Socionomics Institute Director Matt Lampert joined Bert Martinez from Money for Lunch Online Radio on October 5, 2015, to discuss the connection between mood and marijuana and where he thinks the marijuana legalization movement is headed next. Listen to the 6-minute interview below.
Bert Martinez: Let’s get this party started with my first guest. Matt Lampert is the director of the Socionomics Institute. Matt is a graduate of the University of Cambridge and has spoken about social mood theory throughout the U.S. and Europe. Matt Lampert, welcome to Money for Lunch.
Matt Lampert: Thank you. It’s great to be here.
Bert: Alright, so first of all, tell us what the Socionomics Institute does. What are you guys all about?
Matt: What we’re interested in is how changes in social mood, how changes in the way people feel, impact what they do. So if people are feeling more confident, more optimistic, even euphoric or ebullient, they tend to act one way. And as you can probably relate, when you’re feeling pessimistic, depressed and not so confident, you tend to act a different way. We look at indicators of social mood, how society’s feeling, and we use those indicators as a basis to forecast changes in what society does.
Bert: Got it. That’s interesting. One of the surprise issues in the 2016 presidential race has become the legalization of recreational marijuana. Back in 2009, your research group identified a connection between the stock market and the prospects for marijuana legalization. And then your team actually forecasted that society would move towards ending prohibition of the drug. Now, would you tell us what you saw at the time that allowed you to make this forecast?
Matt: Six years ago, who would have thought that recreational marijuana use, the legalization of pot, would become a viable issue in a presidential campaign, and that a handful of states would have legalized the drug? It would be very surprising. One person who would not have been surprised by those developments is my colleague Euan Wilson at the Socionomics Institute. When Euan began his research back in 2009, he initially wanted to see if there was a connection between social mood and marijuana use. He didn’t really find a lot there, but what he found is even more interesting. What does change with social mood is society’s stance toward marijuana. And what he found was that when mood was trending positively, social morals tended to be more black and white, and society was more restrictive of marijuana use. When mood was trending negatively, when people were feeling pessimistic and not as confident, they figured, “Hey, we’ve got bigger fish to fry, so what if someone smokes a joint?” They tended to be less restrictive and lift those prohibitions on marijuana use. Now, one of our most sensitive indicators of social mood is the stock market. It’s great, because if people are feeling optimistic and confident, they can very quickly bid up the prices of stocks. And if they’re feeling pessimistic and negative, they can do the opposite. Back in 2009, when Euan was writing, he had just lived through quite a fall in the markets. He had lived through this period of profoundly negative social mood, and he wondered if that might present an opportunity for the decriminalization of marijuana. He published a report in The Socionomist called “The Coming Collapse of a Modern Prohibition,” where he forecasted that after a negative trend extreme in social mood, the drug war would initially ramp up, but ultimately society would capitulate and move toward decriminalizing the use of the drug. And it’s been a lot of fun over the past few years to watch events unfold as that forecast comes to fruition.
Bert: Yeah, let’s talk about this real quick. Colorado and Washington were the first states to legalize the use of recreational marijuana in 2012. Do you think that most states will eventually follow this? To me, when Colorado legalized marijuana, that was radical in itself, but what’s your take?
Matt: The research that we’ve done suggests that scales are going to shift far more in favor of the advocates during the next huge downturn in the markets, during the next big wave of negative social mood. I think that’s the environment that’s going to be the most conducive to legal marijuana. And we might see a few more states come on board in the meantime, but I think that’s going to be the next big opportunity.
Bert: Absolutely. Alright, let me ask you this. What kind of advantages or disadvantages have these early adopter states like Colorado and Washington experienced?
Matt: The stakeholder that has seen the biggest benefit by a mile has been the state governments. In Washington, the first year that pot was legal, the state racked up $70 million in tax revenue. They thought they would just get $36 million, so they did way better than they expected. In Colorado, in the fiscal year that just ended in June, the state brought in more revenue from the sale of marijuana than it did from the sale of alcohol. That gives you a sense of the size of the industry in that state. The state governments have been doing very well. It’s been a boon to the bottom line. In fact, the narrative in Colorado is that, gosh, the state is getting so much tax revenue from marijuana that it doesn’t know what to do with it. But for business owners and operators in the marijuana space in those states, it’s been a different story. There’s no problem on the revenue side. In fact, in Washington, the state is on track to do $1.4 million a day in pot sales, so we’re talking about a half-billion dollar industry just in one state. But talk to the business owners, and they’ll tell you that, yes, there’s a ton of revenue coming in, but the tax burden is so onerous that once you cover your operating costs and pay taxes, there’s not a lot leftover at the end of the day for the business. So the conversation that’s going on is about what tax structure can be put in place so that it makes sense for the state but also allows for a viable, long-term industry to operate. And they’re having those conversations in Colorado and Washington today, and as more states come on board, that discussion will continue. Ultimately, they do want to have an industry that can survive.
Bert: Absolutely. Matt Lampert, thank you so much for stopping by. We’d love to bring you back and talk more about what’s happening with our society and with socionomics. Matt Lampert, thank you so much for stopping by.
Matt: It’s been a pleasure. Thank you.
Follow this link to read an excerpt of the Institute’s original 2009 forecast.