Will Prop 420 End The Charade?

by Mark Scaramella, June 25, 2010

Of course the "Regulate, Control and Tax Cannabis Act of 2010" which will be on the ballot in November will not be called "Proposition 420." But whatever number it ends up with in November, it's likely that it will 1. pass, 2. Complicate marijuana law in California more than it is now, 3. look a lot like Mendocino County's current pot regulation monstrosity, 4. look something like alcoholic beverage control but without the good parts, 5. not produce the revenue its giddy proponents expect, and 6. not end the charade.

And what is the charade?

Let's turn that question over to KGO weekend talk show host Pat Thurston who discussed the subject a couple of Saturdays ago (at 5 in the morning — you can be excused if you missed it. We only heard it because we snagged it from the KGO archive.)

* * *

[Thurston's opening churn]:

Let's talk about marijuana. I recently read an article in the Los Angeles Times with the headline, "Time to end the marijuana charade." It really is a charade. It's a ridiculous situation in the state of California. Californians voted for compassionate use of marijuana. But at this point in time, does anyone really believe that these marijuana dispensaries are dispensing only to sick people? Isn't this one of the biggest pink elephants ever to emerge?

It's not that I begrudge people the use of marijuana when they are sick. I don't care if people use marijuana recreationally. But once again, when it comes to regulation, when it comes to California policy, we are in the midst of something that is completely dishonest. And in its dishonesty, it is completely idiotic.

This is a policy where hundreds, thousands, maybe hundreds of thousands  of people get their weed at a small number of outlets that are not like drugstores; they are more like recreation halls. People go in, they bring their video equipment, they sit around, they smoke weed, get high with people, have fun.

By the way, the number of shops, the number of these dispensaries seems to be getting smaller. So there are fewer of them available. The ones that are available are doing more and more business.

The neighborhoods they are in are suffering. In some neighborhoods, neighbors at first said they thought they were going to be very mellow. It was just going to be people who were stoned. But unfortunately, they are vandalizing neighborhoods, they are loitering in neighborhoods, they are breaking into people's homes, people’s cars. It's hurting these neighbors and it is hurting the state.

There is a ballot initiative coming up in November. I hope this initiative does something to fix the problem. I have not seen the specific text of it yet. I certainly want to take a look at it. But I think it's time for us in the state of California to stop the charade. Stop looking at marijuana as this great evil weed. Stop looking at marijuana and the compassionate medical use of marijuana and thinking we have resolved some sort of problem here -- and we haven't.

If it's a drug that sick people need, if it's a drug that some people need for medicinal purposes, then it needs to be dispensed through a drugstore with a physician’s prescription. It should not be dispensed in a recreation hall or over countertops set up in people's houses.

The people who are growing marijuana because they have a personal use or because they are sick, I think that's fine. But there are people who are growing it to sell to these dispensaries.

Do you know that these dispensaries mark up the stuff up a lot? They really lowball the growers, and then they mark this stuff up so much, ostensibly to cover overhead, but the overhead includes their salaries. There are people making pretty good money off of this. But guess who isn't? The state of California isn’t. Local jurisdictions are not. Nobody else is making any money off of this.

So there is a huge huge demand for this. If we are going to provide this for medicinal purposes, let's make it medicine and dispense it through a dispensary as medicine.

But if we are going to accept that this is something that should also be available for recreational purposes, then it needs to be made widely available to adults. It needs to be controlled for quality and it needs to be taxed -- a nice big old tax. A tax that will go into state coffers. This is doable.

The crime rate that is associated with the marijuana trade now is really bad. And it's getting worse. It encompasses our state, neighboring states, Mexico. It's violent. There are marijuana farms that are being set up in national parks. Marijuana farms are being set up in isolated areas that are remote and removed from any scrutiny or control. And they are dangerous. People are using automatic weapons to protect them. They have IEDs around some of these places to protect them. This is ludicrous.

In Mendocino County we know there are vast marijuana farms. You can smell them when you drive to Mendocino County at harvest time. You can smell it there quite easily right in public places. So we know that it's happening.

But the state is not getting any cut of this thing.

So we have yet another policy that is a charade.

We could decide as a state that we are going to go back in time and make it completely unavailable. But we all know that's ridiculous. We know prohibition doesn't work. We know that prohibition of alcohol or marijuana ultimately leads to crime. Organized crime. We are funding criminal activities. It becomes a big fundraiser, a big moneymaker for horrible violent criminals. Take it away from them. They should not have the control of this. There is no reason for them to have the control of this.

If we had marijuana farms which were grown legitimately in the state of California and it did not have to be hidden, we would do away with the farms that are being set up in our national parks. We would do away with people setting up IEDs to keep people out of their illicit farms. Farms would be legal. We would do away with the need for these criminals to come into our state and set up this activity because there's this demand. There is a demand and they create a supply for us. We don't need them to do it for us. We can do it ourselves. But we have to be able to do it legitimately. We have to do it within the law. Everybody benefits. Don't they?

. . .

On yelp.com people rate their dispensaries online. And when they do this they do not talk about how sick they are or about their illnesses. Nobody's talking about how this is a solution to their symptoms. They are talking about the quality of their weed, and they give various types of weed ratings.

. . .

Caller: There are delivery services now, hundreds of them. If you want to tell a doctor you have a headache and get a recommendation, then go over and sign yourself up on the Internet at a mobile dispensary and give your phone number. People call you and arrange to deliver the marijuana at a Starbucks or something. You can do that right now.

. . .

Thurston: As we get closer to November you are going to start seeing ads that are funded by the pharmaceutical industry and the alcohol industry because legal marijuana will compete with both of those. If recreational marijuana is allowed it will reduce alcohol consumption. And good! Because people get mean when they drink alcohol. When you smoke pot you get hungry. You get the munchies. You tend to be more mellow. If people pick a fight with you you’re more likely to laugh at them than anything else and offer them a sandwich.

Pharmaceuticals don't like the idea because you can grow your own. You don't have to go through a pharmaceutical company. It's not something that has to be manufactured in some laboratory and converted into a little pill form for you. In fact Marinol does not work as well as smoking pot when it comes to using it for medicinal purposes.

So you can grow it yourself. So that will face resistance from the pharmaceutical industry and the alcohol industry.

We need to stop this fake marijuana policy. Charade is the best word I can think of. It's exactly what it is. It's dishonest.

Let's embrace recreational marijuana for adults and tax it -- big high taxes on it. Let's do it. It will increase the coffers in the state of California and I don't think anyone will suffer. Don't fight it. Make it something you can use legitimately and the state can benefit from it. If the state benefits from it, you and I benefit from it.

. . .

Caller Ron in San Jose: The State of Utah faced this problem back in 1932 right after Prohibition. Because of the Mormon church, they didn't know what to do. So they did the smart thing. The state of Utah took control of the liquor industry and the liquor stores. To this day the state of Utah owns the liquor stores. So why doesn't the state of California own and control the marijuana business? They can franchise it. Anybody who wants a dispensary can go to the state of California and buy a franchise to grow for a dispensary. There would be statewide specific rules. There would be a Department of Marijuana Regulation.  The state of California would simply hire people to operate the marijuana stores and sell it under proper management and keep all the profit for the state. You don't have to keep just the tax. If you legalize and tax pot, how the hell do you collect the tax? You need a structure to make sure you get paid. But it would be almost impossible to collect a marijuana tax through the Franchise Tax Board. How can they make sure they're taxing it? How can they make sure people are reporting what they sell? There is a lot of stuff that goes on at these dispensaries that are not legitimate. I don't trust that they would pay taxes properly.

. . .

Thurston: I have lived in states where they have specific alcohol stores to buy alcohol. It's a very sterile environment, not fun, no flashing neon signs. On the way out there is a turnstile and a person who looks official who is a state employee. You have to show identification. The state reaps all the money. You are is absolutely right. I like that idea.

. . .

Ron: There is absolute control. They can tell exactly what people are doing and the state has direct control over all the outlets and who buys it.

. . .

Thurston: And the prices would all be the same so there would be consistency in pricing. They would all provide pretty much the same thing and the cost would be standardized. You would have to show identification and it would be a good way to control it. I like the idea.

I have not seen the ballot measure that's going to appear in November. I don't know how they are going to collect the tax. We need to look at that. I doubt that they have any real good way to collect the tax. I think your proposal would be a good way to keep control. If you have a mind altering substance you have to maintain control over it.

. . .

Ron: And the crime element. That would go away. When the state of Utah took control of the liquor stores, the black market couldn't compete against it. So the black market pretty much dried up. So you get rid of the crime element. There is always a little bit of a black market, but you could get rid of most of it and it would be much more manageable. People can start worrying about something else for a change.

* * *

Unlike Ms. Thurston, we have reviewed the text of the "Regulate, Control and Tax Cannabis Act of 2010" and have found it wanting in several important areas.

Turning over the regulation, control and taxation of Cannabis to individual counties is downright stupid. Do counties control alcoholic beverages? No. The state does.

The proposition states: "There is an estimated $15 billion in illegal cannabis transactions in California each year. Taxing and regulating cannabis, like we do with alcohol and cigarettes, will generate billions of dollars in annual revenues for California to fund what matters most to Californians: jobs, health care, schools and libraries, roads, and more."

How do they know that this proposition will generate billions of dollars in annual revenues?

The proposition says the state should "regulate cannabis like we do alcohol: Allow adults to possess and consume small amounts of cannabis."

But the regulatory scheme in the proposition is nothing like the alcoholic beverage regulatory scheme.

"The illegality of cannabis enables for the continuation of an out-of-control criminal market, which in turn spawns other illegal and often violent activities. Establishing legal, regulated sales outlets would put dangerous street dealers out of business."

No it wouldn't. Especially not if they can sell large quantities out of state.

"Ensure that if a city decides not to tax and regulate the sale of cannabis, that buying and selling cannabis within that city's limits remain illegal, but that the city's citizens still have the right to possess and consume small amounts..."

So it's going to be illegal in some cities and counties and legal in others? Probably.

"Tax and regulate cannabis to generate billions of dollars for our state and local governments to fund what matters most: jobs, healthcare, schools and libraries, parks, roads, transportation, and more."

Pure speculation.

"Allow the Legislature to adopt a statewide regulatory system for a commercial cannabis industry."

Why is this in there? "Allow the Legislature"? Why not simply call for statewide legalization and taxation?

How much could you legally grow if it passes?

"...in an area of not more than twenty-five square feet per private residence or, in the absence of any residence, the parcel."

Need we even bother to enumerate how many holes this particular porous provision contains?

The proposition legalizes (with licenses) "retail sale of not more than one ounce per transaction, in licensed premises, to persons 21 years or older, for personal consumption and not for resale."

"Not for resale"?

What if the rules aren't followed?

Counties and cities can "prohibit and punish through civil fines or other remedies the possession, sale, possession for sale, cultivation, processing, or transportation of cannabis that was not obtained lawfully."

This is completely unworkable.

What does the proposition say specifically about taxation?

"Section 11302: Imposition and Collection of Taxes and Fees

"(a) Any ordinance, regulation or other act adopted pursuant to section 11301 may include imposition of appropriate general, special or excise, transfer or transaction taxes, benefit assessments, or fees, on any activity authorized pursuant to such enactment, in order to permit the local government to raise revenue, or to recoup any direct or indirect costs associated with the authorized activity, or the permitting or licensing scheme, including without limitation: administration; applications and issuance of licenses or permits; inspection of licensed premises and other enforcement of ordinances adopted under section 11301, including enforcement against unauthorized activities.

"(b) Any licensed premises shall be responsible for paying all federal, state and local taxes, fees, fines, penalties or other financial responsibility imposed on all or similarly situated businesses, facilities or premises, including without limitation income taxes, business taxes, license fees, and property taxes, without regard to or identification of the business or items or services sold."

Notice that they don't even mention the words "sales tax." Most of the other taxes mentioned require separate area-based ballot initiatives, not simple majorities of elected officials. The amount of work required to even put one of these kinds of special taxes on the ballot will make it nearly impossible to implement. And most forms of these tax proposals require two-thirds majorities to pass.

Why didn't they simply use the term "sales tax"? Don't they trust the sellers?

And then there's this lovely provision:

"In a criminal proceeding a person accused of violating a limitation in this Act shall have the right to an affirmative defense that the cannabis was reasonably related to his or her personal consumption."

I know potheads in Mendocino County who can use literally pounds of pot per day if you include all the wondrous forms of "consumption" -- inhalants, salves, food additives, poultices, ointments, tinctures, balms, etc. We'd be thoroughly entertained by a Mendo-style pot-grower/user defendant who came to court ready to roll out the full monty of "personal consumption."

Bring it on!

But don't tell us that this will end the charade.

Only something like Ron-In-San-Jose's state-owned pot store idea will produce anything like the results the proponents of the proposition hope for. But that's not what they proposed.

We've only scratched the surface of the problems which would be generated by "Proposition 420."

To compile your own list of problems, read the full text of the proposed pot legalization initiative at:

http://ballotpedia.org/wiki/index.php/Complete_text_of_The_Regulate,_Control_and_Tax_Cannabis_Act_of_2010_(California)


One Response to Will Prop 420 End The Charade?

  1. mk Reply

    June 29, 2010 at 8:55 am

    Interesting discussion.

    I’m curious about the other elephant in the room, which is legal vulnerability at the federal level. I didn’t see anything about this in the proposed Act. In other words, even though the State says it is okay, isn’t it true that citizens would remain legally vulnerable under the remaining federal prohibition? I’m curious how, for instance, the lawyers at Cargill or ADM would approach this. Say it becomes “legal” in California this November, and ADM decides to put in a few thousand acres of cannabis in the Central Valley? Wouldn’t they be exposing themselves to legal challenge at the federal level?

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