Semi-legal marijuana in Colorado and Washington: what comes next?
By Jonathan P. Caulkins, Angela Hawken, and Mark A.R. Kleiman
As officials in Washington State and Colorado try to decide how to implement the marijuana-legalization laws passed by their voters last month, officials in Washington, DC, are trying to figure out how to respond. Below, a quick guide to what’s at stake.
WHAT DO THE WASHINGTON AND COLORADO LAWS SAY?
Lots of crucial details remain to be determined, but in outline:
In both states, adults may — according to state but not federal law — possess limited amounts of marijuana, effective immediately.
In both states, there are to be licensed (and taxed) growers and sellers, under rules to take effect later this year.
Sales to minors and possession by minors remain illegal.
Colorado, but not Washington, now allows anyone person over the age of 21 to grow up to six marijuana plants (no more than three of them in the flowering stage) in any “enclosed, locked space,” and to store the marijuana so produced at the growing location. That marijuana can be given away (up to an ounce at a time), but not sold.
HOW MUCH OF THIS CAN THE FEDERAL GOVERNMENT PREVENT?
Paradoxically, the regulated activity permitted by these laws is easy to stop, but the unregulated activity is hard to stop.
Although everything allowed by the new state laws remains forbidden by federal law, if thousands of Coloradans start growing six pot plants each in their basements there wouldn’t be enough DEA agents to ferret them out. The same applies to possession for personal use.
On the other hand, the federal government has ample legal authority to shut down the proposed systems of state-licensed production and sale. Once someone formally applies to Colorado or Washington for permission to commit what remains a federal felony, a federal court can enjoin that person from doing any such thing, and such orders are easily enforced. So the federal government could make it impossible to act as a licensed grower or seller in either state.
Moreover, it could do so at any time. The lists of license-holders will always be available, and at any point they could be enjoined from continuing to act under those licenses. That creates a “wait-and-see” option unusual in law enforcement situations; in general, an illicit activity becomes harder to suppress the larger it is and the longer it has been established.
WHAT IMPACT WILL THE LAWS HAVE ON DRUG ABUSE?
It is possible that removing the state-level legal liability for possession and use of marijuana will increase demand, but there is little historical evidence from other jurisdictions that changing user penalties much affects consumption patterns.
There is no historical evidence concerning how legal production and sale might influence consumption, for the simple reason that no modern jurisdiction has ever allowed large-scale commercial production. But commercialization might matter more than mere legality of use. It could affect consumption by making drugs easier to get, by making them cheaper, by improving quality and reliability as perceived by consumers, and by changing attitudes: both consumer attitudes toward the drugs and the attitudes of others about those who use drugs. How great the impacts would be remains to be seen; it would depend in part on yet-to-be-determined details of the Colorado and Washington systems.
Washington’s legislation is designed to keep the price of legally-sold marijuana about the same as the current price of illegal marijuana. Colorado’s system might allow substantially lower prices. Falling prices would be expected to have a significant impact on consumption, especially among very heavy users and users with limited disposable income: the poor and the young.
WHAT EFFECT WILL THE LAWS HAVE ON DRUG TRAFFICKING?
If the laws affect Mexican drug trafficking organizations at all, the impact will be to deprive them of some, but not the bulk, of their revenues. Transnational drug trafficking organizations currently profiting from smuggling marijuana into the US or organizing its production here cannot gain from increased competition.
The open question is how much, if any, revenue they would lose from either falling prices or reduced market share. The oft-cited figure that the big Mexican drug trafficking groups derive 60% of their drug-export revenue from marijuana trafficking has been thoroughly debunked; the true figure is closer to 25%, and that doesn’t count their ill-gotten gains from domestic Mexican drug dealing or from extortion, kidnapping, and theft. So don’t expect Los Zetas to go out of business, whatever happens in Colorado.
Legal marijuana in Washington State is likely to be too expensive to compete on the national market. But prices in Colorado might be low enough to make legal cannabis from Colorado retailers competitive with illicit sellers of wholesale cannabis as a supply for marijuana dealers in other states. To take advantage of that opportunity, out-of-state dealers could organize groups of “smurfs” to buy one ounce each at multiple retail outlets; a provision of the Colorado law forbids the state from collecting the sort of information about buyers that might discourage smurfing. Marijuana prices might fall substantially nationwide, with harmful impacts on drug abuse but beneficial impacts on international trafficking. (The state government could even gain revenue if Colorado became a national source of marijuana.)
The other wild card in the deck is the Colorado “home-grow” provision. Marijuana producers in Colorado will be able to grow the plant without any risk of enforcement action by the state, and also without any registration requirement or taxation, as long as they grow no more than three flowering plants and three plants not yet in flower at any given location. By developing networks of grow locations each below the legal limit, entrepreneurs could create large-scale production operations with a significant cost advantage over states where growing must be concealed from state and local law enforcement agencies.
Only time will tell whether Colorado “home-grown” could compete with California and Canada in the national and international market for high-potency cannabis or with Mexico in the market for “commercial-grade” cannabis. But the risks imposed by local law enforcement, and the costs of concealment to avoid those risks, constitute such a large share of the costs of illegal marijuana growing that avoiding those costs would constitute a very great competitive advantage, and illicit enterprise has proven highly adaptable to changing conditions.
IS THERE A BASIS FOR A BARGAIN?
Maybe. Federal and state authorities share an interest in preventing the development of large interstate sales from Colorado and Washington, and the whole country might gain from learning about the experience of legalization in those two states: as long as the effects of those laws could be mostly contained within those states. The question is whether the federal government might be willing to let Colorado and Washington try allowing in-state sales while working hard to prevent exports, and whether those states, with federal help (and the threat of a federal crackdown on their licensed growers and sellers if Washington and Colorado product started to show up in New York and Texas), could succeed in doing so. If that happens, it would be vital to have mechanisms in place to learn as much as possible from the experiment.
Things will get even more complex if other states decide to join the party.
So buckle your seat belts; this could be a rather bumpy ride.
Mark A.R. Kleiman, Jonathan P. Caulkins, and Angela Hawken are the authors of Marijuana Legalization: What Everyone Needs to Know and Drugs and Drug Policy: What Everyone Needs to Know with Beau Kilmer. Mark A.R. Kleiman is Professor of Public Policy at UCLA, editor of The Journal of Drug Policy Analysis, and author of When Brute Force Fails and Against Excess. Jonathan P. Caulkins is Stever Professor of Operations Research and Public Policy at Carnegie Mellon University. Angela Hawken is Associate Professor of Public Policy at Pepperdine University.