Nearly 1,750 incarcerated firefighters are trained to fight California’s flames for as little as $10 per day.

Day to day, most people can safely ignore that New Zealand rests along the boundary between the Indo-Australian and Pacific tectonic plates. But nature has a way of asserting itself. At 12:51 p.m. on February 22, 2011, the city of Christchurch was rocked by the aftershock of an earthquake that had struck more than five months earlier. Nearly 200 people died in this tragedy; some 70,000 were displaced.

According to the Insurance Council of New Zealand, at more than $31 billion, this was the “biggest insured event” in the nation’s history. Ten thousand homes needed to be rebuilt and another 3,500 demolished. As a result of this sharp decrease in housing supply, the cost of shelter spiked. In the aftermath of the Christchurch earthquake, New Zealand activated emergency authority to require local governments in the metro area to rezone land for housing, and the city proper was forced to allow denser townhouses as well. According to a 2021 report to the Department of the Prime Minister and Cabinet, the rezoning was described as “releasing decades of land in one go.”

The Christchurch City Council estimated that 41 percent of the housing growth from 2010 to 2018 was a result of legalizing denser housing in the city. More ambitious changes followed elsewhere, most notably in the nation’s largest city, Auckland, which was pressured to allow—and fast-track—lots of new housing. A number of economic studies have subsequently shown that these reforms increased the supply of new houses while moderating prices: According to one study, rents would have been 28 percent higher without such reforms. The policy was a success, yet New Zealand still struggles to provide sufficient housing, and residents spend 30 percent more of their income on housing than the OECD average. Even with smart policies, it can take years, if not decades, to fully address a shortage.

New Zealand shares many similarities to the United States. It’s a car-dependent, heavily suburbanized country; more than 80 percent of the nation’s homes are detached, single-family homes—20 percentage points more than in America. And today, America’s second-largest city is facing its own natural disaster, and a set of choices for how to rebuild.

There are few places in the U.S. with a tougher housing market than Los Angeles, meaning there are few places where the destruction of several thousand homes would be harder to bear. By one estimate, Los Angeles County is 500,000 affordable homes short of having sufficient housing for its residents; an appalling homelessness crisis has resulted. Now, on top of this, one estimate predicts that the Los Angeles fires have consumed up to $275 billion in total damages and economic losses. According to Redfin, 6,354 homes have been destroyed or damaged, resulting in significant downstream consequences. “A rental listed for $16,000 per month got bid up to $30,000,” one agent recounted.

[Read: How well-intentioned policies fueled L.A.’s fires]

In the coming months and years, the Los Angeles housing market, already extremely tight, will feel the strain of displaced homeowners and renters looking for a way to stay in the region as their neighborhoods undergo the long process of rebuilding. And it is a long process—just look at the state of Hawaii, where just three of the 2,000 homes destroyed by the 2023 wildfires have been rebuilt, Reason reported last week. The interminable pace is due in large part to the local and state governments’ failure to shape the regulatory environment to encourage housing production.

At least in California, policy makers are showing some signs of life: California Governor Gavin Newsom signed an executive order waiving some of the red tape that holds up housing production, such as the California Environmental Quality Act (CEQA). But Newsom’s order applies only to properties that burned down or were substantially damaged, and it prevents new housing from exceeding 10 percent of the original structure’s footprint and height. This means, in most cases, that only a single-family house like the one that existed previously can be built.

“I’m glad the governor and the mayor have issued executive orders to try to make it easier for people to get quick permits,” California State Senator Scott Wiener, a leading housing advocate, told me. “But I think it’s really important not to force homeowners to automatically rebuild the same way as before.”

Wiener and others, such as newly minted Representative Laura Friedman, whose district covers parts of Los Angeles, have argued that exempting infill housing from CEQA—not just rebuilding what was there before—is a crucial part of the solution. In a phone call last week, Friedman told me of a friend who’d lost her Pacific Palisades home of 50 years to the ongoing fires. But, Friedman went on, the family doesn’t necessarily need to replicate their old home. “She and her family are devastated,” Friedman told me, “but she told me that at her age, she prefers to now move into a condo in a place where she’s not going to be worried every night about another fire.”

The persistent threat of future wildfires means that California’s challenge is not just to rebuild what was lost, but also to build much more housing in areas less prone to wildfires to begin with. It sounds remarkably elementary: If you don’t want people to live in places that are likely to burn down, you have to build in places that aren’t likely to burn down.

[Read: How Los Angeles must rebuild]

Los Angeles has tried this. Days after being sworn into office in December 2022, Los Angeles Mayor Karen Bass signed a directive to ensure that housing developments where all the units are affordable would get their permits within 60 days rather than languishing for months or even years, bypassing some of the onerous requirements and regulations that usually accompany multifamily housing. This change spurred production of apartments affordable to people making less than $100,000. After a little more than a year, developers submitted plans for more than 13,770 affordable units—nearly as many as the city approved in 2020, 2021, and 2022 combined, CalMatters reported last year. Some studio units are expected to go for as little as $1,800, a remarkable coup for unsubsidized new construction in expensive Los Angeles.

It’s exactly the type of policy that would weaken incentives to build farther out into wildfire-prone territory. In fact, the program was so successful that Bass has been backpedaling on it ever since. As the story often goes, the triumph of the program meant that a lot of new buildings were allowed, sometimes in neighborhoods where at least a few residents opposed new development and complained to their local officials. Soon enough, the policy reversals began. Bass exempted areas with single-family homes from accessing the streamlined affordable-housing permits (which make up 74 percent of the city’s residential land) and then layered on a series of requirements that turned the policy from “remarkable” to “status quo,” one economist remarked.

Andrew Slocum, a developer who has affordable-housing projects approved under this program, told me he is frustrated by the rollbacks and his sense that political leadership isn’t taking the housing crisis seriously enough. Slocum recently sent an email to the Los Angeles Department of Building and Safety as well as to Bass’s office arguing that the city is illegally holding up housing projects contra state law. This is not an isolated complaint. Last fall, a county judge ruled that L.A. had violated state and local law when it blocked 360 affordable apartments near single-family homes. Los Angeles is not the first California city to be accused of flouting state requirements to permit housing more quickly: Malibu, Berkeley, Huntington Beach, and other localities have all come under scrutiny.

I reached out to Bass’s office and the L.A. Department of Building for comment, and the mayor’s spokesperson Zach Seidl replied in an email, “Since taking office Mayor Bass has executed a comprehensive strategy to confront housing unaffordability in Los Angeles.”

Seidl also told me that L.A. permits more Accessory Dwelling Units “than anywhere else in California.” This is unsurprising. Los Angeles is the second-biggest city in the nation and is almost three times as large as the next-biggest city in California. Last year, the Los Angeles Times looked at ADUs permitted per 1,000 housing units and found that L.A. barely cracked the top 10 of cities in Los Angeles County.

[Read: The truth about NIMBYs]

This is the trap California has set for itself. In order to prevent costly damages from wildfires and further residential incursions into fire-prone areas, you have to provide more housing in dense urban corridors. But in order to satisfy NIMBY gadflies and antidevelopment members of the Democratic coalition, you have to make it difficult to build new housing basically everywhere.

Los Angeles and even California are not alone in trying to balance these concerns. And in most contexts, it’s easier to fold to short-term political pressure that prevents new construction. But the math is quickly changing. In acceding to critics, policy makers might think they are satisfying their residents’ desire for stability and maintaining the neighborhood character of these communities. But by hell or high water—quite literally—change is coming anyway.

In 2012, Colorado and Washington State legalized the commercial production and sale of cannabis for nonmedical use, and since then 22 other U.S. states have followed. The shift was viewed in many quarters as benign and overdue—involving an organic, even medicinal, intoxicant with no serious drawbacks. Advocates promised safe and accurately labeled products, reduced addiction to opioids, smaller prison populations, surging tax revenue, and a socially responsible industry that prioritized people over profits. But all of those promises have turned out to be overstated or simply wrong.  

Legalization has raised cannabis consumption dramatically, and also altered patterns of use. In the 1990s and early 2000s, most consumers smoked the drug and did so only occasionally or semi-regularly—say, on weekends with friends. Some people used more regularly, of course: In 2000, 2.5 million Americans reported daily or near-daily cannabis use. But by 2022, that had grown sevenfold to 17.7 million. Remarkably, that’s more than the 14.7 million who reported using alcohol that often. Today, more than 40 percent of Americans who use cannabis take it daily or near-daily, and these users consume perhaps 80 percent of all the cannabis sold in the U.S.

The drug’s potency has also risen sharply. Until the year 2000, the average potency of seized cannabis never exceeded 5 percent THC, the principal intoxicant in the plant. Today, smokeable buds, or flower, sold in licensed stores usually exceed 20 percent THC. Vapes, dabs, and shatter—all of which are forms of drug delivery that commercialization spread—are more potent still.

[Malcolm Ferguson: Marijuana is too strong now]

More frequent use of more potent products has led to a staggering rise in the typical consumer’s average weekly dose of THC. Back in the 1980s and ’90s, when potency averaged about 4 percent, someone consuming one 0.4-gram joint each weekend night—and none on weekdays—was averaging roughly 32 milligrams of THC a week. Average daily users today are consuming about 1.6 grams of high-potency flower a day, or its equivalent in other forms. That works out to more than 2,000 milligrams of THC a week—or about 70 times as much.

The numbers are shocking, and yet this is what happens when frequency, potency, and quantity all rise in tandem. For some consumers, high potency itself encourages more frequent use by delivering a stronger effect.

Medical science can’t yet clarify the effects of long-term use of 300-plus milligrams of THC a day, because this consumption pattern is new. Most controlled studies work with short-term exposure to smaller doses, often in the 20-to-50 milligram range, and observational studies that followed users for years were examining a drug—low-strength, infrequently used cannabis—that barely exists anymore.

But high-frequency use of high-potency marijuana raises a range of concerns. For one thing, there is little question that cannabis intoxication can impair cognitive functions including concentration and memory formation. That was not a big worry when most people used only on weekends. Daily use, however, means using on work and school days. The drug also impairs perception and motor control; the availability of strong, legal marijuana has been followed by increases in automobile crashes and emergency-room visits.

And over the long term, although some people can handle a wake-and-bake lifestyle, just like some alcoholic people are functional, there are likely millions of users for whom couch lock impedes career advancement, academic success, or meeting responsibilities to family.

On surveys, 63 percent of high-frequency users report enough cognitive, emotional, employment, and social problems as a result of using the drug to be coded as meeting the criteria for a cannabis-use disorder (a condition defined by being unable to fully control drug-use behavior despite its negative consequences). For technical reasons, we think that figure overstates the problem, but there is no doubt that the problem exists: 17 percent of high-frequency users report wanting cannabis so badly that there are times they can’t think of anything else. Chronic use may lead to other health problems as well. Most notably, evidence is mounting that frequent use of high-strength products raises the risk of serious mental illnesses such as schizophrenia.  

To be clear, these risks and harms do not remotely add up to a “cannabis crisis” in the same way that we speak of an opioid crisis or a meth crisis—calamities marked by widespread premature mortality and shattered families. Many people who enjoy cannabis have no trouble managing their use. They can now buy it cheaply and without stigma, in a variety of forms. And everyone can be relieved that adolescents’ cannabis use has stayed roughly where it was since legalization began. By one standard measure, use rose just 3 percent among 12-to-17-year-olds from 2012 to 2022.

But use has soared for adults (up 155 percent), especially for those 35 and older (up 300 percent), and the increase cannot be characterized as entirely benign. Many assumptions made about what would follow legalization seem naive in retrospect.

Those assumptions extended beyond the nature of the relationship between pot users and the drug, and how it might change. Soaring cannabis use would still have been a win, from public-health and crime-control perspectives, if it had resulted in less use of even more dangerous drugs. But it hasn’t. Predictions that cannabis legalization would reduce consumption of alcohol, a drug much more strongly associated with physical aggression, were not realized—reductions observed in some groups or contexts were offset by increases in others.  

Based on weak scientific evidence, many advocates likewise promised that legal cannabis would lead people to use fewer opioids. (Weedmaps—an online review site for pot—put up billboards all over the country promising reductions in opioid overdose, for instance.) Yet those early findings were reversed as more data became available, and recent reviews suggest that legalization is more likely to increase than reduce opioid-death rates. This should not be too surprising: Although the old “gateway drug” arguments of the 1970s and ’80s overstated the risk of merely trying marijuana, the commercialization of cannabis has clearly expanded high-frequency use, and dependence on any drug can increase the likelihood of using and developing dependence on other drugs.

[Read: Marijuana’s health effects are about to get a whole lot clearer]

Some promised criminal-justice benefits have also proved illusory, in part because advocates exaggerated the extent to which marijuana use entangled people in the criminal-justice system. “Discriminatory enforcement of marijuana laws is one reason that black and Latino Americans make up two-thirds of the U.S. prison population,” the progressive Center for American Progress noted in 2018, in a report advocating national legalization. But even before legalization, very few people were in prison for pot possession alone. There were a lot of pot-smoking burglars and robbers behind bars, but only about 2 percent of inmates were in prison solely for marijuana offenses, and most of those were traffickers or their employees.

That there had been too many marijuana-possession arrests is undoubtedly true. And legalization has cut them sharply, leaving mostly only arrests of underage users and of residual illegal suppliers. But even here, the case for outright legalization of supply was oversold: States that merely decriminalized marijuana possession saw declines almost as large. In California, for example, converting marijuana possession from a misdemeanor to a civil infraction reduced possession arrests by 86 percent in just 12 months. Subsequent legalization had only a modest incremental effect.

Allowing commercial supply—as opposed to merely decriminalizing possession—has produced other unintended consequences, though these consequences could easily have been anticipated because businesses typically follow the laws of economics.    

Large producers run by MBAs have adopted industrial agricultural practices that are brutally efficient, dramatically outcompeting the artisanal production that many advocates foresaw. Before legalization, much high-quality cannabis was grown in small indoor facilities; one 2006 Dutch study of 77 illegal grows reported an average size smaller than 200 square feet. Now an average-size commercial grow might operate on 10,000 to 20,000 square feet, and an industry magazine lists one producer (Copperstate Farms) as operating almost 2,000,000 square feet of greenhouse grow space; mixed-mode growers are even larger.

Commercial production has driven down prices, and so the cannabis tax windfall touted by many supporters of legalization has also been underwhelming. In California, cannabis excise and sales taxes peaked in 2021; by the first quarter of 2023, they were reported as accounting for only 0.2 percent of total state tax collections. Not all taxes due even get collected; in 2023, for instance, 15 percent of the state’s cannabis firms defaulted on taxes they owed.  

Falling prices have thinned profit margins, adding to the commercial imperative to expand the market and attract new customers. Hence the proliferation of edibles and other products that are more accessible to nonsmokers. The industry is targeting women—who historically used cannabis less than men did—as a growth demographic, just as the cigarette and alcohol industries had before. From 2012 to 2022, high-frequency use grew strongly for men (up 137 percent), but exploded among women (up 300 percent).

Many commercial cannabis providers have proved difficult to regulate. Initially, regulatory enforcement efforts tended to be modest, and that was an error. Misleading labels are commonplace in the cannabis industry today, and some producers use unapproved pesticides or exploitative labor arrangements.  

The 2018 Farm Bill created further opportunities for bad behavior. The bill was supposed to legalize nonintoxicating uses of the cannabis plant, such as growing fiber for clothes or seed for food and oil. Unfortunately, loopholes let unscrupulous actors sell intoxicating products completely outside of most states’ regulatory systems. The Farm Bill permits the production and sale of “hemp”—defined as any cannabis product containing less than 0.3 percent of delta-9 THC, the primary THC variant in cannabis. But edibles, being relatively heavy, can contain a lot of delta-9 THC and still, by weight, remain under the 0.3 percent threshold. What’s more, the marijuana plant contains nonintoxicating cannabinoids that can be chemically transformed into intoxicating cousins such as delta-8 THC. The resulting array of products, which can appeal to youth, may have no labeling requirements (depending on what state they’re being sold in) and no protection against unfamiliar and potentially dangerous synthetic by-products. They may not have been tested for pesticides either.

Unsurprisingly, hemp producers who do not follow product-safety rules have in many cases been outcompeting those state-licensed cannabis companies that try to follow the regulations, contributing to high cannabis-business failure rates and less reliable products for consumers.

These ills and others—the sprouting of cannabis shops on seemingly every block in some city neighborhoods, the smell of pot that greets many riders of public transportation—have not gone unnoticed by the American people. The election in November underscored the degree of disappointment with the results of marijuana legalization. Though Nebraska did become the 39th state to approve the drug for medical purposes, North and South Dakotans voted down ballot initiatives to legalize recreational use. Floridians did the same—despite $150 million in campaign spending by the industry and an endorsement from Donald Trump.

This pause in what had seemed an inexorable movement toward wider—and eventually national—legalization is healthy. Leaping all the way from prohibition to the enthusiastic embrace of a for-profit, freewheeling, corporate cannabis industry has clearly created downsides and excesses that legalization advocates did not initially imagine (or, in some cases, admit). States still considering legalization—and those that may be reconsidering how legalization has worked out for them so far—would be wise to instead explore the ample middle ground, or what the late drug-policy expert Mark Kleiman called a “grudging toleration” of legal use and supply. Even a society that otherwise embraces free-market capitalism should be open to middle paths for addiction-inducing intoxicants, which are not ordinary commodities.  

[Read: I don’t want to smell you get high]

What might grudging toleration look like in practice? In addition to eliminating the Farm Bill loopholes that have contributed to a Wild West environment in many places, we would offer four specific suggestions.   

1. Restrain the power of large-scale producers.

The cannabis supply chain spans growers, manufacturers who process and package the plant material, and retailers. Regulation is needed for farmers (concerning which pesticides are allowed, for instance) and retailers (testing compliance with laws blocking sale to minors, for example)—but the bigger challenges involve the manufacturers who produce the concentrated products, control the brands, and dominate marketing and advertising. Two remedies can help.

First, there is no reason to allow for-profit corporations to participate in product manufacturing. For-profit businesses are fabulously efficient at developing new products and driving up consumption. That’s fine when the product is cornflakes or canola, but not when it involves addictive drugs. Cannabis is an addiction-inducing intoxicant for which rapidly expanding consumption has significant costs.  

Instead, legalization could restrict cannabis-product manufacturing to nonprofits or public-benefit corporations. Reliance on nonprofits is a norm in some other industries providing goods or services that in one way or another involve issues beyond pure commerce. Most hospitals and universities, for instance, are either nonprofit or government-owned. In the cannabis industry, these organizations could be chartered to undercut illegal supply by producing to meet existing demand, without promoting greater consumption.

Second, especially in places where for-profit manufacturers are still permitted, major manufacturers should be barred from owning, operating, or controlling either farms or retail outlets. Similar restrictions were part of many states’ plans when alcohol prohibition was repealed, and they might limit big corporations’ power—including their lobbying power. Likewise, they should be barred from merging with tobacco and alcohol companies.

2. Curtail high-potency products.

For many, the purpose of legalization was to replace the illegal market with legal, regulated supply. But legalization has also changed the market, bringing in a slew of more potent products. Drug-reform advocates sometimes invoke the so-called iron law of prohibition, which claims that prohibition begets more potent forms (because, being more compact, they are more easily hidden). But with cannabis, the opposite happened: It was legalization that spread higher-potency forms of the drug.  

Whether cheap, higher-potency products necessarily exacerbate health harms is much debated. But history is replete with examples of inexpensive, high-potency forms of drugs creating new problems, from the British Gin Craze of the first half of the 18th century in London (during which consumption increased eightfold to about one gallon per person per year) to the current fentanyl epidemic, which has killed more Americans than heroin ever did.

Some fear that banning higher-potency products will create or greatly expand illegal markets, but modern societies often ban certain forms of a product without creating big illegal markets—as long as other forms remain legal. For instance, throughout much of the 20th century, many countries banned the sale of absinthe, but there was no big illegal market for absinthe because other liquors were available. Likewise, today’s bans on caffeinated alcoholic drinks and flavored cigarettes are mostly honored.

Quebec already essentially bans dabs, butane hash oil, and other high-potency products, and it has considerably less cannabis use than other provinces of Canada.    

The U.S. should likewise ban such products, and maybe also the synthesis of artificial cannabinoids. And for products that stay within the potency limit, a further safeguard could be taxing more potent products at a higher rate, just as is done with alcoholic beverages.

3. Leave room for small-scale producers and other small businesses.

The primary challenge to public health does not come from the many small artisanal producers of marijuana, or from retailers. The greater problem is Big Marijuana. Applying the same rules to all parties burdens hobbyists and boutique producers while letting corporations run amok.

Most states have enacted cottage-food-production laws that exempt small-scale producers of craft-food products (baked goods, pickles, honey, etc.) from the strict scrutiny that is appropriate for agribusiness and food conglomerates. Cannabis policy could make similar distinctions.  

Small growers might be exempted from certain regulations when selling only flower—and also prohibited from selling refined or dangerous products, just as cottage-food producers are usually banned from selling meats or goods that need to be refrigerated.

4. Get public safety and public health off the sidelines.

In order to limit the damage done by legal addictive products, society needs effective public-health regulation. And in order to thrive, licensed legal industries need government enforcement against illegal suppliers. Both of these necessities have been lacking.

Neither regulators nor police have attacked illegal production, promotion, and sale with sufficient vigor, perhaps because any enforcement involving marijuana has become entangled—at least in the minds of many progressives—with concerns about the carceral state, or anti-police sentiment more generally.

[Jane C. Hu: Almost no one is happy with legal weed]

But when the legal risk of, say, operating an unlicensed weed shop drops to near-zero, the illegal industry grows and the legal industry suffers, undermining the legalization regime and tax revenue at the same time. Enforcement agencies, those who oversee them, and the activist community need to shake off the misperception that enforcing the rules of a legal industry is a revival of the War on Drugs.

Similarly, public-health departments must start informing the public more vigorously about the health risks of cannabis, just as they do those of tobacco, alcohol, and gambling. Thus far, they have generally failed to do this, perhaps because of misplaced fears of reenacting hysterias of prior eras. Today, a big, legal industry is selling a product with established health risks, and public health needs to embrace its traditional role as an advocate for health over profit.  

These and other reforms would better balance the trade-offs between profit and public interest. Naturally, the industry will fight them, but this should only increase urgency. Naive and self-serving advocates shaped (and, via the initiative process, sometimes wrote) many state-level legalization bills, with results that should trouble us. Legalization should be redesigned where it already exists, and efforts to expand it to other states or nationally should learn from the mistakes of the recent past.