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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.

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17 Responses to “Semi-legal marijuana in Colorado and Washington: what comes next?”
  1. steve reiff says:

    aloha,

    i’ve been enjoying the blessed & righteous herb since the 60′s. my herb garden keeps my family supplied.

    our country is fascist. marijuana legalization is a (the?)crucial personal freedom issue today.

    we oppose some nasty powerful forces here, but my intuition is that the feds can be forced to legalize now. you could say that the stars have aligned.

    peace

    steve

  2. w w says:

    I live in CO. I do not use mj and voted against it because I used to be married to a pothead and got tired of always having to be a designated driver for he and his friends.
    Who do you think you’re kidding with discussion of “legalities”? I think it’s wrong to bake with it and distribute in schools, but we all know that non-users are expected to just shut up and tolerate open use by flaunters who think that Where they smoke is supposed to be a joke, as in (true story) – my current husband went to a hardware store the other day and smelled it being used in the parking lot. The store – Home DePOT.

  3. rly? says:

    Seriously? It shouldn’t be legal because you had to be a designated driver? I’ve heard some somewhat valid reasoning behind prohibition, but that definitely isn’t a part of that category.

    Pot is more benign than alcohol, which, by the way, requires designated drivers much more… why exactly do you think it’s “wrong” to bake with it? School distribution is obviously something nobody wants, even the users that want it legalized.

    The only way to make it harder for kids to get a hold of an illegal substance is to legalize and regulate it. That’s why it’s so much easier for kids to get pot than alcohol, which is heavily regulated in stores.

  4. james says:

    Pot isn’t a problem. You are……

  5. Hardrock1a says:

    I am 52, spent 20 years in the Navy, consider myself an independent, but often vote republican because I support strong national security. I started smoking weed at Christmas of 1976. I entered the Navy in 1978, and never stopped smoking weed until they started the UA testing in ’82. I was out of the service from late ’82 to early ’84, and smoked the whole time. Once I went back in, I pretty much stayed away until I retired in ’00. The day I retired, as a retirement gift, a civilian friend gave me a quarter. I have never looked back, I don’t always smoke, but I still do it. I abhor alcohol for myself, if others wish to partake, that’s their business. I don’t like the way it makes me feel, I hated waking up with a hangover, feeling like a cat took a crap in my mouth during the night.
    I am a CO native and voted wholeheartedly for the legalization. We have a major problem in this country with gangs and violence. We need to get the weed off the streets and into well lit stores where the revenue can be applied to our communities rather than going to the gangs and cartels. I am ANTI-Decriminalization, as Larry King recently said, “Decriminalization is the “Don’t ask, Don’t tell” of marijuana.” That didn’t work and decriminalization is a policy that removes the penalties for the user, but does NOTHING to keep it out of the hands of the criminal element and kids hands. Criminals don’t ask for ID, they push other substances that are far worse and they pay NO taxes on their gain.
    There is something fundamentally wrong when the Feds and the bad guys both want to keep Cannabis illegal.

  6. [...] Caulkins, Angela Hawken, and I try to imagine a deal between the federal government and the states that just legalized marijuana. Federal and state [...]

  7. chris green says:

    What’s the federal interest in preventing leakage of legal WA marijuana in adjacent states? The adjacent states, like everywhere else in the country, already consume vast quantities of illegal marijuana, including from mexico. Nothing is going to change that (the DEA has been trying for decades with no luck). So why wouldn’t those states and the feds be happier if the people producing that product were more legitimate producers in WA who are doing things like filing W-2s on their employees, paying taxes, not growing in federal forests, and not shooting each other so often?

  8. Jared says:

    Ok first off all this speculation of “what will the feds do”????? Give me break! They CANT do ANYTHING!! And Ill tell you why. Because if the Government tries to take away a freedom that so many enjoy after its been voted in,US citizens wont protest they will riot. You think the Rodney king riots were bad try pissing off every US citizen that uses cannabis. Now you have alot of rioting people on your hands. The Rodney King riot pissed mostly blacks off. Taking away a law voted in will piss off 80% of the population. United State citizens grow up knowing there rights,knowing how they got those rights,and what it means to every American. We fight for our freedoms and nothing has changed! Just a little organizing and education was all we needed to overturn the FEDS. God Bless America…The land of the FREEEEE!

  9. Alexandra says:

    I agree Hardrock that mere decriminalization is not the answer.

    Legalized cannabis leads to legalized hemp of all breeds and that means more replaceable resources. Paper that doesn’t require sacrificing forests, fabrics that do not use cotton which depletes the soil or petroleum based man made fibers and fuels and plastics which go more on petroleum as well. The uses are endless in industry, medicine and recreation.

    The tax money looks good to me as does the jobs the hemp industry could create. Plus the reduction in crime legalization could mean on the state, federal and international levels.

    Legalization is simply a no-bainer.

  10. bruce lewelyn says:

    The illegal status of weed keeps many many cops and prison employees working with the most people in jail worldwide, and the cops love their new assault rifles and armored cars. Lawyers love the millions they make defending suckers in court from felony convictions. Legal pot? god forbid! Some states are smart enough to realize the taxes will exceed the enforcement costs. So the system goes on ruining lives and keeping the mexican cartels in their killer business. Bravo America. Slash and burn.

  11. Tara says:

    I am from Colorado, I don’t smoke it, don’t bake with it but heck yeah I voted for it. It should be regulated like alcohol, and once Colorado has the best schools and no longer have to reinvent how to get schools money, everyone else will follow suit.

    If your ex was a pothead, why did you stay? You teach others how they treat you. It’s a choice if you want to be a pothead or not, but we need a new way to tackle the problem of drugs and this was it.

  12. John C B says:

    It’s the people who can’t be more responsible with the use of cannabis. There are people out there like myself who need to use cannabis not as a drug to get high but as a medicine to relieve chronic pain. Yes I could continue to keep popping pills like the doctors want me to do, why, so I keep the pharmaceutical companies in business, when the pills aren’t helping my back and deploying my liver, little by little.

  13. [...] The Washington law is much more carefully drafted, with heavy taxation at the state level. Their problem may be, not exports because legal pot is so cheap, but a continued illicit market in Washington because legal pot is so expensive. That gives the federal government good reasons to let the experiment run. Of course Washington State will have to make its policies with due regard to what’s likely to happen in Washington, DC, but it’s possible that an accommodation could be reached. [...]

  14. As usual, the more cannabis is discussed, the more the extant confusion is revealed. Human history has shown that we will disregard oppressive laws for good reasons. What my research with admitted pot smokers reveals is that it’s a potent anxiolytic that has been routinely available for trial at the High School level since the Sixties. Because it’s easily produced by a huge, decentralized national industry, it can’t be “controlled;” despite what federal, and (a diminishing) number of state laws claim. So long as that’s true, “kids will continue to try it and the industry will thrive.

    What is tragic is the large number of people who might benefit from its many therapeutic uses if only we had an honest government and Pharmaceutical Industry.

    Fat chance.

  15. Jan Rodricks says:

    Articles asks some truly obvious questions.

    Of course Colorado weed quality will and probably already does equal the best in the world. Indoor grow rooms use the same hardware and software (seeds) regardless of location, and cluture technique can be learned from countless websites.

    Of course marijuana from post-prohibition states will show up in New York and Texas. as with alcohol and states with wet/dry counties, look for concentrations of marijuana dispensaries to spring up along Colorado and Washington’s borders with other states.

    In 40 years of witnessing marijuana prohibition, I’ve seen that pot laws do far more damage than pot itself. Laws and rules have been written with the intent to destroy the lives of a marijuana user. Fear-mongering anti-pot politicians occupy the same moral sewer as the violent organized criminals with whom they exist in a co-dependent relationship.

  16. [...] to have an alternative view — a $30 billion black market is worth trying to eliminate, and folks studying how to do legalization best have come up with some laudable proposals (like bans on [...]

  17. Interesting article. Still unsure how I feel about legalized marijuana. You do bring up a lot of good points.

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