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This Could be the Beginning of End of Pot Brownies in Colorado

By: Monday October 20, 2014 12:02 pm
edibles

We can expect to see similar regulator fights play out over edibles in every state that legalizes marijuana

The days of commercial pot brownies in Colorado could be numbered. Colorado officials might significantly limit the ways adults can consume marijuana orally. From the AP:

Colorado health officials want to ban many edible forms of marijuana, including brownies, cookies and most candies, limiting legal sales of pot-infused food to lozenges and some liquids.

The Colorado Department of Public Health and Environment told marijuana regulators that many forms of edible marijuana “are naturally attractive to children” and violate the law’s “requirement to prevent the marketing of marijuana products to children.”

It is worth nothing these recommendations are only the beginning of the process to potentially change the rules. They won’t necessarily be adopted.

The actual danger of anyone accidentally consuming a cannabis cookie not knowing it contained marijuana is extremely small, but it is a concern that has received a disproportionate amount of media attention and has become the number one thing to attack by opponents.

Given that marijuana consumers make up only a modest percentage of voters, the marginal increase in enjoyment a marijuana consumer can get from a cannabis cookie over a cannabis lozenge is extremely small, and the amount of negative media attention directed at edibles, this move is not surprising. I even predicted a push for recommendations exactly like this would eventual happen a year ago in my book, After Legalization.

It seems there are basically only two politically feasible paths forwards when it comes to how marijuana edibles are treated. Either most of the industry proactively works with regulators on aggressive packaging, shape, and warning rules that are completely idiot-proof — or we see a blanket ban on most forms of edibles.

This is worth watching because we can expect to see similar regulator fights play out in every state that legalizes marijuana.

Marijuana Legalization Just Keeps Getting More Popular in New Hampshire

By: Monday October 20, 2014 9:29 am

Support for legalizing marijuana continues to grow at a remarkable rate in New Hampshire. According to the latest WMUR Granite State Poll, 59 percent of adults in the state support legalizing small amounts of marijuana for personal use while only 35 percent oppose legalization.

That represents an impressive eight point increase in support for legalization since a year ago and an 11 point improvement since February 2013.

Interestingly the poll asked about marijuana policy in two ways. First it asked the yes or no question of whether people would support legalization, then it asked people what their preferred marijuana policy was among a range of options.

It found 52 percent would most want to see marijuana legalized, regulated, and taxed like alcohol. Another 19 percent would prefer to see marijuana decriminalized in the state while only 27 percent support New Hampshire’s current criminal penalties against marijuana use.

New Hampshire could play a big role in raising the profile of marijuana reform during the 2016 Presidential election as the most marijuana friendly of the early primary states. It will also likely be surrounded by states pushing reform at the time. The Vermont legislature is set to start seriously considering marijuana legalization next year, and legalization ballot measure campaigns are likely in Maine and Massachusetts during the next election cycle.

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

Just How Quickly Could Recreational Marijuana be for Sale in D.C.?

By: Monday October 20, 2014 6:52 am

“About four months” is theoretically the absolute fastest that stores could begin selling recreational marijuana in the District after the D.C. Council adopts new legislation, according to Rabbi Jeff Kahn. As the operator of Takoma Wellness Center, one of D.C.’s three functioning medical marijuana dispensaries, he is uniquely positioned to provide insight into this question.

The biggest mystery about Initiative 71, D.C.’s marijuana legalization initiative, is not whether voters will approve it, since it polls so well, but what will happen after they do. There are two big hurdles still in the way of adults being able to buy recreational marijuana in district. The first is Congress, which unfairly has power over all local legislation in D.C. and could abuse this to shut down any possible reform.

The second is how the D.C. Council will handle the issue of regulated marijuana. Due to limits placed on the D.C. ballot measure process, Initiative 71 would only legalize possession and limited home growing for adults. It was barred from containing tax and regulatory provisions like the 2012 ballot measures in Colorado and Washington State, or the legalization measures on the ballot this year in Alaska and Oregon.

Fortunately, the leading candidates for mayor, Democrat Muriel Bowser and Independent David Catania, both support legislation to tax and regulate marijuana. In addition, both see the District’s regulated medical marijuana system as a model for recreational marijuana. Catania even went so far as to say, “we actually have a pretty good regime in place for an easy transition to legalization through our medical marijuana initiative where we have dispensaries and cultivation centers.”

I spoke with several business leaders inside D.C.’s very small medical marijuana industry, and across the board they think it is a smart way forward. Rabbi Kahn told me, “The DC Medical Marijuana Program has become an unqualified success. It should serve as a model for all further DC marijuana legalization.” Michael Cuthriell, founder of the Metropolitan Wellness Center, also feels the medical marijuana system already has much of the basic regulatory foundation that is necessary, telling me, “The current infrastructure would make a transition to recreational marijuana much smoother.” One of the biggest problems, though, is scaling things up.

Like Colorado before it, D.C. has a well regulated medical marijuana system in place which it could rather easily expand into recreational marijuana. Yet unlike Colorado, the D.C. medical marijuana system is extremely small. There are only three dispensaries and three cultivation centers currently operating in the whole District which serve just 1,362 patients.

To put that in perspective, D.C. has a population of 646,449. If we assume only 5 percent of adults would choose to be regular customers, the local market would be roughly 25,000 people. That’s an 18-fold increase in the market — with sales restricted to only D.C. residents. If the marijuana stores were allowed serve any adults over 21, the market would be radically larger still. The D.C. metro area contains around 5.9 million people and as one of the top tourist destinations in the country it received some 19 million visitors last year.

Theoretically, if the council’s goal were to move as quickly as possible, Kahn pointed out they could pass emergency legislation right away to raise grow limits on the cultivation centers. That would make significantly more marijuana available in roughly four months, and at the same time the council could adopt permanent legislation letting dispensaries serve more people. That could create the additional supply and let dispensaries sell to the recreational market. Curthriell independently came to the same number, answering, “Around four months would be the absolute fastest possible, but it could take as long as 8-10 months.” He thinks even taking 10 months would be pretty good, given that it took Colorado just over a year to get their system up and running.

Corey Barnette from District Growers, one of the existing medical marijuana cultivation centers, had some slightly different expectations from his position. He believes if the council moved immediately to adopt legislation, “Those [currently operating] cultivators would be able to reach the demand of the marketplace if you gave them a six-to-nine month head start.”

That is, of course, looking at only the logistical limitations. One big hold up could be the council and the local regulators charged with writing the final rules. The council is going to need to not only balance the needs of the customers, the community and business leaders, but also trying to prevent Congress and/or federal agencies from stepping in to shut down the whole thing. After all, voters in the District first approved a medical marijuana initiative back in 1998, but Congress stepped in to prevent the District from actually adopting medical marijuana rules until 2010. Earlier this year, a federal appropriations bill containing a provision to block D.C. efforts to move forward with marijuana legalization actually passed in the House, but it died when the Senate didn’t take it up.

That said, Councilmember David Grosso (I) feels that if voters show overwhelming support for Initiative 71, the council will move quickly to respect the will of the electorate. They have already scheduled a joint committee hearing on his marijuana tax and regulate bill for October 30th in preparation of this, and he told me he thinks they could approve a bill as early as “the end of January or beginning of February.” If that happens and local regulators are able to fairly easily transition the medical marijuana market into the adult-use market, Grosso thinks recreational sales might be able to begin as soon as October or November of 2015. That is, if the whole process goes very smoothly.

Logistically, the absolute earliest that recreational marijuana could be on sale for adults in the nation’s capital is by spring. It’s more likely it will be roughly a year to a year and a half from now before we see the first legal recreational sales. But if Congress decides to abuse their power by interfering, they could block it for a decade or more.

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

Majority Back Marijuana Legalization in Delaware

By: Friday October 17, 2014 11:52 am

This is the first public poll to find majority support for marijuana legalization in Delaware

The number of states where a majority want to see marijuana legalized steadily continues to grow.

A new University of Delaware poll reported by the News Journal found 56 percent support legalizing marijuana use. Only 39 percent of adults in the state oppose legalization.

The only age group that continues to oppose legalization is senior citizens, so support is likely to increase as this demographic group is steadily replaced.

To my knowledge this is the first public poll to find majority support for marijuana legalization in Delaware that wasn’t paid for by an advocacy group. The Marijuana Policy Project paid for a poll at the beginning of the year and it found support for legalization at only 51 percent at that time.

Hopefully, the poll combined with the fact that marijuana was recently decriminalized in their neighboring state of Maryland will spur the state government to finally move towards reform. Currently, possession of any a very small amount of marijuana in the state is a misdemeanor and is punishable with up to six months in jail.

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

The Washington-Oregon Marijuana Tax Inversion Point

By: Friday October 17, 2014 10:34 am

View of the Columbia River Gorge on the Oregon/Washington state line

The fact Oregon will soon approve marijuana legalization creates an fascinating opportunity for marijuana policy wonks.

Having two relatively similar states with legal marijuana right next to each to other will provide an interest point of comparison and also will give us our first look at what cross-border legalization issues will arise in the future.

The current initiative in Oregon is similar to the law approved 2 years ago in Washington State, but there are several big policy difference that will have significant impact.

One of the most obvious at this point is how marijuana will be taxed in the two states. Initiative 91 in Oregon would place a flat $35 per ounce tax on marijuana flowers, but Washington taxes marijuana based on its price. There is a 25 percent excise tax from producer to a processor, 25 percent excise tax on processor to a retailer, and 25 percent excise tax on retailer to the customer. It is also subject to B&O (business and occupation) taxes and local sales taxes. According to Moody’s, this means marijuana is subject to effective tax rate of 44 percent in Washington.

So as long as marijuana is selling for around say $200 an ounce, that would mean taxes would be significantly lower in Oregon than in Washington; roughly $35 in Oregon compared to around $88 in Washington. Once stores finally open in Oregon this might encourage some Washington residents to cross the border to do their shopping. But depending on price, marijuana taxes could end up lower in Washington.

If legalization eventually allows serious capital investments in cost saving equipment and it benefits from economies of scale the price could drop dramatically. After all, similar labor intensive luxury agricultural products, like high quality white tea, sell for only about $10 an ounce. At that price even a 44 percent effective tax is only about $4 per ounce.

There is a tax inversion point between the two states at roughly $115. If you are paying that amount per ounce after taxes, the tax rate is basically the same on both sides of the border. If the final price is much more than that, Oregon has the tax advantage; but if it is lower than that, Washington would.

Seeing how one or both these states adjusts their rules and tax rates to deal with this dynamic could set a precedent for many other states going forward. As hopefully more states legalize marijuana issues like different tax rates in nearby localities could become a point of policy contention. We have already seen this emerge as an issue with the different cigarettes tax rates in neighboring states.

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


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