In the Weeds
November 25, 2013
Amelia Thomson-DeVeaux, The American Prospect
Can Colorado and Washington make legal marijuana work?
At midnight on December 6, 2012, when marijuana became legal in the state of Washington, a gaggle of celebrants gathered underneath Seattle’s Space Needle. Cheering and laughing, with no police in sight, they lit up and inhaled. “I feel like a kid in a candy store!” one man said. “It’s all becoming real now.”
The chilly reveling was documented by plenty of television cameras, but it was a little premature. Apart from the fact that what the revelers were doing was not covered under the new law—possession of marijuana is legal, but public consumption is not—the success of the state’s experiment was far from assured. Along with Colorado, where voters also approved legalization last November, Washington is attempting to do something unprecedented: set up a state system to regulate and sell a drug that is illegal in the United States. Marijuana is classified as more dangerous than cocaine, methamphetamines, and opium. States that have legalized marijuana for medical use have repeatedly clashed with federal authorities. But soon—on January 1, 2014, in Colorado and in June in Washington—all adults over 21 will be able to walk into a state-regulated store in Denver or Seattle and buy up to an ounce of pot.
The marijuana-reform movement has come a long way since its first advocacy group, the National Organization for the Reform of Marijuana Laws (NORML), was founded in 1970 with a grant from the Playboy Foundation. Medical marijuana is now legal in 20 states and the District of Columbia. (It’s also legal in Maryland, but only for research purposes.) Polls show that a majority of Americans favor legalization for recreational use as well. This summer, the Marijuana Policy Project, one of NORML’s allies, announced an ambitious goal: legalize marijuana in ten additional states, including California, by 2017. “Colorado and Washington changed everything,” says Ethan Nadelmann, the executive director of the Drug Policy Alliance, another leading advocate for drug-law reform. “For the first time, it made the option of legally regulated marijuana seem and feel real.”
Smooth implementation of Colorado’s and Washington’s new laws would help keep the movement’s momentum going. But the states are in a precarious position. In late August, the Department of Justice released a memo outlining its expectations for states that decide to legalize marijuana. Among them: prevent drugged driving, keep marijuana out of minors’ hands, curb interstate trafficking, and prevent state-regulated marijuana from providing revenue for gangs and cartels.
In one sense, the memo was encouraging for legalization advocates. “It suggests that sanity and reason and evidence-based policies are actually penetrating federal drug policy,” Nadelmann says. “It’s no longer about drug-law rhetoric and zero tolerance. It’s about coming up with pragmatic ways to deal with the reality of drugs in our society.”
But the memo also conveys an unspoken threat: If the states can’t figure out how to comply with federal demands, prosecutors will raid the state-run stores or sue the states in federal court.
The architects of Washington’s and Colorado’s systems face enormous pressure to get this right. Some of their challenges are a direct result of the federal classification of marijuana. Research is costly and difficult, which makes it nearly impossible, for instance, to know what amount of pot makes someone too stoned to drive safely. The larger problem is that policymakers aren’t clairvoyant; they simply don’t know what will happen when marijuana is sold legally for the first time since 1937. Prices need to be low enough to discourage the black market but high enough to keep marijuana from spreading to other states—so how should the drug be taxed? There’s a compelling argument for taxing medical-marijuana patients at lower rates—but how can you ensure that recreational users or racketeers won’t pose as patients to get lower prices? You can build flexibility into the system by allowing ordinary citizens to grow small amounts of marijuana for themselves—but then how do you keep this untaxed, unregulated product from creating a new black market?
Reformers are taking a calculated risk that hiccups in Washington and Colorado—and hiccups are inevitable—won’t be enough to quell their political momentum. A cascade of new laws legalizing marijuana is the movement’s best hope for forcing the federal government to end its long-standing prohibition on the drug. That’s why, says NORML executive director Allen St. Pierre, “the people behind these laws aren’t trying to pass reforms for perfection. They want to win. The goal is to tip that political scale, whether it’s by half an inch or a mile.” That might be a smart strategy for marijuana proponents nationally. But it leaves Colorado and Washington to serve as guinea pigs—and to deal with the consequences if their policies fail or the federal government changes its mind and decides to crack down.
When Mason Tvert and Brian Vicente, the co-directors of Colorado’s 2012 Campaign to Regulate Marijuana Like Alcohol, sat down to write a ballot initiative to legalize marijuana, they had a distinct advantage over reformers in other states: They didn’t have to start from scratch. Colorado voters were among the first to approve medical marijuana, in 2000. Nine years later, lawmakers enacted the nation’s first comprehensive regulatory system. Dispensaries were treated like other businesses—required to register with a newly formed regulation agency, pay sales taxes, and comply with labeling restrictions.
While states like California and Washington continued to struggle with confused, decentralized systems that invited federal interference, Colorado’s regulations led to benefits even skeptics couldn’t deny. Despite the federal government’s financial limitations on growers and sellers—because of arcane banking and tax regulations, marijuana businesses can’t open bank accounts, so they have to use cash for all transactions—retail sales soared, totaling in the hundreds of millions of dollars. Even some of the state’s most conservative pockets were profiting. Colorado Springs, home of the Christian-right Focus on the Family, collected nearly $1 million in medical-marijuana taxes between July 2011 and July 2012. In the same 12-month period, the state took in almost $6 million in taxes.
Tvert and Vicente had no reason to deviate from the state’s existing model as they developed what became Amendment 64, the ballot initiative that legalized marijuana. “It was like writing a paper on a similar subject,” says Tvert, who is also the communications director for the Marijuana Policy Project. “You get to borrow a bit from your past work.” Like the medical-marijuana code, Amendment 64 required retailers to grow at least 70 percent of their own product; by tracking marijuana from “seed to sale,” the thinking went, the state could better prevent it from landing in the hands of out-of-state traffickers and teens. The measure maintained the state’s personal growing provision for medical marijuana as well, allowing private citizens to grow up to six cannabis plants for personal use in a private, locked space. Permitting home growing is designed to be another safeguard against the black market, although critics say it could undermine the legally regulated system.
After Amendment 64 passed with 55 percent of the vote—more Coloradans voted for marijuana than for Obama—lawmakers added a number of additional regulations aimed at fending off federal interference. To curb drugged driving, they set a threshold for impairment: five nanograms of THC, the main psychoactive component in marijuana, per milliliter of blood. The five-nanogram limit rests on a shaky scientific foundation. Because researchers must clear mountains of red tape to gain the federal government’s permission to undertake clinical trials using marijuana, only a handful of studies of drugged driving have been conducted. It’s clear that being stoned does have an effect on driving skills, but setting a threshold for impairment is difficult; Colorado’s law is based on educated guesswork.
Marijuana proponents touted the new law as a moneymaker for the state during the 2012 campaign. To fulfill that promise, lawmakers have approved a 15 percent excise tax and a 10 percent sales tax on recreational marijuana sales, while medical marijuana would be taxed at current, lower rates. Those tax provisions are subject to voters’ approval this November—the last political hurdle for Amendment 64’s advocates.
Instead of replacing the medical-marijuana system, Colorado’s new recreational system will operate alongside it. To ensure an orderly transition, the proprietors of existing dispensaries will own the first stores allowed to sell marijuana to the general public. If the regulations work properly, businesses will be able to operate in a dual capacity, with medical-marijuana strains in one corner of the shop and recreational products in another. That’s important for medical-marijuana patients, who worry that recreational stores won’t carry the specialized strains they rely on to subdue nausea, ease pain, or control muscle spasms without getting them high.
Even though Colorado was better prepared than most states for a legal marijuana system, it’s still conducting an experiment with unpredictable results. One potential source of trouble stems from the personal growing provision, which limits citizens to six plants at a time but places no limit on the plants’ size. Under skilled cultivation, marijuana plants can grow up to eight feet tall. The six-plant allowance creates a loophole for enterprising growers who want to sell their product outside of Colorado or want to peddle their homegrown pot to neighbors for lower prices than the state-regulated stores can offer. It’s one example of just how complicated, even in a state like Colorado, regulating legalized marijuana is proving to be.
Washington approved medical marijuana even earlier than Colorado, in 1998. But its experience with the law has been more fraught. As in several other states—including California, the nation’s largest marijuana market—Washington’s regulatory system is loose and fractured. The state has no registry for patients, opening the door to fraud by making it virtually impossible to track which doctors are recommending marijuana and which patients are procuring it. Commercial sale of marijuana is not technically permitted, so growers and distributors operate under the radar. Enforcement is patchy, varying by county—one more reason Washington has been a frequent site of raids by the Drug Enforcement Administration. As recently as July, DEA agents raided four medical-marijuana cooperatives in western Washington and seized several thousand dollars’ worth of weed. The dispensaries were suspected of operating as fronts for recreational dealing.
Washington lawmakers have never passed a comprehensive framework for licensing and regulating medical marijuana. It’s not for lack of trying. In 2011, Democratic state Senator Jeanne Kohl-Welles introduced a bill to license medical-marijuana dispensaries and establish a patient registry. The bill passed in the legislature, but the governor, nervous about federal retaliation against state employees who facilitated the medical-marijuana system, gutted it. The scheme that resulted only made the law more confusing. Unimpressed by Washington’s feeble attempt at reform, federal prosecutors ordered more raids.
Even before the governor weakened the bill, Alison Holcomb, an attorney who headed up the ACLU of Washington’s marijuana-reform project, was thinking about full legalization. Before joining the ACLU, Holcomb had defended people accused of marijuana offenses, an experience that left her committed to ending the federal prohibition. In the summer of 2010, she began drafting a ballot initiative that would become known as I-502.
Polling showed that Washington voters were supportive of legal marijuana. But they also wanted a strong regulatory framework with significant state oversight—no surprise, given the problems they’d seen with medical marijuana. So Holcomb created an initiative designed to be politically palatable, to “meet Washington voters where they were.” Many of I-502’s provisions were written, like other marijuana-reform laws, to appeal to the “middle third” of voters—moderates who don’t care passionately about drug policy but are open to supporting legalization. Promising to tax and regulate marijuana like alcohol—a familiar model—has been especially effective in wooing this group. It certainly helped I-502 pass in Washington. But what makes for good politics doesn’t always lead to wise policies.
Under I-502, Washington’s system would operate much differently from Colorado’s. In an attempt to prevent large businesses from monopolizing the industry, Washington’s plan called for a three-tiered system regulated by the Liquor Control Board, with separate roles for growers, processors, and retailers. Personal cultivation was not permitted. To appeal to lawmakers and voters facing a sizable budget shortfall, I-502 imposed hefty taxes: 25 percent at each of the three levels of production, resulting in a 44 percent effective tax. To allay concerns about drugged driving, the law was stricter than Colorado’s: Anyone found driving with more than five nanograms of THC in his blood would automatically receive a DUI, with no opportunity to prove lack of impairment.
The ballot measure won with 56 percent of the vote, but not without loud protests from some growers, sellers, and users. “The folks who wrote I-502 put together a piece of shit that could pass,” says Douglas Hiatt, a Seattle-based defense lawyer who specializes in marijuana cases and who opposed I-502. “They wanted to win so bad they forgot to bring along the reform.”
One common complaint is that I-502 left Washington’s medical-marijuana system untouched. It’s up to state lawmakers, once again, to create an effective way to regulate medical marijuana. No consensus exists about what fixes to make. Some lawmakers, like Kohl-Welles, want to incorporate medical marijuana into the new recreational framework; others are pushing to eliminate medical-marijuana laws entirely and let patients rely on the recreational market. If that happens, medical users could be priced out. “They don’t use an ounce,” Hiatt notes. “They use pounds of marijuana. They bake it and eat it and put it into oil. The use is very, very different.”
Proponents of medical marijuana say any system that regulates marijuana for recreational use needs to carve out a niche market for medical users as well. “Patients want to cultivate strains that work well for their condition and have them be affordable and of consistent quality,” says Kris Hermes, a spokesperson for Americans for Safe Access, a national group that promotes access to medical marijuana.
The fate of medical marijuana isn’t the only major source of uncertainty. Washington’s taxes could prove too high, sending would-be legal users back to the black market and giving the cartels an opening to enter the market. On the other hand, if the state lowers taxes and prices fall too low, marijuana will flow over the border into other states. If Washington can’t find a sweet spot for taxing recreational users, it will risk crossing one of the federal government’s red lines. Analysts like Beau Kilmer, co-director of the RAND Drug Policy Research Center, are concerned about whether Washington’s or Colorado’s laws allow lawmakers enough leeway to make necessary adjustments. “If things are set in stone and then you want to change them, it’ll be difficult,” Kilmer says. “It’s crucial to build in some flexibility. Nobody is going to get this right the first or even the second time.”
Marijuana will likely be legal in several more states before it’s clear how well the experiments in Colorado and Washington are working. Legalization advocates are moving on to new battlegrounds. They expect ballot initiatives to go before Oregon and Alaska voters in November 2014, and California won’t be far behind. Maine or Rhode Island could soon become the first state to legalize marijuana through its legislature.
The new systems will vary state to state, but they’re likely to have a few basic elements in common. Because lawmakers and reformers want to sell the laws as revenue-generators, they’ll have substantial excise taxes. To draw in entrepreneurs from the existing medical market, they will be for-profit. And in order to reassure lawmakers and voters alike, they will be built around the “commonsense” concept that sold Amendment 64 and I-502: Marijuana should be taxed and regulated like alcohol.
While this approach might make good politics, drug-policy experts say that privatizing the legal marijuana market could have troubling long-term consequences. “The Colorado and Washington initiatives were designed to look like something that was familiar to voters: alcohol. But that’s a remarkably lousy system,” says Mark Kleiman, a social scientist and drug-policy analyst at the University of California, Los Angeles. “Alcohol companies don’t make money selling to responsible drinkers. If you work for Budweiser, your business is drunks. So you’ve got an interest that’s flatly contrary to the public interest. Why would we want another system where people become millionaires by profiting from drug abuse?”
Only a nonprofit model or state monopoly, Kleiman says, can provide the production and price controls that a legal marijuana system needs. But those models are difficult, if not impossible, to sell politically. As long as marijuana policy is decided by ballot initiatives, advocates will have the unenviable task of balancing voters’ anxieties with the priorities set forth by the Department of Justice. And once they pass a law, the states will continue to grapple, like Washington and Colorado, with how to keep the federal government at bay. The instructions that came down in August aren’t the law. A change of leadership in the department, or the election of a new president with a less generous attitude toward pot, could usher in a new wave of raids and punitive policies.
Despite the uncertainties, with each state-level victory, the country inches closer to ending marijuana’s prohibition. What unfolds in Colorado and Washington over the next year will tell lawmakers and reformers in other states a great deal about what works and what doesn’t. “There’s a lot at stake,” says Colorado’s Brian Vicente. “We need to demonstrate to the federal government that we are taking this seriously. But it’s also exciting. When the stores open, we can demonstrate that the sky hasn’t fallen, that this is producing tax revenue, and that the voters’ will is enacted.”