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For the last year, Ron Kammerzell has had one of the most scrutinized jobs in America. As the senior director of enforcement at Colorado Department of Revenue, he was one of the people charged with implementing legalized marijuana retail sales in the state. The work has had some ups and downs. According to a September poll by Suffolk University and USA Today, almost half of Colorado voters disapprove of the way the state has managed legal pot sales.
As part of our special series, A Year on Pot, Kammerzell spoke with America Tonight about the unexpected challenges state officials have faced over the last year and the ones they anticipate. Questions and answers have been edited for brevity and clarity.
What has been the biggest challenge this year?
I think the biggest challenge has been edibles. When we rolled out the regulation of retail edibles, we mirrored it very much after medical marijuana. The thing I think we didn't anticipate is that the average consumer for medical marijuana is extremely knowledgeable about the effects of THC [the psychoactive component marijuana], the effects of how edible products interact with their bodies. We really didn't anticipate we'd have the challenges with possible overconsumption of edibles on the recreational market.
Some of the edibles that are produced are a cookie. Well, the cookie might have 60 to 100 milligrams of THC in it. For a retail user who doesn't know about the effects of THC ingestion, he views that cookie as if anyone would a cookie: as a single serving. In fact, it's really multiple servings. So that was something we really looked at and really tried to flush out. We want to make sure that any consumer that buys a retail edible product clearly knows what a serving is.
Last year, officials in Amsterdam told us that they had warned the U.S. about edibles and that the amount of marijuana a Colorado resident can purchase was several times what's tolerated in the Netherlands. Now that there have been at least several hospital visits and two possible deaths connected to edibles, do you think this solution is coming too late?
No, I don’t think it’s coming too late. In large part, we can credit the industry when they started to see that there were some potential overconsumption issues in the marketplace. The industry, on its own volition, voluntarily started to really focus on making edible products that were smaller sizes. So long before we ever came up with regulation that mandated it, the industry really started to move in that direction.
Some of that, it's important to understand, is really outside of the control of the [Colorado] Department of Revenue and our regulatory scheme, because we have what's called a gray market here in Colorado. So we have the regulated industries: medical and retail businesses that are licensed by us and have to follow our regulations. And then, we have a caregiver model [people can grow cannabis for patients who can't grow it themselves], as well as personal growth allowances [people can cultivate up to six plants for private use only]. So some of those fall outside of our span of control. But at the same time, I think there are certainly some issues. Butane hash oil is a big issue, and again, I think the Legislature will try to address it this year.
We really didn't anticipate we'd have the challenges with possible overconsumption of edibles on the recreational market.
Colorado Department of Revenue
When this law rolled out or when it was being advertised, one of the things that was promised was that this was going to eliminate the black market. It seems like the opposite has happened. Was it a mistake to say this would eliminate the black market?
I think it’s unrealistic to assume that it’s going to completely eliminate the black market. I think it’s more realistic to say we’re going to shrink the black market and I think over time that’s likely to happen. We’ve collected $50 million in tax revenue this year, which translates into hundreds of millions of dollars of sales in the regulated retail and medical markets. That’s hundreds of millions of dollars that are not going to the black market.
If you look at the market study that we did last year, the estimated demand for marijuana in the state of Colorado is around 130 metric tons per year. And we’ve estimated that we’re going to sell about 77 metrics tons produced through the regulated market this year. So there’s still a gap. I think that gap will close over time.
What about the gray market? Who’s keeping track of what’s going on there?
Well, that's another challenge. The caregiver model is regulated, to some degree, by the Colorado Department of Public Health and Environment. They register patients and they register caregivers. I think that's an area that the Legislature's going to continue to look at to see if there's appropriate regulation. But part of this is constitutional. It's built into Amendment 64 [of the state's Constitution] that you can personally grow up to six plants in your home. That's going to remain a challenge.
And there's a role not only for state government and for the Department of Revenue, but there's a role for local law enforcement and local governments as well. A lot of them have responded to that. They've passed ordinances and they've been active in regulating that in their communities.
You can make the argument we’ve collected $50 million in tax revenue this year, which translates into hundreds of millions of dollars of sales in the regulated retail and medical markets. That’s hundreds of millions of dollars that are not going to the black market.
Colorado Department of Revenue
Can you give me some numbers about whether the state is on track to bring in the amount of money that was expected?
We're not quite there yet. What we saw initially is we thought that we would see more people convert or transition over into the retail market away from the medical market, and that hasn't really happened as prolifically as we thought it would. But we started seeing the retail market make some gains. Specifically, in July, we finally saw the general sales tax for retail marijuana eclipse the general sales tax for medical marijuana. So a little bit slower of a transition than we originally thought, but we think that the retail market's starting to make some gains.
Obviously, that's tough to hear. I think we've done a pretty responsible job of rolling this out, and we have a lot of other states looking at our model. Is it perfect? No. Have there been some challenges? Absolutely. But I think whenever you're embarking on a new challenge that somebody's never done before, somebody's never tackled before, we're pretty pleased with where we're at. I think we've got the regulatory framework in place, and I think we've done some pretty good things to address some of the concerns with overconsumption. So, from my perspective, I think we've done a very responsible job.
What’s the biggest challenge moving forward?
Collectively, for the state of Colorado, it's to really address the gray market. How do we effectively deal with the caregiver model and some of those other issues that are out there? How do we continue to shrink that black market? How do we deal with the challenges with personal growth? And again, some of those things extend beyond the Department of Revenue. But at the same time, we have to look at it as a state: How do we effectively put a regulatory framework in place that really addresses those federal concerns?