Belizeans demand Referendum as Marijuana legalization faces non-accommodative policy env.

In one way or the other, many individuals may have come across the term "entrepreneurial ecosystem." As the World Economic Forum (WEF) defines it, the entrepreneurial ecosystem is the "system of interrelated pillars that impact the speed and ability with which entrepreneurs can create and scale new ventures in a sustainable way."

Essentially, the state of the ecosystem determines, on average, whether the economy in question would have robust or frail entrepreneurial activity. Using the WEF's framework, there are eight pillars of this system: Accessible Markets, Human Capital/Workforce, Funding & Finance, Support Systems/Mentors, Government & Regulatory Framework, Education and Training, Major Universities as Catalysts, and Cultural Support.

Some of these pillars' roles are intuitively appreciated. Take "Accessible Markets," for instance. If the freshly minted entrepreneurial venture does not have access to local or foreign buyers, then it is doomed to fail: a business needs customers, it's that simple.

Similarly, a dearth of finance flowing to micro, small, and medium-sized enterprises (MSMEs) is easily understood as a death knell for many startups. Finally, the role of the regulatory framework created by the country's government matters. This is where the business community in most market economies is heard clamoring for "easing" when it comes to the processes for starting a business, or demanding improvements in key infrastructure such as telecommunications or road networks.

Non-accommodative conditions in any one or more of those pillars can decelerate the emergence of strong entrepreneurial activity. The term "ecosystem" is, therefore, appropriate because it immediately communicates the interconnected nature of the various components.

And, to the point of this article, a similar concept exists for public policies, as policy entrepreneurs likewise have to maneuver the policy conditions as they advance their preferred solutions to public problems.

The policy landscape can either be accommodative or non-accommodative, and that is the lesson that the proponents of marijuana legalization are learning, as Belizeans push back against the Cannabis and Industrial Hemp Control and Licensing Bill 2022, and demand a referendum to settle the matter.

From Ecosystems to Streams: Marijuana Legalization

Analogous to the role played by the entrepreneurial ecosystem as devised by economists and management experts, political scientists and public policy analysts likewise have identified various frameworks to aid in gauging whether or not a particular policy will make its way through the policy process successfully. The policy process includes six iterative steps: "(1) problem emergence, (2) agenda-setting (problem identification), (3) consideration of policy options, (3) decision-making, (5) implementation, and (6) evaluation."

Because all policy solutions begin with "a problem," policy entrepreneurs (i.e. policymakers, advocacy organizations, think tanks, special interest groups, lobbyists, and the like) actively keep an eye out for "windows of opportunity" within which they try to get their favored or preferred policy solution on the decision agenda. Given the fact that the decision agenda is where the problem and its accompanied solution are set to be acted on by the government, this is the coveted spot among competing policy entrepreneurs.

But how do policy entrepreneurs know when a window of opportunity has "opened?" And how do they know when it has "closed?"

John Kingdon's (1984) Multiple Streams Framework is one of several models that provide answers to those questions. Of course, as these things go, over the years Kingdon's model has benefited from advancement, including the contributions by the likes of Nikolaos Zahariadis (2003) and Isabel Flores (2017). Nevertheless, the core tenets remain unchanged. According to the Kingdon model, policy windows "open" when the problem, politics, and policy streams (as he calls them) are active and have converged.

Using the operationalization approach proposed by Zahariadis (2003) and Flores (2017) (henceforth, "the model"), PolicyScape360 examined the policy environment with respect to the idea of marijuana legalization in Belize. The quantitative results predict an "Unsuccessful" bid for "4:20" supporters. The rest of this article is dedicated to elaborating on the "why."

What's the Problem, Anyway?!

Let's begin here. Policy windows seldom open, and when they do, they hardly stay open for very long. These "windows" tend to open following a recent change in administration, especially when the energies post-General Elections are still high. They also open when there is a change in the "national mood" on a particular issue, or a new problem (or a new way of looking at an old problem) emerges.

The window, of course, can close as easily, if the problem supposedly being addressed is either already fixed or the crisis itself has passed or has otherwise been averted.

Based on the foregoing, the model shows that it is hard-pressed to still think of the November 2020 general elections as being "recent" enough. Moreover, the incumbent administration had spent a great deal of its newfound political capital on other unpopular policies such as the 10% salary cut for public officers and teachers.

While that issue too was not without its opposition by the directly affected parties, the (at the time) recent general elections had afforded the administration enough "capital" with the general public to let that policy somewhat slide. Can the government, however, rely on the "honeymoon" effect when it comes to marijuana legalization? Fact is that it has been almost two years since November 2020.

In terms of the national mood, the social partners--as expressed via their senate representatives--had remained apprehensive of the idea of legalization from the start. The recent Senate meeting attested to this fact, with the social partner senators voicing their concerns and lack of support for the Cannabis and Industrial Hemp Control and Licensing Bill 2022.

But the mood was possibly best articulated by Church Senator Hon. Alvin Benguche, who, on March 30th, said to the Senate:

"No matter how many consultations are held, insofar as the church is concerned this is not the direction in which we should be going at this time. [Especially] when we heard earlier from this morning that we now have a robust economy and the economy is growing and things are looking up and all the possibilities. I can agree with the government that things are looking up."

Benguche's words did not only signal that the "window," in his and the churches' view, had closed, but he also questioned if the problem even still existed.

The government, the policy entrepreneurs, in this case, had sold legalization, inter alia, as the solution to an economic problem. In answering a question on the speed with which the Government had been moving with the Bill, Minister of New Growth Industries Hon. Kareem Musa had said to the Belizean media:

"You have to understand that our administration came in on a mandate to rebound our economy. It's been a year. Some people will argue and say it's taking too long, because this is one of those industries where we can see significant value back to our economy, back to getting that 10% for our teachers and our public officers."

That interview was given in November 2021. Fast forward, however, to the recent budget debates, and we have the Prime Minister, via his budget speech, painting a far rosier picture:

"According to recent estimates by the IMF [International Monetary Fund], Belize’s economy expanded by 12.5 percent in 2021 relative to 2020. The SIB’s preliminary number is just below 10 percent. This impressive performance follows a 16.7 percent decline the year before when the country faced severe pandemic-related economic losses, marking one of the most significant GDP swings since independence and among service-based economies within this region. [...] According to the Central Bank, job opportunities improved amid pandemic-related disruptions and Government’s myriad efforts to drive up employment opportunities. The unemployment rate fell to 9.2 percent in September 2021. [...] I announced the policy decision to restore the 10 percent wage adjustment, which had become effective July 01 of last year. Wages will therefore be restored 2 years ahead of schedule. "

Listening carefully to Benguche's words, the sentiment, among other things, is that one of the chief problems to which this policy was attached has already been solved! Without the legalization of marijuana, the economy, according to the Prime Minister and his Cabinet colleagues, has been rebounding. Also, without legalization, even the 10% salary cut was reversed ahead of schedule. So, where's the economic problem that this controversial new-growth industry was supposed to solve?

When unemployment was hovering closer to 30% (under the pre-2020 definition), it was easier for the government to have defined an unemployment problem that requires an aggressive solution via the advent of a legitimate cannabis industry. However, with unemployment being reported (under a revised methodology as guided by the ILO) at 9.2% (on the surface even lower than 2019's pre-COVID 10.4%), then Benguche and his colleagues are expected to be more adamant in their opposition.

Of course, legalization was not exclusively sold as an economic panacea. It was likewise attached to social justice considerations, as well as a way to purge the shadow economy of cartel activity. Regarding the latter, Hon. Musa has reiterated, in an April 5th interview, the point that it would address the cartel problem:

"A release that the NEAB put out a couple of weeks ago said that we are going to create a narco-state. Now, like I said they are not in touch with what is going on on the ground especially in Belize City because we are importing marijuana, we are importing cannabis from Mexico and what is coming along with this illegal trade are guns, let's be real. The cartels are actually sending drugs and sending guns to our young men who are just 'killing up' one another over this plant. Imagine that. And so we are saying that as a government we want to implement more controls, more regulations."

Conversely, members of the National Evangelical Association of Belize (NEAB) argue that the opposite outcome is likely. NEAB officials recently told the media:

"Our government in knowing that we live in a human trafficking and drug trafficking regime where our banks have been derisked before because drug money has been found in it is now legalizing a cash-only industry. This is sending a direct signal to cartels that their dirty money is welcomed here in this industry to be washed."

Here, there are clearly different definitions of the cartel problem. Fundamentally, the group that gets their "definition" to win has the advantage. This point was well summarized by lmer Eric Schattschneide (1960):

"The group that successfully describes a problem will also be the one that defines the solutions to it, thereby prevailing in the policy debate."

Therefore, for the economic problem, the momentum from the "focus event" of the surging unemployment has been (at this time) dampened based on the government's own words. And as far as the black market is concerned, there is no consensus that legalization will cure Belize of cartel money. There are those who argue that it could, in fact, make it worse.

The Policy Feasibility

However, even if the stakeholders could agree on the problem, the policy solution of legalization would still need to be judged based on the evaluative criteria that weigh, inter alia, its legal and technical feasibilities. Similarly, it must consider the policy's level of value acceptability within the community, as well as the degree of resource adequacy.

Starting with legal feasibility, the small open nature of the Belizean economy forces the country to consider the impacts on the banking sector, particularly, as it pertains to international correspondent banking relationships (CBRs).

We have written on this matter here at PolicyScape360 before (see HERE). And more recently, The Reporter interviewed former Central Bank Governor Glenn Ysaguirre and Heritage Bank's Managing Director Steven Duncan. Both interviewees repeated the longstanding concern regarding the likelihood of legalization triggering another round of "derisking" by CBRs.

Duncan was asked if Belize could simply rely on non-USA banks, considering that it's the United States' penalties that most CBRs fear.

"Two of the three private-sector banks in Belize use the same bank as correspondent bank out of the United Kingdom," Duncan told The Reporter. "Because the US is our country’s largest trading partner, that bank in the UK must have relations with an American clearing bank to complete transactions. They cannot complete it on their own."

Closely connected to the legal feasibility, is the matter of technical feasibility. On this, Kingdon wrote:

"Advocates of a proposal must delve deeply into details and technicalities, gradually eliminating inconsistencies, attending to the feasibility of implementation, and specifying the actual mechanisms by which an idea would be brought into practical use."

The government's challenge here is that it allowed sufficient room for there have been fundamental questions raised about the government's ability to properly implement and enforce its legalization policy. A case in point is the point raised by NGO Senator Janelle Chanona who, in the Senate, questioned the age discrepancies between the current and previous laws aimed at easing restrictions.

"[There is the] need that you have to be 21 to get a [Cannabis Identification] Card but right now the law says it's decriminalized at age 18. So, for those three years is that a window that either needs to be closed or opened further?"

Chanona likewise touched on the risks to the financial sector:

"Today in terms of how hard we've worked to come as far as we have financially so they underscore their number one concern is that the industry would somehow pose some indirect or direct threat to our financial system. I know the minister has spoken about dealing with community entities, those that don't have correspondent banking relationships."

Here, Chanona is fundamentally asking how these community banks would work. Also inherent in the question is a concern as to how the government can be certain that there would not be cross-contamination, as at some point the cash parked in the community entities will have to enter the circulation in the wider economy, and ultimately find its way back to the commercial banks. This type of query demanded an elaborative response that would have alleviated these fears, by demonstrating a clear ring-fencing program to avoid such an outcome. In the absence of such explanations, however, the inconsistencies remain too conspicuous for the social partners to overlook.

Chanona also raised a point relevant to investor confidence:

"Conversation with the minister and his team in terms of if that [the financial system risks] came to pass in any way that there would be some pulling or some cease and desist of the industry. So ... then what is the clarity conveyed to investors if everything has to be shut down because of some crisis regarding the financial aspect. Then who bears losses of investors' risks?"

The NGO Senator's question rightfully alludes to whether or not the Government of Belize (GOB) would be exposed to lawsuits from investors if it is that the government must halt the industry to stave off any imminent financial sector threat. Will the government be forced to compensate investor losses?

There may be sensible and practical answers to these questions, but clearly, the pushback from the social partners signals that there have not been sufficient signs of the government following Kingdon's advice as it pertains to them delving "deeply into details and technicalities, gradually eliminating inconsistencies."

Within the policy stream, there's also the matter of society's values and the acceptability of a policy. For years, high school students have been made to parade through the streets of Belize for "Red Ribbon

Week" with signs saying things such as "Drug Free is the Way to Be" or "A Healthy Me is Drug Free." There was even the 2018 slogan: "Life is your journey. Travel Drug Free."

This message and the like have been promulgated throughout learning institutions and other guardians of society's values for decades. Entire generations of Belizeans have adopted these views. Therefore, a sharp change in policy has not given sufficient Belizeans time to reconcile the two dimensions of this debate.

The policy, therefore, does not appear to pass the social partners' assessment of its legal and technical feasibilities, and it does hold up against the country's traditional values.

Not Enough To Hold the "Window" Open

Now, we can look into the Politics Stream, however, at this stage, it is worth reminding that Kingdon's model underscores that only when all three streams (policy, problem, and politics) are active and converge can it be said that the Policy Window is "Open." As a result, the challenges facing the problem and policy streams alone are enough to signal that the window has "closed."

Within that backdrop, the call for a referendum ought not to be surprising, but rather an inevitability. Ideally, it would have been prudent for the call for the referendum to have been made by the government itself, as it would have certainly augmented its 'good will' with the people, thereby, replenishing its political capital.

As was stated at the start of this article, as is true of the entrepreneurial ecosystem's impact on MSMEs, public policies likewise rely on certain conditions to thrive. Of course, the government has the ability to use its authority to ram ahead with its preferred policy decisions, but it must be aware that in so doing it would burn up more of its political capital. It will, then, boil down to whether Cabinet deems such political cost as worth it.

In short, there is prudence in the administration acknowledging that the window is effectively closed, and it is being given an opportunity to rely on the referendum to breathe legitimacy into this process, even though referenda are not necessarily legally binding on GOB.

Candidly speaking, there are no guarantees as to which direction the final vote will go on a referendum. If GOB wins a free and fair majority "YES" vote, it can save some face, but it would also be wise to still address the technical and legal feasibilities. And considering the values element, even with a "Yes" vote on the referendum, a gradual approach to implementation would have great value.