Should marijuana be legalized in California? A look at Proposition 64

GUY KOVNER

California voters, who were the first in the nation to legalize marijuana for medical use two decades ago, will now decide whether to join a parade of states that are allowing adults to use it simply for pleasure.

Their decision on Proposition 64 will have a profound impact on California’s North Coast, the largest producer of marijuana in the United States, with ramifications for the region’s economy, drug use, the environment, government tax revenue and the community of small growers who produce some of the most coveted cannabis in the world.

If approved, one study suggests, it would create a commercial pot industry that could sell $6.5 billion of cannabis by 2020, rivaling the current size of the state’s renowned wine industry.

Although recreational marijuana is already legal in four states — Colorado, Oregon, Washington and Alaska — adding California to a West Coast wall of acceptance would send political ripples across the nation and intensify pressure on the federal government to relax its laws on pot.

“This is California, this is a game changer,” said Lt. Gov. Gavin Newsom, a prominent backer of the ballot measure. “You’re not going to ignore California. At a certain point, the federal government is waking up.”

Polls show the Adult Use of Marijuana Act is supported by 60 percent or more of voters. But the initiative has deeply divided marijuana growers while pitting law enforcement leaders and others who oppose it against health care groups and others that support it.

Advocates contend that prohibition has failed and it is time to regulate it like any other business, delivering a tax windfall estimated at $1 billion a year.

Critics say legalization opens the door to big businesses capable of dominating the regulatory process and leaves children vulnerable to rampant advertising of a harmful substance.

Comprehensive regulations

At its most basic level, Proposition 64 would allow adults to possess up to an ounce of marijuana for recreational purposes and to grow up to six plants at home. Consumption would be prohibited in public places, including bars, restaurants, streets, theaters and entertainment venues.

California’s medical marijuana program, which requires patients to obtain a physician’s recommendation and to purchase cannabis at licensed dispensaries, would remain in place.

The 62-page measure would establish a comprehensive state regulatory framework for the commercial pot industry with 19 license categories covering cultivation, manufacturing, testing, distributing and retailing.

License fees would cover the cost of regulation. Two new taxes — a 15 percent statewide sales tax on marijuana and a separate tax on growers — would go to a host of uses, including grants to community nonprofits, academic evaluation of legalization’s impact, research on the safety of medical marijuana and efforts by the CHP to determine standards for impaired driving.

The provisions for personal adult use of marijuana would be effective the day after the election, while state licenses for dispensaries and other cannabis enterprises likely will not be available until late next year, according to the League of California Cities.

Similar measures will go before voters in four other states — Nevada, Arizona, Massachusetts and Maine — on Nov. 8. Twenty-five states already allow medical marijuana.

Rep. Jared Huffman, D-San Rafael, said there is already “a robust coalition” in Congress pushing for reform of marijuana laws.

Passage of Proposition 64 “could well be the tipping point,” he said, given the state’s population of nearly 40 million and its standing as the sixth-largest economy in the world.

Legalization in California would be “transformative,” said Huffman, whose district encompasses the Emerald Triangle of Mendocino, Humboldt and Trinity counties that produce 60 percent of the marijuana in the United States.

Newsom and Huffman, both liberal Democrats from Marin County and fathers of young children, are prime movers behind Proposition 64 but are wary of pot’s impact on kids.

“I don’t want to see the drug used and abused by my children,” said Newsom, a former San Francisco mayor who is running for governor in 2018.

Concern about youths

Marijuana is harmful to children, degrades the environment and generates violent crime in a black market, cash-only industry pervaded by criminal cartels, Huffman said, echoing arguments from opponents of legalization.

“I just think we can’t make any of it better without crossing this policy bridge,” he said. “The dysfunction and dark side of this underground economy has gone to such an extent that people are ready for change.”

The California Healthy Kids Survey confirms Huffman’s contention that children and pot are not strangers. Fifteen percent of ninth-graders and 22 percent of 11th-graders reported marijuana use in the past month, according to the survey, which covered 2011 to 2013.

In Sonoma County, the numbers were higher, with 18 percent of ninth-graders and 28 percent of 11th-graders reporting use in the same period, the survey said.

“Any parent that talks to a teenager (about marijuana) is going to hear that their kid knows a lot of other kids who have it, use it and sell it,” Huffman said.

Aaron Smith, executive director of the 1,100-member National Cannabis Industry Association, says he believes California voters will back legalization because they have seen it evolve in other states, where he said tax revenues have swelled without a significant increase in crime.

“The sky hasn’t fallen,” said Smith, a part-time Santa Rosa resident. “Anybody who has any relationship with cannabis understands it is safer than alcohol, tobacco and many prescription drugs.”

Legalization will turn the thousands of jobs in the state’s cannabis industry into “solid, taxpaying jobs,” while sales, advertising and other aspects of the business are tightly regulated by the new law, he said. State-licensed dispensaries “would have a lot to lose by selling to minors,” he said.

Karen Milman, Sonoma County’s public health officer, expressed concern over “expanding access to a drug that can impact your health.”

As a county employee, Milman said she cannot take a position on a ballot measure, a step that is reserved for elected officials like the supervisor and sheriff.

But Milman said marijuana has “greater long-term impacts” on youths, as opposed to adults, because it “affects the developing brain.” The earlier in life that a person starts using pot, she said, “the more likely they are to develop dependency and abuse problems.”

Impact on violent crime?

If Proposition 64 passes, Milman said, she hopes the prohibition on marijuana sales to youth are as strictly enforced as laws restricting alcohol and tobacco sales to minors. Outreach to youth should be aimed at offsetting the alleged glamour of marijuana, she said.

“What it really comes down to is how it (legalization) is implemented,” Milman said.

Sonoma County Sheriff Steve Freitas is opposed to legalization. He fears it would make California a magnet for drug dealers from other areas, where pot would remain illegal under federal and state law, and lead to an increase in violent crime and public intoxication.

“If there is a path for me to support, it would be legalized federally, across the United States, and regulated like tobacco or anything else,” Freitas said earlier this year.

Marijuana’s economic potential is undisputed.

The Arcview Group, an Oakland-based cannabis investment and research firm, said Proposition 64 would boost legal cannabis sales in California by 50 percent over the next two years as licensed commercial activity ramps up.

May create jobs, tax revenue

Medical cannabis sales in California are estimated at $2.8 billion this year, with no recreational sales.
If Proposition 64 is approved, the market would jump to $4.3 billion in 2018, counting legal adult and medical sales, and hit almost $6.5 billion in 2020, with nearly two-thirds of the market driven by recreational sales, the report said.

At that level, the cannabis industry would approach the size of California’s wine industry, which generates about $7.5 billion in retail sales in California, according to Jon Moramarco, managing partner with bw166, a Santa Rosa wine, beer and spirits consulting firm.

“The opportunity for jobs, tax money and wealth creation made by California ending marijuana prohibition cannot be overstated,” Troy Dayton, CEO of The Arcview Group, said in a statement.

That rosy outlook would be dulled, the group said, if a significant number of California cities and counties exercise their right to ban cannabis, an option they are granted by the proposition.

Whether the widely anticipated “green rush” spells doom for the multi-generational tradition of small-scale marijuana farmers is a point of contention.

State Sen. Mike McGuire and Assemblyman Jim Wood, both Democrats from Healdsburg and major authors of California’s landmark medical cannabis law enacted last year, said that concern is among the reasons they both will vote against Proposition 64.

The ballot measure “blows the lid off any caps for commercial grows,” McGuire said, referring to the top-tier cultivation license that allows marijuana gardens of unlimited size. That license won’t be issued until 2023, but critics say it is a major departure from the Medical Cannabis Regulation and Safety Act, which limits cultivation to a half-acre indoors and an acre outdoors.

Wood said the ballot measure was premature, coming atop the medical pot regulations that state officials are scrambling to establish by 2018. “I wish we had more time to get our ducks in order,” he said.

He also questioned whether the proposition would deliver enough money to pay for the cleanup of “horrific environmental damage” done by rogue growers on the North Coast.

Could affect small farms

Hezekiah Allen, a former Humboldt County pot farmer who heads the California Growers Association, said unlimited cultivation licenses will “wreak havoc on farming communities.”

Small farms account for as many as half of the state’s estimated 50,000 to 60,000 growers, he said.

Growers also believe the proposition’s flat 15 percent sales tax is too high, Allen said. The pot tax would be tacked onto existing sales taxes, which range in Sonoma County from 8.25 to 9.25 percent — bringing the total tax on marijuana sales to nearly 25 percent in some cities. Cities and counties would be able to impose additional sales taxes on marijuana if Proposition 64 is approved.

The measure would also impose a tax on growers of $9.25 per ounce for flowers and $2.75 per ounce for leaves, with some exceptions.

Overall, marijuana taxes would generate up to $1 billion in new revenues for the state, according to a forecast by the state Legislative Analyst.

Allen argued a tiered tax rate — lower for smaller cultivators — would “help level the playing field.” His 700-member organization, sharply divided over the ballot measure, adopted a “neutral with concerns” position.

The Sonoma County Growers Alliance, which represents local cannabis growers, announced Friday that it was opposing Proposition 64, based on a unanimous vote by the trade group’s board of directors.

Tawnie Logan, executive director, said the 200-member group was concerned the measure tramples on local control of the marijuana industry that was guaranteed in the medical cannabis law. She also said that people who use marijuana for medicine should not pay sales tax on it.

Craig Litwin, a Sebastopol cannabis consultant, said he was concerned that Proposition 64 allows “gigantic grows that would eventually wipe out mom and pop growers.”

Nonetheless, he said the measure was “mostly positive,” noting that it permits the Legislature to amend major provisions, including cultivation licensing standards, with a simple majority vote, an allowance that is rare for initiatives that are typically locked into the wording presented to voters.

If the measure passes, Allen said he would immediately begin lobbying lawmakers to remove the permit for unlimited cultivation.

Predicted to pass

There is “legitimate concern” for small growers in the face of multinational corporations moving into the marijuana business, Newsom said. However, he disputed the contention that Proposition 64 opens the door to a commercial marijuana boom.

The measure includes strict anti-monopoly provisions and allows a “microbusiness” license for farms smaller than 10,000 square feet, which Newsom compared to craft breweries.

“I don’t want Big Tobacco to become Big Marijuana,” he said.

There is little doubt about the outcome of the vote, said David McCuan, a Sonoma State University political scientist.

“It’s gonna pass,” he predicted, citing the measure’s consistent 60 percent support in polls and a $21.7 million campaign war chest, including $7.3 million from tech entrepreneur Sean Parker and $5.3 million from Fund for Policy reform, a nonprofit headed by financier-activist George Soros.

The No on 64 campaign has just $2.5 million, including $1.4 million from a Pennsylvania millionaire named Julie Schauer and $890,000 from an nationwide anti-legalization campaign fronted by former Rhode Island congressman Patrick Kennedy.

Newsom, who championed same-sex marriage as San Francisco’s mayor in 2004, “loves to embrace emerging issues,” McCuan said. Newsom views marijuana as a social justice issue and has put it at the forefront as he prepares to run for governor.

“This is a watershed moment in the culture wars,” McCuan said.