Can Legal Pot Work for California?

Senate pro Tem Kevin de Leon ‘not there yet’ on recreational marijuana

Back Web Only Aug 5, 2015 By Rich Ehisen

At least one if not two ballot measures to legalize recreational marijuana use are almost assured to be on the November 2016 ballot for California voters. But while many folks see the legal sale and taxation of pot as a way to pump big money into the state’s coffers, the experiences of legal-weed states like Washington and Colorado show the road from green bud to greenbacks has more than its share of potholes.

California was the first state to make medicinal marijuana legal, which voters did via ballot measure in 1996. Efforts since then to get the Golden State on board for legal recreational use have gone up in smoke, most notably the Proposition 19 campaign in 2010 that voters rejected amidst internal discord among the measure’s supporters. But with polling showing that a slight majority of Californians now support legalization, advocates are back in force and looking forward to 2016.

California Senate pro Tem Kevin de Leon knows all the signs seem to point to state voters making marijuana legal in the near future. But during a recent conversation in his office, he makes it clear it is an issue he would rather not deal with.

As an individual, I am personally not there yet, irrespective of what the windfall might be with regard to tax receipts,” he says. He’s also keeping a close eye on what is happening in Colorado, Washington and Oregon, hoping California will learn enough from their mistakes and triumphs to make sure what ends up on the ballot doesn’t leave him and his colleagues trying to fix a plethora of newly-created pot problems.

The biggest issue of course is that the U.S. government classifies marijuana as a Schedule 1 narcotic, the same as heroin or cocaine. That means the feds can, at their discretion, lay the hammer down any time they so choose — not just on growers or distributors but also on the banks who take in cash from dispensaries. That possibility has scared off most banks from doing business with legal pot sellers in the 23 states and D.C., where some form of legal marijuana is available (19 states and D.C. for medicinal use only plus Colorado, Washington, Oregon and Alaska for both medical and recreational sales). With banks not an option, legal sellers often find themselves stuffing cash into boxes and bags, installing bank-level vaults on site or hiring heavily armed private security to move their cash somewhere safe. If that sounds like a recipe for criminal activity, it is –— from robberies to pot proprietors avoiding heavy taxes by underreporting revenues.

Other complications abound. Washington and Colorado concede they need to do bring taxes in line between recreational and medicinal dispensaries. In both states, medical marijuana is taxed at a far lower rate than recreational, allowing medicinal dispensaries to sell their product cheaper than the recreational stores. That has served only to drive consumers either to medical suppliers or to black market dealers, both of which significantly reduce the revenue the state receives from the deal. It is also the polar opposite of what state officials want and what pro-legalization advocates promised voters in those states.

Under a California statute that went into effect this year, when proponents reach 25 percent of the signatures needed to get their issue on the ballot, it goes to the Legislature, which then holds public committee hearings on that issue. Lawmakers can’t change the proposal themselves, but in theory can influence proponents to fix flaws in that proposal before it gets to voters. That will be critical in preventing the “unintended consequences” de Leon says occurred in the early days of medical marijuana in Los Angeles, when dispensaries “were more common than Starbucks.”

“I can’t speak for the rest of the state, but in L.A. it was the wild west, with many medicinal marijuana dispensaries within shouting range of an elementary school,” he says. “Common sense dictates that they shouldn’t be next to an elementary school, but there was not a regulatory framework that prevented it from happening.”

This time, he says, it will be different. And while he’s not vowing that lawmakers will get involved at all costs, given “the arcane technicalities and details of the way it’s supposed to really work, I think the legislature will play a role.”

For more on Senate pro Tem Kevin de Leon and his thoughts on climate change, check out Rich Ehisen’s August Discourse installment, “Head in the Clouds.