30 Mar 2013

Wash. Touts Credentials of Pot Consultant

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Green thumb? Check. Extensive knowledge of the black market? Check. Throw in impeccable academic credentials and decades of experience with government agencies, and you have Washington’s marijuana consultant — a team advising officials on all things pot as they develop rules for the state’s new industry in legal, heavily taxed marijuana.

The Washington Liquor Control Board introduced Massachusetts-based BOTEC Analysis Corp. as the presumptive winner of the consultant contract during a news conference Tuesday. The team is led by a University of California, Los Angeles, public policy professor and includes a former executive of the company that is the sole licensed supplier of medical marijuana in the Netherlands. It also includes researchers with the RAND Corp. who will help figure out how much marijuana state-licensed growers should produce.

“These are, by far, the top consultants available,” said Randy Simmons, who oversees the implementation of the legal weed law for the board. “We’re serious about doing this the right way.”

Washington and Colorado last year became the first states to pass laws legalizing the recreational use of marijuana and setting up systems of state-licensed growers, processors and retail stores where adults over 21 can walk in and buy up to an ounce of heavily taxed cannabis. Sales could begin at the end of the year.

The votes left state officials with a daunting task: figuring out how to build a huge pot industry from scratch. The state’s Liquor Control Board must determine how many growers and stores there should be, how much pot should be produced, how it should be packaged, and how it should be tested to ensure people don’t get sick.

The board is doing a lot of its own research, with buttoned-up bureaucrats traveling to grow operations in California and Colorado as well as within Washington state. But the consultant’s advice will also be important. The state is aiming to produce just enough marijuana to meet current demand: Producing too little would drive up prices and help the black market flourish, while producing too much could lead to excess pot being trafficked out of state.

BOTEC — it stands for “back of the envelope calculations” — is a 30-year-old think tank headed by Mark Kleiman, a UCLA public policy professor with a doctorate from Harvard University’s Kennedy School of Government. The firm has evaluated government programs and provided consulting relating to drug abuse, crime and public health. It studied the results of an effort to crack down on heroin dealers in Lynn, Mass., and in the early 1990s advised the Office of National Drug Control Policy on drug-demand reduction programs.

Kleiman has written several books on drug policy and crime, including “Marijuana Legalization: What Everyone Needs to Know,” and he has argued that states can’t legalize marijuana — federal officials would never stand for it.

“Pot dealers nationwide — and from Canada, for that matter — would flock to California to stock up,” he wrote in an opinion piece in the Los Angeles Times in 2010, when California was considering legalizing marijuana. “There’s no way on earth the federal government is going to tolerate that. Instead, we’d see massive federal busts of California growers and retail dealers, no matter how legal their activity was under state law.”

For that reason, some marijuana advocates questioned how committed his team would be to carrying out the will of the voters. But Alison Holcomb, the author of Washington’s new law, said the choice of a consultant who isn’t a pot cheerleader sent a message that the state is taking its responsibilities seriously.

That’s a crucial concern because state officials are trying to persuade the federal government not to sue to block the law from taking effect. Gov. Jay Inslee has said he stressed to U.S. Attorney General Eric Holder that Washington will have the best-regulated system possible, but the Justice Department still has not announced its intentions.

Steven Davenport, BOTEC’s managing director, said that with more than 30 people involved, the team comprises a wide range of opinions on marijuana legalization, but none is relevant to the task at hand: figuring out how it can best be accomplished, balancing the needs of a working marijuana distribution system with the interests of public health.

“We understand the significance and the size of the task in front of us,” Davenport said. “Our intent is to make sure the board does this correctly.”

Other team members include Michael Sautman, former CEO of Bedrocan International, the international affiliate of the only company licensed to produce medical marijuana for patients in the Netherlands; the company is overseen by the Dutch Ministry of Health, according to BOTEC’s bid for the contract.

Sautman “has consulted lawmakers and regulators in Canada, Israel and several U.S. states regarding how medical marijuana is produced and distributed in the Netherlands,” the bid reads.

Beau Kilmer, co-director of RAND’s Drug Policy Research Center, said RAND is already under contract with the White House’s Office of National Drug Control Policy to develop a new approach for estimating the number of marijuana users across the country and how much pot they consume. His group will build off that work to estimate use by county in Washington state, and that it could involve Internet-based surveys asking people to detail their cannabis use — to the extent of asking them to explain the size of their most recent joint, as compared with a photograph of a joint next to a credit card or ruler for scale.

“That’s going to be a challenge, but I’m excited to work on it,” Kilmer said.

The value of BOTEC’s contract has not been set, but it is expected to exceed $100,000. The losing bidders have 10 days to contest the award.

Source: Washington Post (DC)
Author: Gene Johnson, The Associated Press
Published: March 19, 2013
Copyright: 2013 Washington Post Company
Contact: [email protected]
Website: http://www.washingtonpost.com/

30 Mar 2013

House Bill Aims To Tax Marijuana Brand Names

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A House committee held a public hearing Friday on a measure that would tax marijuana brand names and trademarks likely to be introduced in the state of Washington when the sale of recreational marijuana starts at the end of the year.

The bill heard by the House Finance Committee calls for a tax of $3.60 per $1,000 of assessed value of “all trademarks, trade names, brand names, patents and copyrights related to marijuana.” It does not say how those values would be determined and instead says the Department of Revenue can adopt rules for determining those amounts.

In November, voters approved Initiative 502, which allows adults over age 21 to have up to an ounce of pot. The state is due to start issuing licenses to marijuana growers, processors and retail stores, with the marijuana taxed 25 percent at each stage.

Democratic Rep. Jeff Morris of Mount Vernon, the sponsor of the trademark bill, told the committee that Washington, along with Colorado, which also passed a legalization measure in the fall, could benefit as the new industry moves to register brand names or trade names.

“I think that this reflects the uniqueness of the situation,” Morris said. “What was the value of Marlboro as a trade name back when it was filed as a trade name or brand name?”

Under the bill, revenue from the tax would go into a special fund for agricultural research tied to health benefits.

During Friday’s hearing, Morris specifically cited research being done at Washington State University on creating plasma from wheat and making gluten-free wheat.

“It’s that type of research that I’m hoping this money would target,” he said.

Chris Mulick, director of state relations for WSU, testified that the university has concerns about the bill.

He said WSU currently receives $21 million a year to support agriculture research, and there are concerns that if the measure passes, the tax on brand names would supplant state funding.

Mulick also noted concerns surrounding the state’s efforts to persuade the federal government not to sue to block the law from taking effect. The U.S. Justice Department still has not announced its intentions.

“This is a resource that at this time remains highly uncertain,” Mulick said.

Morris said the tax is not meant to replace state funding of research.

A fiscal note done by the state Office of Financial Management says the amount of potential revenue from the tax is unknown for several reasons, including the difficulty estimating a value for a an industry that doesn’t yet exist, as well as uncertainty caused by the illegality of marijuana under federal law.

The measure is House Bill 1976.

Online: http://www.leg.wa.gov

Source: Associated Press (Wire)
Author: Rachel La Corte, The Associated Press
Published: March 22, 2013
Copyright: 2013 The Associated Press

30 Mar 2013

Colo. Hemp Legislation Would Launch Industry

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Colorado’s hemp-growing industry will kick off on a modest scale under state legislation expected to be introduced next week.

The bill sponsored by state Sen. Gail Schwartz, D-Snowmass Village, would enable farmers to register for 10-acre research-and-development plots to test the viability of different hemp varieties.

Hemp is genetically related to marijuana but contains little or no THC, the psychoactive substance in marijuana. The seeds and fibers of hemp have dozens of commercial uses in foods, cosmetics, textiles and building materials.

The passage of Amendment 64 last year legalized in Colorado the possession and cultivation of both marijuana and hemp.

However, growing hemp, as with marijuana, is still illegal under federal law. That’s one of the reasons that hemp backers are proposing to launch the industry on a relatively small scale.

Schwartz said Thursday at a hemp forum in Loveland that 10-acre R&D plots grown under state guidelines are less likely to attract federal law enforcement attention than bigger commercial farms.

The proposed legislation would not prohibit larger farms, but backers say it is unlikely that farmers would choose to start on a large scale.

“The reality of the situation is that hemp probably won’t be grown on a mass commercial level for a few years because the crop will still need to be processed in-state and it will take a while to build that infrastructure and market,” said Samantha Walsh, political director of the advocacy group Hemp Cleans.

The bill would direct the Colorado Department of Agriculture to establish rules for registration and crop testing.

Hemp-growing has been legal in Canada since 1998. The industry is expanding rapidly. In 2012, a record 52,000 acres were grown. Projections for this year are 75,000 acres.

Canadian farmers at the Thursday forum said the crop is resistant to drought and weeds, relatively easy to grow, and profitable compared to other mainstream crops.

Manitoba hemp scientist Anndrea Hermann said the Canadian crop recently has generated average profits of $255 per acre compared with $208 for corn, $201 for canola and $100 for wheat.

David Bronner, whose company Dr. Bronner’s Magic Soaps is a major buyer of hemp oil, said at the forum that Colorado’s efforts to establish an industry may help persuade the federal government to end its prohibition.

“A little civil disobedience in the mix would hasten the end of this charade,” he said.

Source: Denver Post (CO)
Author: Steve Raabe, The Denver Post
Published: March 22, 2013
Copyright: 2013 The Denver Post
Website: http://www.denverpost.com/
Contact: [email protected]

 

30 Mar 2013

Wall Street Sees Opportunity in Marijuana

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Amid the whir of fans and the glow of soft white light, workers tended to bright green seedlings sprouting in a giant greenhouse.

Located about an hour’s drive from Manhattan in the hills of northwestern New Jersey, the facility produces basil, chives, oregano and other herbs that are sold in grocery stores around New York City. But if Ken VandeVrede has his way the facility will one day be growing a much more valuable plant: marijuana.

VandeVrede is chief operating officer at Terra Tech, a hydroponic equipment maker based in Irvine. The small company wants to double the five-acre New Jersey greenhouse operation. The aim is one day to supply the exploding U.S. medical marijuana trade and to prepare in the event that recreational marijuana ever becomes legal nationwide.

“We can scale this thing very, very quickly,” said VandeVrede, clad in blue jeans and a pumpkin-colored sweater as he surveyed his indoor fields of produce and flowers. “When hemp and cannabis become legal, we’re ready to rock and roll.”

To do it, Terra Tech needs to raise $2 million. And like a number of small businesses in the burgeoning U.S. cannabis industry, it’s trying to enlist Wall Street’s help. Business owners have been pitching their ideas to potential investors, coming to New York in some cases to meet with would-be financiers.

Wall Street has good reason to smell potential profits.

Washington, D.C., and 18 states, including California, have already legalized medical marijuana; there are formal measures pending in 10 additional states, according to the National Cannabis Industry Assn.

Colorado and Washington legalized recreational marijuana use in November. In addition, a measure allowing “adult use” of pot has been proposed in Maryland, according to the association’s tally. Various bills to legalize marijuana and hemp have been proposed in Congress too.

Although pot remains contraband under federal law, some entrepreneurs see marijuana heading down the same path as Prohibition, which banned the manufacture, transportation and sale of alcohol from 1920 until it was repealed in 1933.

“More and more people see the inevitability,” said Brendan Kennedy, chief executive of the Seattle private equity firm Privateer Holdings, which targets cannabis-focused start-ups. “They see that the Berlin Wall of cannabis prohibition is going to come down.”

Privateer is raising $7 million to acquire small companies that have a hand in the trade but don’t grow or distribute marijuana. Its first acquisition: Leafly, a Yelp-style online rating site in Seattle for dispensaries and varying strains of marijuana.

With pot still federally outlawed, others are making similar bets — funding firms that supply equipment or ancillary services while steering clear of marijuana farming and sales.

Take Lazarus Investment Partners, a $60-million hedge fund in Denver, for example. One of Lazarus’ investments is in AeroGrow International Inc., a maker of hydroponic kitchen appliances geared toward growing herbs, lettuce and tomatoes.

Lazarus, which owns 15% of AeroGrow’s shares, has suggested that the company tweak its products to accommodate taller plants, including marijuana, said Justin Borus, the fund’s managing partner.

“We want to be selling the bluejeans to the gold miners,” Borus said. “We don’t want to take a bet on which state is going to get legalized and which dispensary is going to succeed, or [which] cannabis growers are going to be successful. We want to just make a bet on overall legalization.”

In California, MedBox, a West Hollywood maker of automated dispensing machines for doctors’ offices, pharmacies and pot dispensaries, is on the hunt for funding.

Vincent Mehdizadeh, MedBox’s founder, said the company is actively exploring raising $20 million in equity to boost staffing and fund research and development, acquisitions and marketing.

Mehdizadeh said he’s seen a “major spike” in interest from potential financiers looking to invest in the small company since Colorado and Washington legalized recreational pot use last year.

“Everybody’s loosening up a lot because they realize the momentum has shifted and the financial world is going to have to make room for this industry,” he said. “Wall Street and investment banks are going to have to come along for the ride, eventually.”

Derek Peterson, president and chief executive of Terra Tech, is working to get his company’s shares listed on a stock exchange by the end of the year. The company may try for NYSE MKT, which was formerly known as the American Stock Exchange and is geared toward smaller companies, or perhaps the Nasdaq Stock Market, he said.

“The stodgier Wall Street types are starting to realize there’s money to be made here,” said Peterson, who worked in wealth management at Wachovia Securities and Morgan Stanley Smith Barney.

The company has taken steps to get the word out to investors. It tapped Midtown Partners, a small New York boutique investment bank, to help it explore financing options as it planned the New Jersey greenhouse expansion. Terra Tech is merging with the farm’s owner, NB Plants, and retail gardening center and nursery. Both are owned by VandeVrede’s family.

Initially, the vast majority of Terra Tech’s revenue will come from cultivating fresh herbs and flowers from the New Jersey farm, with the rest coming from equipment sales. The idea is to first feed urban consumers’ growing appetite for pesticide-free produce, then add pot or hemp when the legal climate is right.

“There is this huge demand for organic food,” said Prakash Mandgi, Midtown Partners’ director of investment banking. “Marijuana cultivation, in my opinion, is a potential driver in the future, but it’s so tied to government rule and regulations…. Federally it’s illegal.”

Estimates for the marijuana industry’s size range widely, since much of the trade remains on the black market. Bloomberg Industries recently pegged it at $35 billion to $45 billion.

Still, Wall Street is by no means opening the floodgates of capital.

Companies in this space are still quite tiny, not to mention risky, compared with large corporations trading on the New York Stock Exchange or the Nasdaq.

Moreover, Wall Street firms face a significant disincentive to investing in the industry: federal law. Growing and distributing marijuana can still lead to raids by federal agents — not to mention prison time and huge fines.

Major banks have come under intense scrutiny by the federal government in recent years for violating laws aimed at preventing money-laundering. The British banking giant HSBC paid $1.9 billion to end a U.S. investigation into its role processing cash for drug cartels and customers in rogue nations.

Marijuana dispensary owners have complained of difficulty opening bank accounts, forcing them to operate in cash only.

“This is messy,” said Dan Richman, a former federal prosecutor who handled narcotics cases and now teaches at Columbia Law School in New York. “This might be complex politically. It’s not complex as a matter of federal criminal law.”

Investors in businesses involved in growing or distributing cannabis could face civil forfeiture actions to seize their investments or other assets, Richman said.

“I would think the prospectus would have to say: ‘The government might come and take all of your money and possibly go after you,’” Richman said.

Federal law may not deter all investors. After all, the government can choose what laws to strictly enforce, and it’s unclear how the federal government will ultimately treat legalized recreational pot in Colorado and Washington.

Alan Valdes, a floor trader on the New York Stock Exchange, expects some of Wall Street’s more adventurous investors to put up money for a project he’s involved with called Diego Pellicer Inc.

The business idea is to open a dozen Starbucks-like high-end shops for pot in Colorado and Washington. Valdes said he and his partners might begin tapping investors — wealthy individuals, family-run funds — later this year.

“These are more mavericks — these are gunslingers,” he said of potential investors. “The big houses are off the table right now.”

Source: Los Angeles Times (CA)
Author: Andrew Tangel, Los Angeles Times
Published: March 23, 2013
Copyright: 2013 Los Angeles Times
Contact: [email protected]
Website: http://www.latimes.com/

30 Mar 2013

On Pot Laws, Respect The States

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It may be surprising, but no state is required to have a law making possession of marijuana, or any drug, a crime. Therefore, any state can legalize some or all marijuana possession if it chooses. The federal government, if it chooses, can enforce the federal law against its possession and use, but it is up to each state to decide what to criminally prohibit, based on the 10th Amendment.

This basic insight has been lost in the public discussion about whether the initiatives legalizing possession of small amounts of marijuana passed by Colorado and Washington voters in November are preempted by federal law. The two states will soon finalize regulations to implement those initiatives, including how to tax and regulate marijuana.

U.S. Atty. Gen. Eric H. Holder Jr. told a recent meeting of state attorneys general that the Justice Department review of the initiatives was winding down, suggesting an imminent decision as to whether it intends to challenge the initiatives as being preempted by federal law.

This month, eight former heads of the Drug Enforcement Administration urged Holder to enjoin the new state laws. Peter Bensinger, DEA chief from 1976 to 1981, told the Associated Press: “This is a no-brainer. It is outrageous that a lawsuit hasn’t been filed.”

Is it outrageous? Or is it just an intelligent assessment of the legal landscape?

The preemption doctrine is based on the supremacy clause of Article VI of the Constitution, which makes federal law “the supreme law of the land” trumping conflicting state laws. The question, then, is whether there is a conflict between the federal government prohibiting small amounts of marijuana and some states not doing so.

There is not a conflict when one level of government prohibits something but another level of government does not. An easy illustration is that murder is a crime in every state, but, except for very specific circumstances, it is not a federal crime. No one would say that there is a conflict. Likewise, a state can decide that certain conduct does not violate state law even if it offends federal law. It is then for the federal government to decide how, if at all, it wants to enforce the federal law.

Several other states, including California, have laws making possession of up to an ounce of marijuana an infraction punishable by a fine, even though under federal law, it’s a misdemeanor punishable by up to one year in federal prison. Similarly, 17 states and Washington, D.C., have laws that allow possession of marijuana for medical purposes; there is no such federal exception. Although the federal government can enforce the stricter U.S. law in states that have decriminalized possession or have medical marijuana laws, it has never acted to have those state laws invalidated based on the preemption doctrine.

Simply put, no state has to have a law prohibiting marijuana, even though federal law does. And if a state does have such a ban but wants to repeal it in whole or in part, such as for possession for medical reasons or for small amounts, it may do so.

Because states could remove all criminal sanctions for marijuana, this more limited removal of some state sanctions cannot be preempted, claiming a conflict with federal law. It is true that Colorado and Washington go further than allowing possession of small amounts of marijuana under state law; their new laws also regulate and tax the sale of marijuana. But this actually helps achieve the federal objective of controlling marijuana compared to a state decriminalizing marijuana without regulating its distribution.

Beyond the legal arguments, there are policy reasons for the federal government to not interfere with the Colorado and Washington laws. An important feature of federalism is that states are empowered to serve as laboratories for experimentation with social policies. As the nation embarks on perhaps the most significant public debate about drug policy since President Nixon declared the war on drugs, Washington and Colorado’s experiment should be allowed to go forward. The country can then assess whether it succeeded or failed.

Let’s hope Holder’s response will be more nuanced and respectful of the states than that urged by the retired drug warriors.

Erwin Chemerinsky is dean of the UC Irvine School of Law. Allen Hopper is criminal justice and drug policy director of the ACLU of California.

Source: Los Angeles Times (CA)
Author: Erwin Chemerinsky and Allen Hopper
Published: March 27, 2013
Copyright: 2013 Los Angeles Times
Contact: [email protected]
Website: http://www.latimes.com/

27 Feb 2013

‘What Were They Smoking?’

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The federal government says there is no such thing as “medical” marijuana. Despite that, an increasing number of states have legalized the use of marijuana for medicinal purposes, and a couple, so far, have okayed recreational use of marijuana for adults.

In the medical context, doctors often prescribe marijuana to manage chronic pain, and those patients must register in a confidential patient database. Registration triggers issuance of registry identification cards so recipients avoid criminal liability. Because many such patients are in the workforce, however, employers need to be aware of existing medical marijuana laws and pending legislation in each state where they employ workers.

The states of Alaska, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Maine, Massachusetts, Michigan, Montana, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, and Washington currently legalize marijuana use for varying reasons. Washington and Colorado approved recreational marijuana use by adults, with regulations to monitor its possession, use and sale.

Expect more smoke. In 2013, Alabama, Illinois, Iowa, Kansas, New Hampshire, Maryland, North Carolina, Oklahoma, and West Virginia introduced bills to make marijuana use lawful. On February 21 2013, for instance, Maryland Democratic Delegate Curt Anderson introduced a bill to legalize and tax marijuana use by “over 21” adults. The titles of several of these proposed bills contain words like “compassionate use” and “compassion and care” that reveal or suggest empathy for individuals with chronic pain who, with marijuana, want to function and work with less or no pain.

Some existing and pending state laws place specific restrictions on the management of employees who are registered medical marijuana users. In other states, however, regulations state that “their” laws do not deprive businesses from maintaining a drug-free workplace. Still other states have yet to address application of their marijuana laws to the workplace while their regulations remain embryonic.

In California, Colorado, Michigan, Montana, Nevada, Oregon, and Washington, businesses need not currently accommodate employees who legally use marijuana for medicinal purposes. Washington’s statute, for example, says that employers may establish drug-free work policies, and nothing in it requires accommodating the medical use of marijuana. Others are not so clear, forcing employers to develop what sometimes must be “best guess” workplace policies to comply with “fog-filled” laws.

Marijuana use laws in Arizona, Connecticut, Delaware, Maine, and Rhode Island expressly forbid businesses from refusing to hire applicants and from disciplining and otherwise adversely affecting the employment of registered medical marijuana card holders based solely on that status. Arizona and Delaware extend that by forbidding businesses from refusing to hire applicants or disciplining employees on the basis of drug tests that reveal marijuana components or metabolites. There are exceptions to these rules where, for example, the employees are “impaired” by marijuana while on an employer’s property and/or during work hours. But in those states, employed medical marijuana card holders are not “impaired” simply because marijuana components or metabolites are “in” their systems. Even worse, there currently are no bright-line tests for marijuana “intoxication” comparable to those for alcohol intoxication. That means employers in disciplining “impaired” employees will have to rely on observations of an employee’s behavior to prove impairment and avoid liability if the employees file a charge or sue.

With the changing landscape of state regulation, businesses cannot rely on federal classification of marijuana as a Schedule I substance (meaning it has no currently accepted medical use and has high potential for abuse). Instead, the federal-state “tug of war” means that every employer must be on “high alert” to ever-broadening marijuana use state laws and regulations.

Employers also need to educate law-makers as to the practicalities of employing marijuana users so any legislation passed can and does avoid unintended, harsh, and perhaps dangerous workplace consequences. Here are examples of opportunities for workplace input. In Colorado, there is a task force to propose regulations for its new use laws. Massachusetts health officials held three public “listening sessions” during February to help draft the regulations for the medical marijuana law passed by voters in November 2012.

Employers also should ensure that their human resources professionals and management teams are knowledgeable about the marijuana laws in each state where they employ workers, including updating their policies.

As more and more states relax the use of marijuana, perhaps, in part, because tax revenues from the sale of marijuana can help solve budget woes, business owners will also need pain management.

* Barbra Diallo also contributed to the content of this article.

Source: Forbes Magazine (US)
Author: Roxanne Wilson, Contributor
Published: February 26, 2013
Copyright: 2013 Forbes Inc.
Contact: [email protected]
Website: http://www.forbes.com/

27 Feb 2013

Holder Promises Marijuana Verdict Coming ‘Soon’

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Attorney General Eric Holder promised Washington and Colorado state attorneys general on Tuesday that the Justice Department would issue its verdict “soon” on how it plans to treat the states’ recent moves to legalize marijuana.

“We’re still in the process of reviewing both of the initiatives that were passed,” said Holder, speaking at the National Association of Attorney General annual conference in Washington, D.C.

“You will hear soon. We’re in the last stages of that review and we’re trying to make a determination as to what the policy ramifications are going to be, what our international obligations are — there are a whole variety of things that go into this determination — but the people of [Colorado] and Washington deserve an answer and you will have one soon.”

Holder was responding to Colorado state attorney general John Suthers, who asked the nation’s top law enforcement official when the DOJ would be weighing in on the state laws that have been in effect for nearly two months.

The DOJ is charged with enforcing the federal prohibition on marijuana, and the state laws run counter to the long-existing ban, creating a debate over which law should be enforced and which law is most responsive to the will of the people.

Marijuana has been a centerpiece of the federal government’s “war on drugs,” aimed at cracking down on drug use in the United States. But the growing number of people who support the decriminalization of pot — which is still legally classified nationally in the same category as heroin — has some policymakers in Washington, D.C., rethinking their approach.

On Monday, nearly a dozen House Democrats introduced several bills that would decriminalize marijuana and remove the drug from the list of controlled substances, while requiring the federal government to regulate it and impose penalties on tax-evaders.

Holder has met or talked with both governors and attorneys general from Colorado and Washington during the DOJ’s review process, posing a series of questions to the state leaders, such as how they plan to prevent marijuana produced in the state from being trafficked to other states where the drug is not legal.

Source: Hill, The (US DC)
Author: Jordy Yager
Published: February 26, 2013
Copyright: 2013 The Hill
Website: http://www.hillnews.com/

26 Feb 2013

Will High Marijuana Taxes Encourage Black Markets?

posted in: Cannabis News | 0

Opponents of marijuana prohibition had one heck of a year in 2012, as voters in both Washington and Colorado passed ballot initiatives legalizing recreational use of the drug. One of the central arguments these folks used in their anti-prohibition campaign was to point out what an excellent revenue source a well-regulated and heavily taxed marijuana industry could be for states. And in a time when the federal and state governments are so hard up for revenue, the tax receipts legal marijuana could bring in, plus reduced strain on law enforcement, could be significant. A 2010 Cato Institute study of the issue estimated that if marijuana prohibition were ended nationwide, it would save state, local, and federal governments $8.7 billion annually in reduced law enforcement costs, and bring in another $8.7 billion in tax revenues.

But as it turns out, actually figuring out an appropriate marijuana tax policy is more complicated than it sounds. The cannabis industry is an easy target for legislatures to saddle with heavy taxes. In Washington State for instance, there is a 25% tax at three different stages of cannabis production: from the grower to the processor, from the processor to the retailer, and the retailer to the customer. These taxes are in addition to any other state or local sales taxes that might apply.

But that’s not all. The ultimate goal for opponents of marijuana prohibition is federal legalization. But any serious reform of federal marijuana policy will most certainly include a hefty federal excise tax as well in order to 1) help fund regulatory mechanisms; and 2) garner support from lawmakers who would not otherwise be disposed to reform. Oregon Representative Earl Blumenauer, for instance, has introduced marijuana reform legislation that would enact a 50% excise tax on production.

Proponents of legalization understand that healthy sales taxes are a great tool for furthering their cause. At a certain point, however, high taxes will encourage an illicit market. Where is the line? It’s difficult to know for sure, but if a 50% tax were enacted on the federal level, the marijuana industry in a state like Washington would face at least $1.92 in tax for every $1 of product sold. Whether this level of taxation is enough to encourage a black market is difficult to say.

The black market generally imposes its own costs — purveyors can charge a premium because of the risks they incur. But the regulatory burden for legal marijuana cultivation is high as well. In Colorado, for instance, where medical marijuana has been legal for more than a decade, growers are required to keep their operations under 24-7 video surveillance, procure criminal background checks for workers, and keep regulators alerted each and every time they move product. These are just a few of the regulations that can help to drive up the price of legal cannabis cultivation and encourage illicit markets to develop.

Another vexing tax problem facing Washington state lawmakers particularly is whether or not medical marijuana should be taxed at the same rates as pot consumed recreationally. As it stands, medical marijuana — just like other medications — is not taxed in Washington State. But lawmakers are concerned that having the same product be taxed in some instances while not taxed in others will create a black market whereby medical marijuana is sold illicitly to recreational consumers. One possible way to avoid this problem would be to tax all marijuana products the same, and then allow patients with a prescription to file for a refund.

For opponents of prohibition, taxes are the one of the best tools to convince citizens and governments of the benefits of a well-regulated marijuana industry. But the marijuana industry in America — in all its various stages of legality — is large and well-developed. Some even estimate it to be the single largest cash crop in the country. Given that fact, one can’t expect the black market to dissapear overnight if taxes and regulations make legal marijuana prohibitively expensive. And as legislators continue the process of setting up a tax and regulatory structure for this budding industry, it’s a reality they had better take into account.

Source: Time Magazine (US)
Author: Christopher Matthews
Published: February 25, 2013
Copyright: 2013 Time Inc.
Contact: [email protected]
Website: http://www.time.com/time/

26 Feb 2013

Give This Plant its Due: Legalize Hemp

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As states of a more liberal bent battle the federal government over the legalization of medical and even recreational marijuana, another cannabis battle has reemerged in the farm states. But if pot smoking raises troubling moral and safety questions, industrial hemp does not.

Activists have been struggling to legalize hemp for decades in the U.S., but only recently has the issue seemingly caught fire in Congress. Last week, Senate Minority Leader Mitch McConnell signed on to legislation that had for years been championed by Texas Rep. Ron Paul, the former GOP presidential contender, and has now been taken up by his son Rand, the Republican senator from Kentucky. It would remove hemp from the federal government’s list of Schedule 1 controlled substances and make it legal to cultivate the plant.

What’s so hep about hemp? Supporters tout it as a wonder fiber with dozens of potential uses that would find a lucrative market in the U.S. But while that may be an exaggeration — hemp is unlikely to become anything more than a specialty crop for a few hundred growers supplying goods to high-end food markets and low-end textile producers — there’s no denying that it’s a highly useful weed. The global market for hemp consists of some 25,000 products, according to a report by the Congressional Research Service, including fabric, paper, rope, auto parts and home furnishings. Hemp seed, meanwhile, is an alternative protein source used in a variety of food and beverages, and can be pressed to make body oils, cosmetics and pharmaceuticals.

Despite all this, it is illegal to grow hemp anywhere in the U.S. without permission from the Drug Enforcement Administration. There are currently no active federal licenses, so all hemp products produced here are made from imported material.

Based on its classification under the Controlled Substances Act, one might suspect that hemp provides a cheap high for pot fiends, but one would have to smoke an absurd amount of rope to catch a hemp buzz. The plant seems to have been deemed guilty by association with marijuana because both come from the same species, Cannabis sativa. But just as some mushrooms are magical while others are only good in a salad, not all varieties of cannabis are the same. The intoxicating chemical in marijuana, delta-9-tetrahydrocannabinol (THC), is heavily concentrated in the marijuana plant: anywhere from 10% to 30%. The THC content of hemp, by contrast, is less than 1%, and in the varieties legally cultivated in the European Union and Canada must be less than 0.3%.

Historically, hemp was an important crop in the U.S. before it was caught up in an anti-marijuana crusade in the 1930s. When the Controlled Substances Act was approved in 1970, it took the definition of marijuana from the Marihuana Tax Act of 1937, which considered all varieties of Cannabis sativa to be dangerous and narcotic. Despite court challenges, the DEA continues to insist that any plant containing THC, no matter how little, must be tightly controlled.

Legalization opponents, including the California Narcotics Officers Assn., argue that legalizing hemp would complicate the enforcement of laws against cultivating marijuana because the plants are almost indistinguishable from each other; marijuana growers, in other words, could easily conceal their plants in hemp fields. The association opposed a 2011 state bill to create pilot programs for hemp cultivation, which was approved by the Legislature but vetoed by Gov. Jerry Brown because hemp production violates federal law.

Of course, few sensible growers of marijuana would raise their plants in a hemp field. The two varieties would cross-pollinate, severely lowering the pot’s THC content and rendering it all but useless medicinally or as a recreational drug.

Reasonable people can disagree about whether marijuana should be legalized. But the dangers of growing industrial hemp are next to nonexistent. To date, nine states have approved its cultivation, but none has any active fields because of a refusal by the DEA to grant growing permits.

Enough. Hemp is a rare issue that Republicans and Democrats, and members of Congress from both rural and urban states, ought to be able to agree on. Legalize it.

Source: Los Angeles Times (CA)
Published: February 25, 2013
Copyright: 2013 Los Angeles Times
Contact: [email protected]
Website: http://www.latimes.com/

22 Feb 2013

Bill To Legalize Marijuana in Maine

posted in: Cannabis News | 0

Lawmakers from opposite ends of the political spectrum unveiled a bill Thursday that would give Mainers the chance to legalize marijuana for recreational use in a statewide referendum.

The bill, sponsored by Rep. Diane Russell, D-Portland, and co-sponsored by Rep. Aaron Libby, R-Waterboro, would make vast changes in Maine’s drug law, ranging from making possession of up to 2.5 ounces of pot legal to imposing a tax of $50 per ounce.

Russell and others argued during a press conference Thursday afternoon at the State House that laws against marijuana have enmeshed too many nonviolent offenders in the legal system and deprived government coffers of millions of dollars in revenue. Russell estimated that taxing and regulating marijuana could generate up to $13 million a year, three-quarters of which she proposes routing into the state’s General Fund, which supports the majority of state government including public education and most social services. The rest of the revenue would pay for implementation of the law, substance abuse treatment and prevention programs, and research on the effects of marijuana.

“We have retail establishments that grow and supply [medical] marijuana to responsible consumers,” said Russell, whose first effort to legalize marijuana failed in the Legislature two years ago. “We have proven here in Maine that this can be done for medicinal purposes and it’s now time to institute that same strict regulatory infrastructure for responsible adult recreational consumers.”

Russell proposes making it legal for individuals to grow as many as six plants if they are cultivated in a locked space. She also supports allowing the transfer of the drug from one adult to another without compensation, as long as they are at least 21 years old. The bill would make it illegal to smoke pot in public and calls on the Department of Administrative and Financial Services to license marijuana retail stores, cultivation facilities, product manufacturing facilities and testing facilities.

Libby said his support for the bill isn’t about promoting drug use, but rather about taking government regulation out of what he called a “morality issue.”

“I believe that ending marijuana prohibition is a true part of limited government,” said Libby. “As a fiscal conservative, I see great potential in the economic growth of removing these prohibitions.”

David Boyer, who is the Maine political director for a Washington D.C.-based group called the Marijuana Policy Project, argued that in many ways marijuana is far less harmful than alcohol.

“Marijuana is objectively far less harmful than alcohol for the consumer and for the broader community,” he said. “It is irrational to punish adults who simply prefer to use the less harmful substance. Law enforcement resources should be focused on preventing and responding to serious crimes rather than enforcing the failed policy of marijuana prohibition.”

Denison Gallaudet, a former superintendent in the Richmond area, also supports the bill because of the potential revenue that could be reaped by the state. But another reason for his support of the bill is that in his experience, drug laws don’t keep marijuana out of the hands of kids.

“We were confronted with the fact that our high school kids were smoking marijuana at twice the rate of smoking cigarettes,” said Gallaudet of his time as superintedent. “This is clearly a plan that is not working.”

If passed by the Legislature, “An Act to Tax and Regulate Marijuana” would result in a statewide referendum in November 2014.

Washington and Colorado approved ballot measures last year that legalized marijuana for recreational use. Bills to regulate and tax marijuana like alcohol also are expected to be debated this year in Hawaii, Massachusetts, New Hampshire, Pennsylvania and Vermont, according to the Marijuana Policy Project.

Source: Bangor Daily News (ME)
Author: Christopher Cousins, Bangor Daily News
Published: February 21, 2013
Copyright: 2013 Bangor Daily News Inc.
Website: http://www.bangornews.com/

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