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D.C. Council Prepares for Historic Move Towards Marijuana Legalization

By: Thursday October 30, 2014 7:16 am

The Council of the District of Columbia is set to make history as the first legislature in the country to pass a law legalizing, taxing, and regulating marijuana sales for adults. At 11:00 am the Council will hold their first public hearing on a proposed legalization law and I will be there testifying.

You can watch the hearing here, and my written testimony is attached below.

Marijuana sales are already legal in Colorado and Washington State but those laws were adopted via ballot initiative. While the voters of D.C. will have a chance to legalize marijuana possession by voting for Initiative 71, D.C. ballot law prevented the campaign from including tax and regulate provisions. So that task is left to the Council. With a new poll showing that 55 percent of D.C. likely voters want the Council to adopt a tax and regulate law if the Initiative 71 is approved, the Council is getting ready to fulfill the will of the electorate.

How the Council decides to craft the final version of this bill could have wide ranging implications. Most states don’t allow ballot initiatives, so there is a good chance this bill could end up serving as the model in states where the only path forward for reform is via the state legislature. It will be the first time the basic rules are written by professional legislatures instead of activist campaign that needs to focuse on language that sounds best to voters.

My written testimony:

To the members of the Council of the District of Columbia,

I’m Jon Walker, senior policy analyst at Firedoglake. I’m the author of After Legalization: Understanding the Future of Marijuana Policy, and I’m also a D.C. resident.

The D.C. Council has the unique chance to make history. It could be the first legislative body in the country to adopt a law approving the taxation and regulation of recreational marijuana use, and it could serve as a model for other states.

While I support marijuana legalization, I will leave it to others here today to make the arguments in favor of it. Instead, I want highlight six specific policy considerations the Council should keep in mind when drafting the final version of the legislation:

1. Keep in mind your power to shape the market and consumption habits – The rules and taxes the Council adopts can shape consumption habits in the region for decades to come. The Council could design policies to favor potent marijuana over weak marijuana, vaporizing over smoking, edibles over flowers. For example, the explosion in popularity of flavored vodka is in part the result of a decades old tax advantage that flavored spirits received.

2. Allow legalization of personal possession and home cultivation to move forward right away – There is little practical reason for delaying the main elements of Initiative 71. Ending the criminalization of personal use can exist without a regulated retail system. In Colorado, possession of up to an ounce of marijuana and limited home cultivation was legalized in December 2012, and it was just over a year later when the first retail shop opened. During that time, there were very few problems to speak of, but there was a significant drop in small marijuana arrests.

In addition, allowing home cultivation will give added reassurance that residents would still have a legal way to obtain marijuana in the event of possible future interference by federal agencies against the retail system. Data from Europe indicates that very few adults go through the hassle of growing their own marijuana when it can easily be obtained at retail locations; however, when home cultivation is the best legal option, a significant number take part.

Finally, Allowing home cultivation should potentially help the long term development of the D.C. marijuana industry. Just as laws allowing homebrewing eventually lead to the growth of craft brewing, home marijuana cultivation could play a similar role.

3. A small limit on non-resident purchases – The Council needs to balance two concerns. On one hand is the goal of eliminating the black market. On the other hand, the Council should aim to prevent the diversion of marijuana to neighboring states that haven’t legalized it, in accordance with the Cole memo. Banning non-residents from buying any marijuana may seem like it would help with the latter goal, but it would create huge potential for a grey market in which residents re-sell marijuana purchased legally. This black market could easily become large and organized enough that it would undermine that anti-diversion goal and other Cole memo priorities like preventing use by minors and revenue going to criminal organizations. The smartest course seems to be a middle ground that relies on placing a very small limit on what non-residents can buy.

Here are some numbers to keep in mind when choosing a limit. A joint contains roughly 0.5-1 grams

  • 1 gram – This tends to be the smallest unit of marijuana flower for sale in places where it is legal
  • 3.54 grams – An 1/8th of an ounce is commonly purchased for personal use in America
  • 5 grams – The limit on how much a person can buy at a coffeeshop in the Netherlands
  • 7.09 grams – Non-residents are only allowed to buy 1/4th an ounce of marijuana in Colorado
  • 10 grams – Marijuana possession under 10 grams was recently decriminalized in Maryland
  • 14.17 grams – Under half an ounce is considered simple possession in Virginia, a misdemeanor

4. Allow vertical integration – Vertical integration is allowed in Colorado’s marijuana industry but not in Washington State’s. I would consider it a mistake to ban it in D.C. If the Council is worried about competition, there are other ways to address that. Arguably, bans on vertical integration actually drove much of the market concentration in the beer industry.

Long-term, it is likely the entire country will eventually embrace marijuana legalization. Given D.C.’s size, its marijuana producers are likely going to remain small, making them eventually vulnerable to outside competition from growers in states where land and labor is cheaper. Allowing vertical integration from the start should hopefully allow the D.C. industry to better position themselves in the future as local craft options. It was only relatively recently, when states began allowing limited vertical integration in the beer market, that we began to see real growth in the microbrewing/brewpub industry.

5. Consider allowing private clubs or marijuana lounges – One issue in Colorado is tourists have no legal place to consume marijuana. This can result in public consumption, and it made marijuana edibles much more popular among tourists since they can be discreetly eaten. Edibles are not ideal for infrequent consumers. Consuming too much is more likely with edibles, since people can’t easily titrate their consumption the way they do with smoking or vaporizing.

Allowing the creation of on-premise private marijuana clubs or lounges would be a smart approach to give people a safe, controlled and highly regulated place to consume. Especially in D.C., this could really help advance the Cole memo goal of preventing diversion. People at these lounges could be limited to only purchasing as much as they consume while there. If the Council is worried about air quality in these establishments, it can require all marijuana be vaporized instead of smoked.

6. Maximum flexibility for regulators over rules, labeling, and taxes – Whenever a new industry is taking shape, things evolve fast. Add to that the changing legal issues surrounding marijuana, and we could see rules that need to be revised very quickly. Giving regulators maximum flexibility will probably be the best way to deal with the developing market, the political situation, legal issues and consumer behavior.

 

Poll Shows Legalization Initiative on Path to Victory in D.C.

By: Wednesday October 29, 2014 11:17 am

The American people want Congress to adopt this amendment.

All signs indicate the people of D.C. will vote in favor of legalizing marijuana next week. A new survey by Public Policy Polling for Washington City Paper and the Kojo Nnamdi Show found Initiative 71 leading with 52 percent of likely voters planning to vote for it and only 35 percent planning to vote against it. The remaining 13 percent are still undecided.

Initiative 71 would make it legal for adults 21 and over to possess up to two ounces of marijuana and grow a few plants in their own home. The measure doesn’t include provisions allowing for the regulated sale and tax of marijuana like we have seen in Colorado and Washington State, only because D.C.’s initiative law wouldn’t allow it.

The campaign’s hope is that a strong vote for the initiative will get the D.C. Council to adopt their own regulation law. So far it appears the Council is already preparing to go that route if the initiative wins. On Thursday the Council will hold its first hearing on a bill to create a system of licensed, taxed and regulated adult use marijuana stores.

A Marist poll from last month did find a much higher level of support with 65 percent of likely voters inclined to back the initiative and 33 percent opposed, but that poll pushed voters hard to make a decision. It included definite supporters and those leaning one way, so it had just two percent listed as truly undecided. Based on that it is probably safe to assume most of the undecided in this PPP poll will end up voting yes on Tuesday.

Which Pot Poll to Believe in Oregon?

By: Wednesday October 29, 2014 7:17 am

legalize marijuanaWe have two recent polls on the marijuana ballot initiative in Oregon, Measure 91, and they diverge significantly from each other.

One poll came out yesterday. It was conducted by Elway Research for The Oregonian and KGW.  It found the measure losing, with 44 percent of likely voters planning to vote yes and 46 percent planning to vote no.

The other poll was released by SurveyUSA  for KATU-TV last week. It found 48 percent of likely voters supporting Measure 91 and only 37 percent opposed.

There are three big reasons why I’m inclined to put significantly more stock in the SurveyUSA poll and doubt this Elway poll. The first has to do with issues about the Elway poll’s turnout model. According to the Oregonian the poll assumes 70 percent of the electorate will be over the age of 50. That seems unlikely based on past elections and is very important given how much support for legalization correlates with age. By comparison the SurveyUSA poll puts this age groups share at only 58 percent.

The second reason is past performance. Elway’s marijuana legalization poll of Washington State at this same time two years ago was off. It found Initiative 502 leading only 48 percent yes to 44 percent no, but it ended up winning 55.5 percent to 44.5 percent. By comparison, SuveryUSA’s final poll of Initiative 502 was very close to the final result.

Finally, the big reason to doubt the Elway poll is all the other polls so far. For example the poll for OPB and Fox 12 earlier this month found Measure 91 winning 52 percent yes to 41 percent no. That margin is effectively identical to the SuveryUSA poll. That is why when possible we try to look at the averaging of multiple polls because there is always the chance any one can be an outlier.

Of course in a week we will know which pollster is more accurate and if Measure 91 does lose I will re-evaluate my opinion of the pollsters involved. For now, though, I would put my bets on this SurveyUSA poll.

What Price Do You Want Legal Marijuana to Sell for?

By: Tuesday October 28, 2014 9:56 am

Mark Kleiman’s reserved endorsement of Oregon’s marijuana legalization initiative, Measure 91, has crystallized in my mind a question that I would like to see other policy experts, political leaders, and regular people answer. What specific price would you ideally want legal marijuana sold for?
dank marijuana.
If marijuana were fully legalized without any special taxes, consumer protections, labeling requirements, or regulation, the price could drop dramatically. Exactly how much it would retail for in such an unlikely scenario is hard to predict, but similar agricultural products can give us a range. On the high end, some of the most expensive and labor-intensive crops like vanilla bean and high quality white tea sell to consumers for around $7-20 per ounce. For a low end estimate, perhaps the most comparable crop is hops. Hops flowers often sell to small consumers for around $2.50 an ounce.

This means that after marijuana is fully legalized, the government has substantial direct and indirect power to set a price anywhere between a few hundred dollars an ounce to a few dollars an ounce.

The government can just give itself a monopoly over all legal marijuana sales and directly set a price, like Uruguay is planning to do. Or if marijuana is being sold by private businesses, the government could use taxes, license fees, and regulations to significantly adjust the price to consumers. While taxes are the most direct mechanism for adjusting price, regulations can play a big role. The frequency and types of product tests required by law add some real costs to production.

Like most consumer goods, a reduction in the price of marijuana will probably result in some increase in the amount purchased, but how this demand curve is actually shaped is still a matter of significant debate.

Deciding an ideal price for legal marijuana all depends on your priorities. Here are just some examples of several possible priorities with the likely impact on price they would have, with the highest prices at the top. The possible prices I list for each are purely educated guesses, simply designed to give readers a rough idea of the tradeoff — they could end up being significantly wrong.

1) Highest price possible that still reduces the black market - (possibly around $180 an ounce) – It seems this is Kleiman’s preferred choice. The goal would be to eliminate the black market but also keep prices high to reduce consumption.

I would like to see experts try to put an exact figure on this, because there is no one magic number at which the entire black market would instantly disappear. There remains a very small black market in almost everything from cheese to laundry detergent. It is more of a sliding scale based on many factors, so is the goal eliminating 97 percent of the black market, or would a price that eliminates 85 percent be good enough? In addition, if marijuana were also legalized in neighboring countries where it was subjected to a very low tax rate, the local price would potentially need to be dropped to stop the grey market smuggling of legal marijuana across the border.

2) The most government revenue possible(possibly around $120 an ounce) – The goal here is to soak from the market as much money as the government can get from it. This might result in a price higher or much lower than the first option, depending on the demand curve and how much of the black market remains at a given price. The argument for this option is that the tax revenue could be used for all sorts of other priorities which may have a much bigger positive impact on society than any change in marijuana consumption.

3) Maximize new jobs(possibly around $100 an ounce) – Taxes aren’t the only way to keep prices higher. Demanding frequent testing, substantial security measures and limiting the size of farms all make legal marijuana more expensive but also end up creating more jobs. The marijuana industry could be made artificially inefficient, localized, and diverse with the top goal of making it an indirect jobs program. This might end up creating a price similar to option two, but with much of the money going to workers and companies instead of tax payers.

4) Maximizing substitution for more dangerous drugs while discouraging overuse - (possibly around $60 an ounce) – There is some indication that people might substitute marijuana for more dangerous drugs for either medicinal or recreational reasons. A study found opioid deaths dropped significantly after states legalized medical marijuana. While it would be hard to determine, it is theoretically possible the optimum price for overall public health is between option one and the lowest price possible. The price would have to be low enough to encourage beneficial substitution while also high enough to discourage some users and still raise sufficient revenue for public health programs.

5) Whatever it costs to create extremely accurate information or maximum security(possibly around $50 an ounce) – The primary thing determining price could even be some goal separate from tax revenue or demand, like assuring the most accurate chemical labeling possible or super aggressive security measures. If the regulator burden was big enough, it could end up indirectly setting a high floor on the overall price. Under priorities like these the “ideal” price is whatever it costs for the industry to meet the goal.

6) The “fair” price relative to alcohol(possibly around $15 an ounce) – Polling shows most adults want to see marijuana taxed and regulated like alcohol. One could argue the “fair” thing to do is treat marijuana just like alcohol by subjecting it to the same relative tax rate and overall regulatory burden.

7) Let the market decide(possibly around $6 an ounce) - Several ideological arguments can be made for allowing the market to mainly decide the price by subjecting it to only basic regulations. Some people don’t think it is the government’s place to pick winners, make judgments about morality, or try to be a “nanny state.”

Some priorities can be combined easily while others are often mutually exclusive.

At the moment I’ve heard relatively few people even state their top priorities when it comes to the price of fully legal marijuana, and basically no one is coming up with concrete numbers. As more states and countries legalize marijuana, this is a question that deserves real attention.

Jon Walker is the author of After Legalization: Understanding the future of marijuana policy

Picture from Katheirne Hitt licensed under Creative Commons

Medical Marijuana Amendment Appears to Be in Trouble in Florida

By: Tuesday October 28, 2014 7:01 am

Not so sunny forecast for Amendment 2 in Florida

It is looking increasingly likely that Florida will not legalize medical marijuana this year. New polling confirms that Amendment 2, Use of Marijuana for Certain Medical Conditions, probably won’t get enough votes this November to be adopted.

The latest Gravis Marketing poll found 50 percent of likely voters plan to vote for the ballot measure, while 42 percent plan to vote against it. In any other state that would be a victory, but not in Florida.

Under Florida law, any amendment placed on the ballot needs to get 60 percent of the vote to be adopted. Even if all the undecided voters in this poll vote Yes, the measure would still be just short. While a significant majority of voters is likely to cast a ballot in favor of medical marijuana, it looks like it won’t hit the legal threshold.

If we had a sane political system this wouldn’t matter. After a majority of voters back some policy, you should reasonably expect their representatives in the state legislature would want to move to make it law. Unfortunately, sanity is a trait often lacking in our current politics, especially on issues of drug policy.

Jon Walker is the author of After Legalization: Understanding the future of marijuana policy


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