innovation. Under prohibition, the supply of production inputs—physical and financial capital, but also talent⁶—is artificially restricted by the law. As drug laws are liberalized, these restraints come off. Hobbyist chemists and low-skill drug traffickers are replaced by capable cultivators with technical know-how and financial capital to match.

Thus, against the Iron Law of Prohibition, we might posit an Iron Law of Liberalization: “the more liberal the drug laws, the more potent the drugs will become.”

My view is that we’re really only at the start of legal-market innovation. Jonathan Caulkins has a great paper comparing (in part) innovation in cannabis production to innovation in tobacco production. Much as the creation of the automatic cigarette roller moved us from single cigarettes to packs, so too does Caulkins envision a future in which you can buy a pack of joints at CVS for the cost of a single pre-roll today.

Why does this matter? Because the Iron Law of Prohibition is an incredibly powerful rhetorical tool in the arsenal of the drug liberalizer. It is routinely cited by academics, international pro-legalization groups, and think tanks. Every increase in the potency of the drug supply is blamed on prohibition. (This argument makes little sense—the intensity of enforcement has if anything declined over the past decade, so why would prohibition be causing e.g. the fentanyl transition?—but they make it anyway.)

But I think the Iron Law of Liberalization is more powerful, and more relevant to today’s dynamics, than the Iron Law of Prohibition. And once policymakers recognize it, and recognize how liberalization has already increased, rather than decreased, the potency of drugs, they may start to rethink the wisdom of their plans.

1. Amusingly, Wired felt it necessary to argue that actually, higher potency is good, because people will have fewer stomach issues.

2. *ba-dum-tss*

3. From Wired: “Methods to enhance the potency of mushrooms using gene-editing technology have been subject to a patent application by at least one biotech company, Intima Science. ‘In some cases, the genetically modified fungi and other organisms comprises … up to 400 percent more psilocybin measured by dry weight of a fungus compared to a comparable control without genetic modification,’ the document says.”

4. A fun argument against this position is that, as the libertarians also argue, enforcement does not actually raise fixed costs all that much, so consequently prohibition can’t really have that big of an effect. (For a full discussion of enforcement and cost, see my report on drug policing.)

5. Credit for this insight goes to Jonathan Caulkins, who explained it to me succinctly a few years ago.

6. Why did it take half a century for the cartels to develop fentanyl? Because almost anyone who can make fentanyl in a lab could probably get a better job than working for a drug trafficking organization.