2 Jul 2013

Legalizing MJ is Hard Regulating Pot is Harder

posted in: Cannabis News | 0

It’s not every day that a former Microsoft executive holds a press conference to announce his new venture into the exciting and profitable world of drug dealing. But that’s exactly what happened earlier this month when Jamen Shively, a former Microsoft corporate strategy manager, announced that he wants to create the equivalent of Starbucks in the newly legalized pot industry in Washington state.

All this is happening at the same time that the Washington State Liquor Control Board is looking to finalize rules on the new, legal marijuana industry. And one of the major debates right now among board members is how much they ought to prevent or encourage the kind of market consolidation in which a few firms dominate the whole industry.

As Chris Marr of the Liquor Control Board argued, “How do you prevent a Microsoft millionaire from getting this idea and deciding that — playing by the rules — they’re going to dominate the market?” And if that is the concern, what can economics inform us about how this new market should be set up?

To provide some background, voters in Washington state passed Initiative 502 last fall in a general ballot, creating a statewide legal market in pot. Unlike Colorado, which has passed a bill to expand its medical marijuana industry and make pot legally available to everyone, Washington is folding pot under regulations for the liquor industry. As such, the Washington Liquor Board has regulatory control over the new marijuana industry.

As with alcohol, a marijuana firm is classified as a producer, processor or retailer. The first question, therefore, is how aggressively regulators should try to check the market power of front-line sellers. As of now, if there is excess demand for licenses, which cost $1,000 each, they will be subject to lottery. Licenses can’t be traded in a secondary market, and it is possible that the regulators will cap the number of licenses per holder.

The law also requires regulation for public safety and public health. As with the tobacco industry, voters don’t want firms marketing and selling pot to underage users. And public health officials are concerned about companies marketing to “problem users” who would like to quit or reduce their usage but find themselves unable to.

If that’s the case, then perhaps having pot dealers with large market power is a good idea. Economists usually consider monopolists a problem because they produce too little of a product and charge too much for it, earning substantial profits. But that could be a good thing for the pot industry. Safe profit margins mean that a firm might be less likely to compete on price for every potential consumer — and also much more likely to follow the law.

Yet people involved with the Washington law have two main responses to this. The first is that firms with market power could go outside the market and use their extensive profits and influence to exert political power.

“The idea is to prevent the retail industry from becoming so large that they have enough wealth and power to roll over anyone trying to enforce, expand or update the public-health-focused rules that are designed to protect the public’s health and safety,” says Roger Roffman, a University of Washington professor and author of the forthcoming book “Marijuana Nation.”

Second, consolidated firms may that they themselves pose threats to public health. “If a firm has market power, the profits they get from selling above market costs means that they can have a bigger marketing department,” says UCLA public policy professor Mark Kleiman. “In the real world, spending here will increase their market share by creating additional problem users. This, combined with lobbying efforts that will rival the alcohol industry in terms of avoiding taxes and adjusting the rules, is a major problem.”

A third argument comes from University of Chicago economics professor E. Glen Weyl. He argues that “long-term players who have market power have an incentive to get people addicted. A monopolist, in particular, has a big incentive to advertise to get people addicted over the long-term, as they are sure to reap all those rewards.” If a marijuana firm has a monopoly, then the financial gains of turning someone into a heavy, problem user of a product (rather than a specific brand) will all go to that firm. A market with smaller, fragmented firms with greater turnover would be a check on this dynamic.

Both Weyl and Kleiman argue that Washington should consider bolder ideas to regulate the industry. Weyl suggests some sort of mandatory turnover policy to discourage firms from turning people into problem users. Another possibility, which Kleiman considers, is to create a state-run nonprofit retail firm that has no interest in creating problem users or expanding the market. (Given that pot is still illegal at the federal level, this isn’t likely to happen).

Market consolidation is also an issue when it comes to a firm’s vertical structure. Under Washington state law, if a firm is a retailer, it can’t be a producer as well as a processor. This is meant to fragment the vertical chain of production, and it contrasts with Colorado’s system, in which dealers are required to grow 70 percent of what they sell (as that is how the medical marijuana system works).

Another related economic issue is the location of pot retailers. The law in Washington, as currently structured, requires pot retailers to be at least 1,000 feet away from a school, day-care facility, playground, teen arcade game center, recreation center, transit center or library. Though this may sound minor, in practice it means that it will be very difficult to put pot retailers in dense population spaces. Retailers might be limited to industrial or largely depopulated areas.

That could force what economists who study spatial models of economies call the agglomeration model — as when certain kinds of restaurants all cluster together to create an area people go to for certain goods. As Weyl notes, “often ethnic restaurants cluster into neighborhoods so that people can find the best places, creating ethnic neighborhoods. Do we want a ‘pot town’ to grow up in our cities? Perhaps not, but that is the logical consequence of forcing dealers away from a convenience model.”

Kleiman thinks the main issue with regard to pot retailers’ ultimate location has more to do with advertising and discretion than anything else. “An alcoholic trying to quit drinking will pass by alcohol in bars, billboards and grocery stores. That person uses up a lot of emotional energy always having to say no.” Instead of focusing on 1,000 feet within certain buildings, the bigger issue Kleiman emphasizes is whether storefronts and signs aggressively advertise their product.

It’s important to get these issues right because they interact with the three background constraints on this new market. The first is the black market, while the second is the legal medical marijuana market. For some reason, the medical marijuana market won’t be taxed, while the new legal market will be taxed around 25 percent. (The black market is, of course, not taxed at all.)

Note that if the price goes too high, or if the location restrictions prove too inconvenient, pot consumers might just stick with medical marijuana or the black market. State lawmakers are currently trying to get the medical marijuana market folded under the same regulations that the Liquor Board is creating for the legal pot market, and Mark Kleiman notes that police may need to escalate crackdowns on illegal distribution as they legalize the market.

A third constraint is the federal government, which enforces laws that still make pot illegal. If legalization is seen as a disaster, it is possible that the federal government will move to shut down the process by preempting state law. But even if it doesn’t, background laws will probably hurt the scale and efficiency of pot retailers.

As Jack Finlaw explains, since marijuana is banned at the federal level, new pot retailers “often cannot conduct their businesses through banks. They also cannot deduct business expenses from their federal taxes.” It is possible the normal interactions between businesses that allow them to thrive — things like having a legal bank account — won’t be immediately available.

Markets are constructed through laws and regulations, and the market for pot that is being created in Washington state is no exception. The regulators see how the consolidated alcohol industry is able to avoid taxation and accountability and are determined to avoid these problems in the new pot industry. Thus this market may help economists understand a crucial role of regulations that has lapsed in recent decades: the role of government in curbing the excess power of the private sector.

Mike Konczal is a fellow at the Roosevelt Institute, where he focuses on financial regulation, inequality and unemployment. He writes a weekly column for Wonkblog.

Source: Washington Post (DC)
Author: Mike Konczal
Published: June 29, 2013
Copyright: 2013 Washington Post Company
Contact: [email protected]
Website: http://www.washingtonpost.com/

20 Jun 2013

Dream of ‘Cannabis Empire’ Raises Fears, Hackles

posted in: Cannabis News | 0

For the activists who led the effort to legalize recreational marijuana in Washington state last fall, Jamen Shively was one of their biggest fears: an aspiring pot profiteer whose unabashed dreams of building a cannabis empire might attract unwanted attention from the federal government or a backlash that could slow the marijuana reform movement across the country.

With visionary zeal, the 45-year-old former Microsoft manager described his plans to a conference room packed with reporters and supporters last month, saying he was tired of waiting for a green light from the Obama administration, which still hasn’t said how it will respond to the legalization of recreational pot in Washington and Colorado. Shively vowed to quickly raise $10 million and eventually build his company, Diego Pellicer, into an international pot powerhouse.

Though he promised a “cautious and measured” expansion, Shively’s approach nevertheless contrasted with that of state regulators who want to avoid repeating the national experience with Big Tobacco and Big Alcohol, industries that profited wildly on addiction and abuse. Mark Kleiman, who heads the team hired to be Washington’s official marijuana consultant, responded on his blog: “It was inevitable that the legalization of cannabis would attract a certain number of insensate greedheads to the industry.”

Shively’s ambitions – “We are Big Marijuana,” he proclaimed – don’t merely raise questions about what marijuana legalization might look like in the long run and whether large corporations will come to dominate. He also risks getting himself indicted.

The Justice Department has said while it doesn’t intend to prosecute sick people for using marijuana, it will go after those who try to get rich from commercial sales. It hasn’t said yet whether it will sue to block Washington and Colorado from licensing pot growers, processors and stores.

The legalization votes in Washington and Colorado have created a fever for cannabis-related investing, to an extent. Conferences have focused on the parameters for legally investing in “ancillary businesses” – those that supply equipment needed by pot grows, for example – without financing the actual production or distribution of marijuana, which remains illegal under federal law.

Shively isn’t skirting the edges of the nascent industry, but diving right in, in a way that few other entrepreneurs are. Some companies that make high-end marijuana-infused products, such as Colorado-based Dixie Elixirs, are planning to make their brands available in other states, but it’s not clear anyone else is taking steps to create a pot empire.

“Developing a national brand in an industry in which it is illegal to move the core product across state lines presents some serious logistical challenges,” said Betty Aldworth, deputy director of the National Cannabis Industry Association.

Diego Pellicer’s business plan estimates $120,000 of pure profit per month, per recreational pot store. Shively said he plans dozens of stores in Washington and Colorado.

At the May 30 news conference, Shively announced Diego’s first corporate deal – an arrangement with a Seattle medical marijuana company called the Northwest Patient Resource Center. He said Diego would be starting in the medical marijuana market in Washington and Colorado, and then transitioning some dispensaries to recreational pot stores once the states begin issuing licenses.

Shively said the arrangement was “not in violation of either federal or state law,” but it was troubling enough to one of the dispensary company owners that he’s walking away from the deal – and the company he helped found – because he fears it puts everyone involved at risk of federal prosecution.

“I’m not an activist. I’m just a businessman,” said the part-owner, Thomas Jun, a 42-year-old father of three. “I can’t afford to do any federal time.”

According to Shively, Diego Pellicer has acquired the option to buy Northwest Patient Resource Center, but does not actually own it. That’s what gives Diego Pellicer some protection and allows it to position itself for the time when more states legalize pot and Congress changes federal laws, he said. No marijuana will be moved interstate.

“We don’t touch cannabis. We don’t have ownership of cannabis,” he said. “It’s not a perfect insulation or buffer, but it’s the best possible mechanism that we can come up with.”

Through his lawyer, Douglas Hiatt, Jun provided the AP with internal company documents, including a draft of the $1.6 million agreement dated May 30. The deal directs monthly payments of up to $50,000 from Diego be used to “to further develop and enhance NWPRC’s customer locations and to otherwise grow its business as currently conducted.” Former federal prosecutors say that could be seen as a conspiracy to violate federal law.

“It certainly would make me nervous to be involved in anything like this,” said Laurie Levenson, a professor at Loyola Law School-Los Angeles and a former assistant U.S. attorney.

Shively called the draft provided to AP “an obsolete document,” but declined to provide further details. He also declined to discuss a $10,000 check he wrote to the dispensary company May 27.

The deal highlights the tension between the varying degrees of acceptance of marijuana by the states and the outright prohibition by the federal government, which makes banking and other business functions problematic. For example, beyond the growing and sale of marijuana constituting federal crimes, the movement of money related to marijuana sales likely constitutes money laundering.

Dixie Elixirs won’t be directly involved in the growing, processing or sale of pot in multiple states, said Tripp Keber, its managing director. Instead, it will license its technical know-how and recipes to people in Washington or elsewhere who want to produce products under the Dixie Elixirs brand – and try to avoid the attention of federal prosecutors by adhering to state laws.

“Big public federal indictments are going to do the industry a disservice,” Keber said.

If Shively’s model is endorsed by the regulators writing rules for Washington’s pot industry, “then we would be increasing the risk of intervention by the federal government,” said Alison Holcomb, the Seattle lawyer who drafted Washington’s law.

Shively said investors are advised that the company and those involved could face federal prosecution. A copy of Diego’s business plan includes 11 bullet points listing risks the company faces. None specifically suggests those involved could be prosecuted.

Source: Associated Press (Wire)
Author: Gene Johnson, Associated Press
Published: June 17, 2013
Copyright: 2013 The Associated Press

18 Jun 2013

Dream of ‘Cannabis Empire’ Raises Fears, Hackles

posted in: Cannabis News | 0

For the activists who led the effort to legalize recreational marijuana in Washington state last fall, Jamen Shively was one of their biggest fears: an aspiring pot profiteer whose unabashed dreams of building a cannabis empire might attract unwanted attention from the federal government or a backlash that could slow the marijuana reform movement across the country.

With visionary zeal, the 45-year-old former Microsoft manager described his plans to a conference room packed with reporters and supporters last month, saying he was tired of waiting for a green light from the Obama administration, which still hasn’t said how it will respond to the legalization of recreational pot in Washington and Colorado. Shively vowed to quickly raise $10 million and eventually build his company, Diego Pellicer, into an international pot powerhouse.

Though he promised a “cautious and measured” expansion, Shively’s approach nevertheless contrasted with that of state regulators who want to avoid repeating the national experience with Big Tobacco and Big Alcohol, industries that profited wildly on addiction and abuse. Mark Kleiman, who heads the team hired to be Washington’s official marijuana consultant, responded on his blog: “It was inevitable that the legalization of cannabis would attract a certain number of insensate greedheads to the industry.”

Shively’s ambitions – “We are Big Marijuana,” he proclaimed – don’t merely raise questions about what marijuana legalization might look like in the long run and whether large corporations will come to dominate. He also risks getting himself indicted.

The Justice Department has said while it doesn’t intend to prosecute sick people for using marijuana, it will go after those who try to get rich from commercial sales. It hasn’t said yet whether it will sue to block Washington and Colorado from licensing pot growers, processors and stores.

The legalization votes in Washington and Colorado have created a fever for cannabis-related investing, to an extent. Conferences have focused on the parameters for legally investing in “ancillary businesses” – those that supply equipment needed by pot grows, for example – without financing the actual production or distribution of marijuana, which remains illegal under federal law.

Shively isn’t skirting the edges of the nascent industry, but diving right in, in a way that few other entrepreneurs are. Some companies that make high-end marijuana-infused products, such as Colorado-based Dixie Elixirs, are planning to make their brands available in other states, but it’s not clear anyone else is taking steps to create a pot empire.

“Developing a national brand in an industry in which it is illegal to move the core product across state lines presents some serious logistical challenges,” said Betty Aldworth, deputy director of the National Cannabis Industry Association.

Diego Pellicer’s business plan estimates $120,000 of pure profit per month, per recreational pot store. Shively said he plans dozens of stores in Washington and Colorado.

At the May 30 news conference, Shively announced Diego’s first corporate deal – an arrangement with a Seattle medical marijuana company called the Northwest Patient Resource Center. He said Diego would be starting in the medical marijuana market in Washington and Colorado, and then transitioning some dispensaries to recreational pot stores once the states begin issuing licenses.

Shively said the arrangement was “not in violation of either federal or state law,” but it was troubling enough to one of the dispensary company owners that he’s walking away from the deal – and the company he helped found – because he fears it puts everyone involved at risk of federal prosecution.

“I’m not an activist. I’m just a businessman,” said the part-owner, Thomas Jun, a 42-year-old father of three. “I can’t afford to do any federal time.”

According to Shively, Diego Pellicer has acquired the option to buy Northwest Patient Resource Center, but does not actually own it. That’s what gives Diego Pellicer some protection and allows it to position itself for the time when more states legalize pot and Congress changes federal laws, he said. No marijuana will be moved interstate.

“We don’t touch cannabis. We don’t have ownership of cannabis,” he said. “It’s not a perfect insulation or buffer, but it’s the best possible mechanism that we can come up with.”

Through his lawyer, Douglas Hiatt, Jun provided the AP with internal company documents, including a draft of the $1.6 million agreement dated May 30. The deal directs monthly payments of up to $50,000 from Diego be used to “to further develop and enhance NWPRC’s customer locations and to otherwise grow its business as currently conducted.” Former federal prosecutors say that could be seen as a conspiracy to violate federal law.

“It certainly would make me nervous to be involved in anything like this,” said Laurie Levenson, a professor at Loyola Law School-Los Angeles and a former assistant U.S. attorney.

Shively called the draft provided to AP “an obsolete document,” but declined to provide further details. He also declined to discuss a $10,000 check he wrote to the dispensary company May 27.

The deal highlights the tension between the varying degrees of acceptance of marijuana by the states and the outright prohibition by the federal government, which makes banking and other business functions problematic. For example, beyond the growing and sale of marijuana constituting federal crimes, the movement of money related to marijuana sales likely constitutes money laundering.

Dixie Elixirs won’t be directly involved in the growing, processing or sale of pot in multiple states, said Tripp Keber, its managing director. Instead, it will license its technical know-how and recipes to people in Washington or elsewhere who want to produce products under the Dixie Elixirs brand – and try to avoid the attention of federal prosecutors by adhering to state laws.

“Big public federal indictments are going to do the industry a disservice,” Keber said.

If Shively’s model is endorsed by the regulators writing rules for Washington’s pot industry, “then we would be increasing the risk of intervention by the federal government,” said Alison Holcomb, the Seattle lawyer who drafted Washington’s law.

Shively said investors are advised that the company and those involved could face federal prosecution. A copy of Diego’s business plan includes 11 bullet points listing risks the company faces. None specifically suggests those involved could be prosecuted.

Source: Associated Press (Wire)
Author: Gene Johnson, Associated Press
Published: June 17, 2013
Copyright: 2013 The Associated Press

1 Jun 2013

Former Microsoft Manager Has Big Ideas About Pot

posted in: Cannabis News | 0

Former Microsoft manager Jamen Shively wants to create the first national brand of retail marijuana and to open pot trade with Mexico. Shively plans to announce that and more in a Thursday news conference he says will feature Vicente Fox, the former president of Mexico. “Let’s go big or go home,” Shively said. “We’re going to mint more millionaires than Microsoft with this business.”

He’s acquiring medical-marijuana dispensaries in Washington and Colorado, he said, and plans to become the leader in both the medical and adult-recreational pot markets. He sees the marijuana market as the only one of its size in which there does not exist a single established brand.

He and Fox plan to announce a proposal for regulating the trade of marijuana between the two countries, he said.

Some details of the trade agreement remain to be worked out, such as how to get around international rules forbidding legal pot, Shively admitted.

“I don’t know how exactly that would be done, but I know it’s been done in other industries,” he said.

Alison Holcomb, primary author of the state’s legal-marijuana law, said Shively faces a huge obstacle in the federal government’s prohibition of marijuana.

“Having a national chain of marijuana-based companies is not only explicitly counter to the existing prohibition, but also counter to the government’s expressed concern about business growing too large,” said Holcomb, drug-policy director for the ACLU of Washington.

But Shively, 45, likened the federal prohibition to the Berlin Wall and said it’s crumbling, with fewer defenders every day.

He also said he’s created a way to shield investors from federal regulators at the Securities and Exchange Commission.

And, he contends a venture this size is too big to operate recklessly and take risks — such as diverting legal pot to black markets — that the federal government is most concerned about.

“What we’re all about is making it extremely professional and having the highest quality and efficiencies,” he said.

What if the feds were to come after him?

Shively paraphrased Obi-Wan Kenobi. “He said ‘Darth, if you strike me down I will become more powerful than you can possibly imagine.’”

If she were Shively’s attorney, Holcomb said, she’d advise him to read the so-called Cole memorandum from the U.S. Department of Justice. It “explicitly mentioned a concern with operations involving thousands of plants and millions of dollars” and is evidence of the federal concern with big pot businesses.

Shively, though, seems undeterred. He has become almost evangelical about pot and its benefits, particularly for medical patients, such as his father who has prostate cancer.

“I’ve just fallen in love with the plant,” he said. “Especially in the medical realm I’ve gone from entrepreneur to advocate to activist, seriously.”

Shively worked at Microsoft six years, he said, and had the title of corporate strategy manager. He said he’s been smoking pot for a year and a half.

Source: Seattle Times (WA)
Author: Bob Young, Seattle Times Staff Reporter
Published: May 29, 2013
Copyright: 2013 The Seattle Times Company
Contact: [email protected]
Website: http://www.seattletimes.com/

24 May 2013

The Cannabis Is Out Of The Bag

posted in: Cannabis News | 0

This week, the Colorado General Assembly put the finishing touches on legislation aimed at taxing and regulating the commercial distribution of marijuana for recreational use.  The process has been haunted by the fear that the federal government will try to quash this momentous experiment in pharmacological tolerance — a fear magnified by the Obama administration’s continuing silence on the subject.

Six months after voters in Colorado and Washington made history by voting to legalize marijuana, Attorney General Eric Holder still has not said how the Justice Department plans to respond.  But if the feds are smart, they will not just refrain from interfering, they will work together with state officials to minimize smuggling of newly legal marijuana to jurisdictions that continue to treat it as contraband.  A federal crackdown can only make the situation worse — for prohibitionists as well as consumers.

Shutting down state-licensed pot stores probably would not be very hard.  A few well-placed letters threatening forfeiture and prosecution would do the trick for all but the bravest cannabis entrepreneurs.  But what then?

Under Amendment 64, the Colorado initiative, people 21 or older already are allowed to possess up to an ounce of marijuana, grow up to six plants for personal use and keep the produce of those plants ( potentially a lot more than an ounce ) on the premises where they are grown.  It is also legal to transfer up to an ounce “without remuneration” and to “assist” others in growing and consuming marijuana.

Put those provisions together, and you have permission for various cooperative arrangements that can serve as alternative sources of marijuana should the feds stop pot stores from operating.  The Denver Post reports that “an untold number” of cannabis collectives have formed in Colorado since Amendment 64 passed.

Washington’s initiative, I-502, does not allow home cultivation.  But UCLA drug policy expert Mark Kleiman, who is advising the Washington Liquor Control Board on how to regulate the cannabis industry, argues that collectives ostensibly organized to serve patients under that state’s medical marijuana law could fill the supply gap if pot stores never open.

It is also possible that Washington’s legislature would respond to federal meddling by letting people grow marijuana for personal use, because otherwise there would be no legal source.

With pot shops offering a decent selection at reasonable prices, these alternative suppliers will account for a tiny share of the marijuana market, just as home brewing accounts for a tiny share of the beer market.  But if federal drug warriors prevent those stores from operating, they will be confronted by myriad unregulated, small-scale growers, who will be a lot harder to identify, let alone control, than a few highly visible, state-licensed businesses.

The feds, who account for only 1 percent of marijuana arrests, simply do not have the manpower to go after all those growers.  Nor do they have the constitutional authority to demand assistance from state and local law enforcement agencies that no longer treat pot growing as a crime.

Given this reality, legal analyst Stuart Taylor argues in a recent Brookings Institution paper, the Obama administration and officials in Colorado and Washington should “hammer out clear, contractual cooperation agreements so that state-regulated marijuana businesses will know what they can and cannot safely do.” Such enforcement agreements, which are authorized by the Controlled Substances Act, would provide more security than a mere policy statement, although less than congressional legislation.

Taylor, who says he has no firm views on the merits of legalization, warns that “a federal crackdown would backfire by producing an atomized, anarchic, state-legalized but unregulated marijuana market that federal drug enforcers could neither contain nor force the states to contain.” Noting recent polls finding that 50 percent or more of Americans favor legalizing marijuana, he says the public debate over that issue would benefit from evidence generated by the experiments in Colorado and Washington.  That’s assuming the feds do not go on a senseless rampage through these laboratories of democracy.

Source: Odessa American (TX)
Copyright: 2013 Odessa American
Contact: [email protected]
Website: http://www.oaoa.com/
Author: Jacob Sullum

22 May 2013

How Much Will a Legal Marijuana Habit Cost You?

posted in: Cannabis News | 0

If you’re an average pot smoker in Colorado—paying average prices for average-quality marijuana—you can expect to spend around $650 on weed next year. A study conducted by the Colorado Futures Center at Colorado State University aimed to get to the bottom of how much the state can expect to collect in tax revenues now that marijuana is legal. By doing a little extra math, we can get a rough estimate for what the average marijuana enthusiast will spend annually as well.

Researchers estimate that in 2014, 642,772 Colorado residents, or about 12.5% of the state population, will take advantage of pot’s newly legal status. Analysts assumed each person would smoke or otherwise “use” 3.53 ounces of marijuana annually, for a total of 2,268,985 ounces (about 142,000 pounds) per year.

All of these numbers may be underestimated, because they’re based on data compiled when recreational marijuana was illegal. In fact, there are so many unknowns in the realm of legal non-medicinal pot that all of this math has a crude back-of-the-napkin quality to it. In any event, using the study’s numbers, the average marijuana enthusiast can expect to pay a retail price of $185 per ounce next year. Multiply that times 3.53 ounces—which no one can buy at once, mind you, because there’s a one-ounce purchase maximum for residents—and the total comes to $653 annually spent on pot.

How much the individual actually winds up spending on marijuana will depend on several factors, most obviously the quality (and price) of the pot and how much one smokes. Researchers used the crowdsourcing site PriceofWeed.com to get the $185-per-ounce figure. As of early April, an ounce of marijuana was averaging $206 on the black market, and because the price is expected to drop once pot is legal, the study landed on $185. If the smoker is opting for higher-quality, $300-per-ounce marijuana, his annual pot bill would top $1,000. That’s for someone smoking the average of 3.53 ounces per year. A heavy smoker who goes with $300-per-ounce pot and uses, say, half-an-ounce monthly could expect to drop $1,800 annually on his habit.

That may sound like a lot. But a pot-smoking habit is probably cheaper than a cigarette-smoking habit. Colorado is one of the cheaper states for cigarettes, but a pack still goes for around $5.19, according to one state-by-state price check compilation. So a one-pack-per-day habit—purchased one pack at a time, not by the carton—comes to $1,894 for a year.

Health officials say that once medical expenses and things like lost productivity due to the effects of smoking are incorporated, an addiction to cigarettes is far more costly than that. For that matter, plenty of arguments have been made that legalizing marijuana will result in increased usage and addiction, as well as higher rates of driving while stoned, so the costs to society outweigh any benefits that arise from approving the drug for recreational use.

Oh, and about the point of the Colorado State study, regarding tax revenues for the state? Researchers estimate that the 15% excise tax on wholesale marijuana would yield $21.7 million annually, which is far short of the $40 million annual target. To hit the target, marijuana would have to cost a lot more than the prices that have been estimated, or people in Colorado would have to buy a lot more marijuana than the forecasts project. Neither is likely to occur, the study states. “As competition forces growers and sellers to be more efficient, margins will erode and both wholesale cost and retail prices are forecast to fall,” the report reads. And instead of usage rising year after year, the study’s authors foresee a “decline in the rate of growth of consumption as the ‘wow’ factor erodes overtime and any marijuana tourism begins to decline, particularly if other states follow Colorado and Washington and legalize marijuana.”

Source: Time Magazine (US)
Author: Brad Tuttle
Published: May 20, 2013
Copyright: 2013 Time Inc.
Contact: [email protected]
Website: http://www.time.com/time/

2 May 2013

Marijuana Taxes Prove Sticking Point in Colorado

posted in: Cannabis News | 0

Marijuana as a potential tax bonanza has Colorado lawmakers wrestling with a question both sides say they don’t know how to answer: How much will people pay for legal weed?

The state House advanced a taxing measure Monday to levy a pot tax in excess of 25 percent, a reduction from the 30 percent rate lawmakers considered last week.

The proposal sparked a lively floor debate over the proper tax rate for a drug that’s never been taxed before. Democrats argued that voters want high pot taxes, and that consumers will gladly pay a premium for the assurances that would come from a regulated and legal drug supply.

“We need to responsibly tax it,” said the measure’s sponsor, Rep. Jonathan Singer, D-Longmont.

He predicted Colorado voters would happily sign off on marijuana taxes. Colorado law requires voters to approve new taxes.

Republicans argued against the taxes, though. They pointed out that Colorado voters have a history of rejecting tax hikes, even for popular public programs, and that the public’s desire for a marijuana windfall may not materialize unless the tax rate is lower.

“Taxation of marijuana is right, just, and proper. But we have make sure this passes,” said House Republican Leader Mark Waller.

Other Republicans noted that marijuana taxes would be in addition to hefty licensing and application fees to enter the business. The result, they feared, could be the retention of a black market for pot. The measure approved by voters last year allows not just retail pot sales, but also home marijuana growing, raising the specter of plentiful homegrown weed to compete with the taxed marijuana.

“The consensus has always been that the industry needs to pay for itself … but whether we like it or not, there’s already an entrenched black market in place,” said Rep. Dan Nordberg, R-Colorado Springs.

The tax debate came after a largely party-line vote on a separate marijuana bill to regulate how the newly legal drug can be grown, packaged and sold.

Among other things, that bill requires potency labels, serving-size limits on edible pot and purchasing limits for out-of-state buyers. The regulation bill also revives a marijuana blood-limit standard for drivers, a proposal that has failed four times in the Senate. The House vote Monday to revive the DUI standard renews the battle.

A third marijuana bill awaits action in the Senate. That measure includes less controversial pot regulations, such as a new crime of providing marijuana to people under 21.

Washington and Colorado, the only two states that have legalized pot for recreational use, are still awaiting federal response to the votes. Marijuana remains illegal under federal law, even for medical use.

Online:

Marijuana regulation bill: http://bit.ly/11RIeiY

Marijuana tax bill: http://bit.ly/12ekKlF


Source: Associated Press (Wire)
Author: Kristen Wyatt, Associated Press
Published: April 29, 2013
Copyright: 2013 The Associated Press

28 Apr 2013

Federal Law Trumps Colorado’s on Medical Marijuana

posted in: Cannabis News | 0

A severely disabled man fired because of his after-hours medical-marijuana use has no legal recourse because the drug remains banned under federal law, a Colorado court ruled Thursday.

A three-judge panel of the Colorado Court of Appeals upheld 2-1 the firing of Brandon Coats, a quadriplegic who has a prescription for the drug in a state that permits medical marijuana, saying he was not protected from dismissal under the Colorado Lawful Off-Duty Activities Statute.

The statute prohibits employers from dismissing employees who engage in legal activity outside of work, but says nothing about those who violate federal but not state law.

“Plaintiff contends that we must read ‘lawful activity’ to include activity that is prohibited by federal law, but not state law,” said Chief Judge Janice Davidson in the divided opinion. “However, while we agree that the general purpose of [the law] is to keep an employer’s proverbial nose out of an employee’s off-site hours business we can find no legislative intent to extend employment protection to those engaged in activities that violate federal law.”

The case illustrates the ongoing tension between federal and state authorities as voters and legislatures move to legalize medical marijuana in violation of the federal Controlled Substances Act.

The conflict is likely to intensify after the passage of ballot measures in November approving recreational marijuana for adults 21 and over in Colorado and Washington.

Brian Vicente, a Denver lawyer and marijuana- decriminalization advocate, called the court’s ruling “disappointing” given the recent moves by Colorado voters to legalize medical and recreational pot.

“I thought it was an inappropriate reliance on federal law — the court used that as an ‘out’ to avoid a ruling based on state law,” Mr. Vicente said.

At the same time, he said, the ruling underscores the need for the state legislature to update the Colorado Lawful Activities Statute, which originally was intended to protect tobacco smokers from being fired.

“We call it ‘the smokers’ rights statute,’ but the court’s take was that Colorado needs to revisit this statute to incorporate medical and now adult recreational use,” Mr. Vicente said.

The Colorado legislature is now considering a package of bills designed to create a regulatory framework for recreational marijuana as required by Amendment 64, which won 55 percent of the vote in November.

Nearly 109,000 Colorado residents hold valid medical-marijuana registry cards. The most common medical condition cited for treatment is “severe pain,” reported by 94 percent of cardholders, followed by “muscle spasms” at 16 percent, according to the state Department of Public Health and Environment.

Mr. Coats worked as a telephone operator for Dish Network until he was fired in 2010 for failing a drug test in violation of the company’s drug policy.

In his lawsuit, Mr. Coats said he never used marijuana at work and was never under the influence of the drug while on duty.

Source: Washington Times (DC)
Author: Valerie Richardson, The Washington Times
Published: April 25, 2013
Copyright: 2013 The Washington Times, LLC
Website: http://www.washtimes.com/
Contact: [email protected]

28 Apr 2013

Marijuana Repeal Considered In Colorado

posted in: Cannabis News | 0

” Marijuana legalization could be going back to the ballot in Colorado — a prospect that infuriated pot legalization activists Friday.

The proposal for a marijuana ballot measure came as the House started debate Friday evening on bills to regulate and tax pot. One bill would state how pot should be grown and sold, and the other would tax recreational marijuana more than 30 percent.

A draft bill floating around the Capitol late this week suggests that a new ballot question on pot taxes should repeal recreational pot in the state constitution if voters don’t approve 15 percent excise taxes on retail pot and a new 15 percent marijuana sales tax. Those would be in addition to regular state and local sales taxes.
Lawmakers have only a few days left to finish work deciding how to regulate the newly legal drug.

Marijuana activists immediately blasted the proposal as a backhanded effort to repeal the pot vote, in which 55 percent of Coloradans chose to flout federal drug law and declare pot legal in small amounts for adults over 21.

“It’s clear that the intent … is to prevent marijuana from being legal and being regulated and being controlled,” said Mason Tvert, who led last year’s campaign to add recreational pot to the state constitution, which has allowed medical marijuana since 2000.

Sen. Larry Crowder, R-Alamosa, said the whole purpose of legalizing recreational marijuana was to raise money for education and other programs. “So if there’s no money, we shouldn’t have marijuana,” Crowder said.

A volunteer group that has been critical of proposed marijuana regulations, Smart Colorado, praised the effort to get rid of recreational pot without approval of the taxes.

A spokesman for the group, Eric Anderson, said in a statement that marijuana activists “sold the ballot issue to Colorado voters as a way to pay for state priorities like education, but increasingly it’s looking like it could be a net drain on the state budget.”
The marijuana measure approved last year won more votes than President Barack Obama, who carried the state. The pot measure directed lawmakers to come back to the ballot with a tax proposal, with much of the money going to school construction. Because of Colorado’s Byzantine tax laws, the recreational pot taxes can’t be levied until voters again sign off on them.

In Washington state, the only other place where voters last year approved recreational pot, the ballot measure set taxes at 75 percent, settling the question. Both states are still waiting to find out whether the federal government plans to sue to block retail sales of the drug, set to begin next year.

The Colorado repeal effort wouldn’t apply to medical marijuana, which voters approved in 2000.

Lawmakers from both parties have expressed worry this year that Colorado won’t be able to afford to give recreational pot the kind of intense oversight and regulation many expect. From labeling and potency standards to making sure pot taxes are collected, the regulatory scheme under consideration in Colorado wouldn’t be cheap.

The state House started debate Friday on the tax ballot question. The repeal provision, if it appears, would come later, likely when the pot tax shifts to the Senate.

Some lawmakers said Friday they doubt lawmakers would send pot legalization back to voters this year.

“That’s almost like saying to voters, ‘Vote for this, or else,’” said Sen. Cheri Jahn, D-Wheat Ridge. “I don’t think you threaten voters like that. When over 55 percent of the people vote for something, I think we have to respect that.”

Marijuana repeal debate could dominate the Legislature’s closing days. The path to repeal would be uncertain, but some lawmakers say it’s only fair to ask again if voters are willing to legalize pot and risk federal intervention in exchange for a tax windfall projected to exceed $100 million a year.

“I think that’s why the people supported it,” Crowder said.

http://denver.cbslocal.com/2013/04/2…in-colorado-2/

27 Apr 2013

Pot Legalization Won’t Change Mission

posted in: Cannabis News | 0

The nation’s drug czar said Wednesday the legalization of marijuana in Washington state and Colorado won’t change his office’s mission of fighting the country’s drug problem by focusing on addiction treatment that will be available under the federal health overhaul.

Gil Kerlikowske, director of the National Drug Control Policy, released President Barack Obama’s 2013 strategy for fighting drug addiction Wednesday at the Johns Hopkins School of Medicine in Baltimore. The strategy includes a greater emphasis on using public health tools to battle addiction and diverting non-violent drug offenders into treatment instead of prisons.

“The legal issue of Washington and Colorado is really a question you have to go back to the Department of Justice,” Kerlikowske said when asked about the impact the two states would have on national drug policy.

The key to the administration’s efforts to deliver health care to drug addicts is in the federal health care overhaul because it will require insurance companies to cover treatment for substance abuse disorders, as they currently do for chronic diseases like diabetes. That change could lead to addiction treatment for several million more people.

“Treatment shouldn’t be a privilege limited to those who can afford it, but it’s a service available to all who need it,” Kerlikowske said.

The strategy outlined by Kerlikowske also supports a greater emphasis on criminal justice reforms that include drug courts and probation programs aimed at reducing incarceration rates. It also will include community-based policing programs designed to break the cycle of drug use, crime and incarceration while steering law enforcement resources to more serious offenses.

Kerlikowske, a former Seattle police chief, said addiction needs to be acknowledged as a disease that can be diagnosed and treated. He said the debate over the nation’s drug problem has become locked in a highly charged ideological debate in which there are no simple answers.

“We’re not going to solve it by drug legalization, and we’re certainly not in my career going to arrest our way out of this problem, either, and these two extreme approaches really aren’t guided by the experience, the compassion or the knowledge that’s needed,” Kerlikowske said.

Kerlikowske was joined by Dr. Nora Volkow, director of the National Institute on Drug Abuse; Anthony Batts, Baltimore’s police commissioner; and Dr. Eric Strain, director of the Center for Substance Abuse Treatment and Research at Johns Hopkins Bayview Medical Center.

Batts noted that Maryland lawmakers this year showed signs of becoming more lenient on laws relating to marijuana, and he expressed his opposition to leniency. The state Senate passed a bill to decriminalize the possession of less than 10 grams of marijuana, but the bill did not pass in the House of Delegates.

Batts said he views marijuana as a “starter drug.”

“I’m seeing more takeover robberies — people breaking into houses — surrounding marijuana, and it is dealing with younger people who are doing these takeover robberies that are resulting in murders, shootings and killings,” Batts said.

Newshawk: The GCW
Source: Associated Press (Wire)
Author: Brian Witte, The Associated Press
Published: April 24, 2013
Copyright: 2013 The Associated Press

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