In some places, the question has moved on from whether pot should be legal to how it should be regulated and taxed.Pablo Porciuncula/AFP/Getty Images
BOULDER, Colo. — The future of marijuana is lighting up.
Two states and the nation of Uruguay legalized marijuana in 2013, and with a majority of Americans favoring legalization, look for 2014 to bring more efforts to take it mainstream. The New York legislature is considering a bill to legalize pot, as are Rhode Island lawmakers. Legalization petitions also are circulating in Alaska and Oregon. California voters likely will consider legalization again in either 2014 or 2016 after rejecting the idea in 2010.
Regulation — often billed as “regulation like alcohol” — is key to the legalization efforts, and state and local governments struggled to develop those regulations during the past year. The regulations range from childproof packaging to elaborate application processes and beyond. Retail stores are expected to open in Colorado shortly after the first of the year, though the initial rollout may be limited by regulatory requirements; stores in Washington are expected to open in June.
Many of those initial retailers will be grandfathered-in medical marijuana businesses, which typically sell a range of smokeable cannabis, along with oils, edibles and other products.
There are the seemingly minor details to be regulated. Can you smoke on the street? No, it’s illegal to smoke in public in both states. What about your front porch? Depends on the city; Denver recently agreed to allow it. Then there are the bigger issues, such as licensing and taxation.
One of the attractions for state governments is the ability to tax marijuana products at higher rates than other retail products. Washington will levy a 25 percent excise tax as well as standard sales taxes. That could bring in up to $2 billion in the first five years, the state estimates. Colorado voters overwhelmingly approved a 15 percent excise tax and a 10 percent sales tax on marijuana products, with some localities tacking on additional taxes.
Such heavy levies could keep the medical marijuana industry strong in the two states, since medical users won’t have to pay additional taxes. Almost 112,900 Coloradans had medical cards as of September, with an average age of 41; 67 percent are men.
Whether serving medical or recreational customers, the pot business in these two states is about to boom. That business goes beyond the dispensaries that will be the retail face of legal marijuana. There are those who make the infused oils, edible brownies and more. There are lawyers helping businesses navigate the regulatory framework. It wouldn’t be surprising to see big tobacco step into the business through the side door of vapor or electronic cigarettes, which the industry is promoting heavily in the U.S. and Europe.
Even agriculture could get a boost from legalization. Colorado recently approved regulations for hemp farming, and seven other states also regulate industrial hemp, which despite low levels of THC is still listed as a Schedule I drug by the federal government.
The federal listing of marijuana and even hemp as a controlled substance remains a potential barrier to legalized marijuana. Regulators and cannabis businesses are walking a tightrope to avoid federal violations. The U.S. Justice Department announced in August it wouldn’t sue Colorado or Washington over legalization, but that doesn’t mean the feds will turn a blind eye to criminal activity.
In late November, the DEA raided several medical marijuana businesses and grow operations. They arrested a Colombian national on charges of illegal possession of a firearm, but it is unclear how he is related to the marijuana businesses. Last summer, the feds raided some Washington state dispensaries.
And because of pot’s illegality at the federal level, banks often won’t deal with marijuana-related businesses.
U.S. Rep. Jared Polis, D-Colo., introduced a bill in the House earlier this year to legalize marijuana, while a bill by an Oregon representative would levy federal taxes. But those bills are sitting in committees, unlikely to see much attention in the Republican-controlled House.
There will, however, be plenty of attention paid to Colorado and Washington in 2014 to see how their legalization efforts turn out. Some Colorado companies hope to lure visitors from other states by promoting pot tourism.
And the media is gearing up, too. Denver alternative weekly Westword employed a marijuana critic in 2009 to review and write about the industry. The Denver Post is following suit for the New Year, with a website devoted to cannabis and a newly appointed editor to run the site.
Meanwhile, the rest of the nation can follow along in the funny pages, as two Doonesbury characters pursue their potrepreneurial dreams in Colorado.