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THE DAILY ASTORIAN • MONDAY, JANUARY 5, 2015
Rethinking pot — one year later
Medical
marijuana a
challenge for
legal pot states
SEATTLE (AP) — A year
into the nation’s experiment with
legal, taxed marijuana sales,
themselves wrestling not with the
federal interference many feared,
but with competition from med-
ical marijuana or even outright
black market sales.
In Washington, the black
market has exploded since voters
legalized marijuana in 2012, with
scores of legally dubious medical
dispensaries opening and some
pot delivery services brazenly
advertising that they sell outside
the legal system.
Licensed shops say taxes are
so onerous that they can’t com-
pete.
Colorado, which launched
legal pot sales last New Year’s
Day, is facing a lawsuit from Ne-
braska and Oklahoma alleging
that they’re being overrun with
pot from the state.
And the number of patients
on Colorado’s medical marijuana
registry went up, not down, since
2012, meaning more marijuana
users there can avoid paying the
higher taxes that recreational pot
carries.
they must do more to drive
customers into the recreational
stores. They’re looking at rein-
ing in their medical systems and
-
tween medical and recreational
weed without harming patients.
And in some cases, they are
considering cracking down on
the proliferating black market.
“How can you have two
parallel systems, one that’s reg-
ulated, paying taxes, playing by
the rules, and the other that’s not
doing any of those things?” said
Rick Garza of the Washington
Liquor Control Board, which
oversees recreational pot.
A cautionary tale
medical marijuana with taxed
recreational pot offers a caution-
ary tale for states that might join
Washington and Colorado in reg-
ulating the adult use of the drug.
While legalization campaigns
have focused on the myriad ills of
prohibition, including racial dis-
crepancies in who gets busted for
weed, the promise of additional
tax revenues in tight budget times
was in no small part of the appeal.
Weed sales have so far brought
in some revenue, though less than
Colorado brought in more
than $60 million in taxes, licens-
es and fees for recreational and
medical marijuana combined
through October of this year, and
more than half of pot sold was of
the lesser-taxed medical variety.
In Washington, where supply
problems and slow licensing ham-
pered the industry after sales began
in July, the state collected about
$15 million in taxes this year.
The latest states to legalize
marijuana — Oregon and Alas-
ka — have different concerns,
-
less paying attention to Colorado
and Washington as they work on
rules for their own industry.
Alaska doesn’t have commer-
cial medical dispensaries, so li-
censed stores there won’t face di-
rect competition. And in Oregon,
taxes on recreational pot are set at
hope will minimize competition
from the medical side.
Seattle’s lessons
In Seattle, however, six li-
censed recreational stores face
competition from medical pot
shops that are believed to number
in the hundreds.
“Am I afraid about medical
marijuana dispensaries taking
my business? They have all the
business. They are the industry,”
said James Lathrop, the owner of
Cannabis City.
He said the dominance of
medical marijuana and the black
market is obvious in his clientele:
It’s mostly tourists and profes-
sionals who use pot occasionally
and don’t mind spending a little
extra at a legal store.
Regular pot users have stuck
with their old dealers or continue
masquerading as patients, he said.
Getting control
Reining in medical marijua-
na will be a top priority when
AP Photo/Elaine Thompson
Packaged marijuana is displayed for sale at retail shop Cannabis City in Seattle.
Legal weed brings tax
boost, but it’s modest
DENVER (AP) — To
see the tax implications
of legalizing marijuana in
Colorado, there’s no better
place to start than an empty
plot of land on a busy thor-
oughfare near downtown
Denver.
It is the future home of a
60,000-square-foot public
recreational center that’s
been in the works for years.
Construction costs start-
ed going up, leaving city
-
er they’d have to scale back
the project. Instead, they
hit on a solution — tap
$3.2 million from pot taxes
to keep the pool at 10 lanes,
big enough to host swim
meets.
The Denver rec center
underscores how mari-
juana taxation has played
throughout Colorado and
Washington. The drug is
bringing in tax money,
but in the mix of multibil-
lion budgets, the drug is a
small boost, not a tsunami
of cash.
Much of the drug’s tax
production has been used
to pay for all the new reg-
ulation the drug requires
— from a new state agency
in Colorado to oversee the
and building inspectors for
local governments to make
sure the new pot-growing
facilities don’t pose a safe-
ty risk.
And estimates for pot’s
tax potential varied widely.
Some government econ-
omists predicted a huge
boost to public coffers.
Others predicted a volatile
revenue stream that could
spike wildly based on how
consumers and the black
market would respond.
Some even guessed
that legal weed would cost
more than it produced in
taxes, through higher pub-
lic safety costs and possible
expensive lawsuits because
the drug remains illegal un-
der federal law.
In Colorado, where re-
tail recreational sales be-
gan Jan. 1, 2014, the drug
has a total effective tax
the legislative session begins in
Olympia next month.
The question, lawmakers say,
is how to direct people into the
regulated system — maximizing
state revenues — without hurting
legitimately sick people who use
marijuana.
Ideas under discussion in-
clude reducing pot taxes to make
recreational stores more com-
petitive and eliminating medical
dispensaries, which have been
largely tolerated by law enforce-
ment even though they aren’t al-
lowed under state law.
The state could lift its cap on
the number of recreational stores
and license dispensaries to sell
pot for any purpose.
that they intend to start busting
law and recently sent letters to
330 marijuana businesses warn-
ing them that they’ll eventually
Legal weed states have
lessons to share
DENVER (AP) — Don’t worry about a federal lawsuit. But do
worry about tax rates. Those are among the many lessons Colorado
and Washington have to share from the front lines of America’s
marijuana experiment.
LESSON ONE: DON’T BE TIMID
ed when voters made pot legal.
-
-
ure out how to monitor and tax a product that had never been ful-
ly regulated anywhere in the world, the states spent many months
coming up with rules for how the drug should be grown, sold and
consumed.
The delays were understandable. But they led to one of the
biggest disappointments of the marijuana markets — lower-than-
hoped tax collections.
AP Photo/Elaine Thompson
Cannabis City clerk Jessica Mann scans a customer’s
ID as she rings up a purchase of marijuana at the shop
in Seattle.
rate of about 30 percent,
depending on local add-on
taxes.
Through October, the
-
able, Colorado collected
about $45.4 million from
sales and excise taxes on
recreational pot sales.
That puts the state on
pace to bring in less than
the $70 million a year
Colorado voters approved
when the agreed to a state-
wide 10 percent sales tax
and 15 percent excise tax
on recreational pot.
$40 million in excise taxes
for school construction; so
far that fund has produced
about $10 million.
But adding fees and li-
censes and the taxes from
medical marijuana sales,
Colorado had collected
more than $60 million
through October. Local
governments can add addi-
tional taxes, too.
That’s what led to addi-
tional revenue streams like
Denver’s $3.2 million for a
bigger pool at its rec center.
In Washington, where
recreational pot sales began
in July, recreational weed is
taxed on a three-tier system
as the plant moves from
growers to processors to
retailers. The total effective
tax rate is about 44 percent.
just getting a look at the
taxes, and the money is
coming in slowly because
need to obtain state licenses or be
shut down.
Tacoma has also announced
plans to close dozens of unregu-
lated pot shops.
alter the medical marijuana sys-
tem in Colorado, where it was
enshrined in the state constitu-
tion in 2000. But lawmakers are
nevertheless set to review how
it is regulated next year because
the state’s 2010 scheme is expir-
ing.
Taxes will be a large part of
the discussion. Medical pot is
now subject only to the statewide
2.9 percent sales tax, one-tenth of
the taxes levied on recreational
pot.
Colorado’s medical mari-
juana registry has grown from
107,000 people in late 2012 to
about 116,000 this year, though
marijuana patient advocates dis-
pute that the growth is tax-driven.
there aren’t many stores
there yet. State economists
have predicted pot sales
will bring in $25 million by
next July.
The state anticipates
a $200 million increase
by mid-2017, and about
$636 million to state cof-
fers through the middle of
2019.
There remain more
questions than answers
about pot’s tax potential.
A new president in 2017
could sue legal weed states
to shut down sales com-
pletely.
And no one knows how
the opening of new recre-
ational markets will drain
sales from Colorado and
Washington. Oregon voters
have approved retail pot
sales beginning in 2016;
Alaska has approved sales
but it’s not clear when
they’ll begin.
And the biggest market
in the West — California
— is expected to consider
recreational pot legaliza-
tion in 2016.
In other words, budget-
ers curious about marijua-
na’s tax potential will have
to wait.
“If they’re looking
at pot as something that
might swoop in and save
them, they need to keep
looking,” said Joseph
Henchman, an analyst who
has studied marijuana tax
collections for the Tax
Foundation, a nonpartisan
tax think tank.
LESSON TWO:
DON’T GET TOO EXCITED, EITHER
Both Colorado and Washington have seen tax collections fall
below some rosy projections. The effective tax rates are about 44
percent in Washington and 29 percent in Colorado, with plenty of
asterisks and local variances.
The states assumed that pot users would pay a steep premium to
stop using drug dealers and have clean, safe stores in which to buy
their weed. But the tax rates have led to a continuing black market,
Months of delays for permitting and licensing meant that po-
tential pot taxes went uncollected. And limited marijuana supply in
both states has further driven up the price of legal weed.
LESSON THREE: THINK
OUTSIDE THE BONG
Pot users these days aren’t using the drug the same way hippies
in the 1960s did. But Colorado and Washington weren’t entirely
prepared to deal with popular new forms of edible and concentrat-
ed weed.
It took more than 18 months for Washington to begin sales of
edible pot.
Colorado had regulations for edible pot already in place from
the medical market — but it stumbled, too, when the edibles proved
weren’t sure how much to eat.
Colorado has had to go back after the fact to tighten rules on
edible pot packaging and dosing.
LESSON FOUR: THINK ABOUT THE KIDS
It’s an obvious consequence of legalization — wider availabili-
ty for adults means easier access for kids.
School districts in both Colorado and Washington have re-
ported more kids showing up at school with weed. There have
been more kids treated at emergency room for marijuana inges-
tions, too.
Marijuana exposure isn’t fatal, but the experience so far in both
states underscores the need for states to have plans for talking with
minors about pot.
LESSON FIVE: THE THIN GREEN LINE
Law enforcement has a big role in reducing potential public
safety effects of legalization.
determine whether drivers are impaired by marijuana. After legal-
enough to haul someone to jail.
-
idence, telling legal growing operations from illegal ones, and
protecting new businesses may be targets for robbery because
they operate with large amounts of cash (because banks are leery
of assisting businesses that sell a drug that is illegal under federal
law).
C ITY OF A STORIA
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Astoria Mayor Arline LaMear will soon be making appointments to the City’s various
Boards and Commissions in 2015. The application form may be accessed by visiting
the City of Astoria’s web page at www.astoria.or.us and clicking on the “Forms and
Permits” link under “INFORMATION LINKS”. The application form is also available in
the Mayor’s Office on the third floor of City Hall. To apply for current vacancies, submit
an application form to the Mayor’s Office by 5:00 p.m. January 15, 2015.
Presently there are vacancies on the:
x Budget Committee
x Design Review Committee (vacant positions are for “Design Professional” and “Builder”)
x Historic Landmarks Commission
x Hospital Authority
x Library Board
x Parks & Recreation Board
x Planning Commission
x 3R Committee
Contact the Mayor’s Office at (503) 325-5824 or via email at jyuill@astoria.or.us for
additional information.