AP Photo/Scott Sonner, File
Dozens of people line up outside the Silver State Relief medical
marijuana dispensary in Sparks, Nevada, to be among the first in Nevada
to legally purchase medicinal pot.
The U.S. Drug Enforcement
Administration’s refusal to decontrol marijuana has raised the hackles
of doctors, patient advocacy groups, cannabis entrepreneurs, and
potheads almost everywhere. Under the agency’s recent
directive,
marijuana remains an illegal, controlled substance like heroin and LSD
that has no medical value. But unlike most federal regulations, the DEA
move will have little to no effect on state-level marijuana politics.
Since Colorado and Washington state green-lighted recreational
marijuana in 2012, the DEA has gotten swamped by a tidal wave of
legalization campaigns across the country for recreational and medical
marijuana. Most states have moved fast, first, to allow doctors and
patients who suffer from diseases like cancer and conditions like
chronic pain to be able to use marijuana without the omnipresent threat
of arrest and prosecution.
But states, especially ones that already have
medical marijuana, have also picked up the pace toward complete
legalization for a simpler reason: beaucoup tax dollars.
To date, 26 states have legalized or decriminalized marijuana. There are a plethora of ballot initiatives
on tap for voters to weigh in on this November. Initiatives in Arizona,
California, Maine, Massachusetts, and Nevada would legalize possession
of specific amounts of marijuana and cultivation of a certain number of
plants. (The Massachusetts question also proposes to tax the substance
like alcohol.) Arkansas, Florida, Montana, and North Dakota will
consider legalizing or expanding access to medical marijuana. Several
other states are awaiting the outcomes of conflicts over access to the
ballot for marijuana initiatives.
Taxpayers may nix other tax increases, but they embrace sin taxes on
marijuana. Though marijuana sales in states new to the industry can be
slow going, recreational marijuana tax revenues can run into the
hundreds of millions of dollars. Colorado has made an airtight case for
marijuana revenues.
The state takes in a 2.9 percent retail and medical marijuana sales
tax, but more importantly, it takes in a 10 percent retail marijuana
special sales tax and a 15 percent marijuana excise tax, as well as
application and license fees for both retail and medical marijuana. In
June, Colorado took in nearly $16.8 million in taxes and other fees
compared to nearly $10.8 million in 2015, a whopping 55 percent
increase.
In 2014, Colorado recreational marijuana businesses tallied
nearly $700 million in sales, while the state took in $76 million in
taxes. Last year was even better: Colorado took in $135 million in fee
and tax revenues on nearly $1 billion in sales. The good citizens of the
Centennial State even rejected a $66 million tax refund plan; instead,
the monies stayed in state coffers and went to school construction, law
enforcement and substance-abuse programs, and other budget line items.
Future recreational marijuana revenues are a major selling point in the states that have marijuana ballot questions.
Future recreational marijuana revenues are a major selling point in the states that have marijuana ballot questions.
Nevada would slap marijuana sales with a 15 percent excise tax on top
of the state’s 10 percent sales tax; projected tax annual revenues are nearly $465 million.
Overall, the DEA directive will have little impact on the booming industry. Meanwhile, a recent Ninth Circuit Court of Appeals decision
may make medical marijuana dispensary owners breathe a little easier.
The court ruled last week that the U.S. Department of Justice cannot
prosecute people who comply with their state laws on medical medical
marijuana sales.
The DEA decision did relax regulations
on using marijuana plants in medical research (a sticking point that
has long frustrated the medical community), which will allow scientists
to cultivate plants in DEA-approved facilities. Medical marijuana use
may be flourishing but doctors and other medical professionals have had
to forge ahead without the rigorous research and clinical protocols that
usually accompany new drug regimes, which can take years.
Currently, there is only one DEA-approved medical research facility
in the country at the University of Mississippi. But researchers have a
long list of issues with accessing the Ole Miss cannabis, including
finding that the university cannot offer enough varieties of the plant
which complicates testing. Some researchers have even complained
that the university’s marijuana was inferior and did not compare
favorably to products that can obtained in states were marijuana is
legal. (Nor are they convinced that the DEA plans to make life easier
for researchers to set up their own facilities.)
There are also more dollars for states in the economic development
opportunities to be had in research and development. After Ohio’s
Republican Governor John Kasich signed medical marijuana legislation
into law in June, officials in Johnstown, a small town north of
Columbus, gave the go-ahead for more marijuana businesses to set up shop.
The community already has one marijuana business (a manufacturer of
equipment that uses a carbon dioxide separation process to separate oils
from marijuana and other types of plants.) now headquartered at a
nearly empty office park. The owner of that firm, Apeks Supercritical,
has visions of a $500 million medical marijuana research and development
campus. Johnstown may even corner the the R&D market since other
Ohio communities are not keen on marijuana dispensaries. (At the other
end of spectrum, even behemoths like Microsoft want in.)
State officials can work around Uncle Sam since many Americans have
come to believe that pot has important medical benefits and is not as
dangerous as a drug like heroin. That means that the DEA is now
confronted with a paradox: There is new and entirely appropriate alarm
about the opiate abuse crisis nationwide.
However, the agency has obliterated
the old canard that marijuana was a “gateway” drug to hard drugs. It
makes no sense for the DEA, other federal agencies, and state and local
law enforcement to continue enforcing existing restrictions on pot as
they grapple with a far more serious opioid epidemic.
States are the laboratories of democracy, so it is no surprise that
the federal government has failed to keep up with regulating the pot
industry. But this November, the feds could fall even further behind. As
more states legalize marijuana, the DEA will have think hard about how
the agency continues to prosecute its war on a drug that is a medical
and fiscal lifesaver in most of the 50 states.
To his great credit
President Obama has made headway on Cuba normalization, relief for
Dreamer kids, and entente with Iran. But this issue continues to demand
more federal law enforcement attention than it should. Perhaps his
successor will finally leash the DEA and get real on marijuana.
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