Washington State (my home) passed an Initiative legalizing Marijuana in November of 2012. This prompted me to do a post on the subject (http://sigma5.blogspot.com/2012/11/legal-marijuana.html) shortly thereafter. So how have things worked out in the two years that have passed since then? Well, that depends on your expectations. I laid out the history of Marijuana laws to that date in my previous post. I smoked a little Pot in my college years but have not touched it since. So I have little or no personal experience to fall back on nor do I expect to benefit directly from Pot legalization. I voted for legalization. You can probably figure out some of the reasons by reviewing my earlier post. But let me lay them out for you explicitly.
I see a close parallel between our Marijuana experience and the U.S.'s earlier experience with Prohibition. Federal prohibition of legal alcohol sales resulted in a great deal of lawlessness and increased consumption of the vary substance that was presumed to be bad. So it had the perverse effect of increasing the harm caused by alcohol. But it also resulted in the creation of a large criminal class and funded them profligately. This resulted in a lot of very bad things happening. And "law abiding citizens" broke the law in large numbers and often routinely. This threw the whole legitimacy of the criminal justice system into question. The criminal justice system is supposed to protect the good guys and prosecute the bad guys. But prohibition turned large numbers of good guys, namely drinkers, into bad guys. It also caused the criminal justice system to spend a lot of time going after people who provided a very popular and widely used service. The U.S., at least at the Federal level, came to their senses and repealed Prohibition after only about a decade.
I am willing to believe that Marijuana does some harm. But I believe that it will cause less harm if it is legalized and regulated. I believe it is a good thing for "good guys" to be able to buy and consume Marijuana legally. It gets the criminal justice system out of a dubious business. Legalization deprives criminals of a great deal of their income. That should result in fewer criminals and less criminality in non-Marijuana related areas. Marijuana can also be a source of substantial tax revenue. Alcohol is. Getting the money from Pot taxes is better than getting the same amount money somewhere else.
There is an issue with Marijuana that is not similar to Prohibition. The pressure to do something about Marijuana has been intense for some time. This has resulted in the evolution of a hybrid system "Medical Marijuana". As I indicated in my earlier post, there is some reason to believe that Marijuana has some medical benefits in some cases. States, Washington is one of them, put Medical Marijuana regimes in place. Initially, at least in Washington's case, a limited amount of Marijuana was permitted if it was for "medical purposes". Eventually this loophole was pried wide open. Now Medical Marijuana is widely available to almost anybody. And in Washington the regulatory regime covering medical Pot Dispensaries is a complete mess.
So my goals were to: (1) Move Marijuana out of the "prohibition" regime and make it a product that could be purchased legally. (2) I wanted to see the government put into a position where they could reap substantial income from it, just like liquor. (3) I wanted the legal system to be successful enough to drive the illegal business out of business. (4) I wanted the Medical Marijuana business to cease too. I figured the medical benefits could be provided by legal recreational Pot dispensaries having a "medical" sideline. (5) I wanted a well regulated business. Think of the Las Vegas Casinos. In the old days they were run by the mob. Now they are run by large traditional corporations that follow the law. I wanted the people in the Marijuana business to follow the law. I would be happier if it was a "mom and pop" business rather than one dominated by large corporations but the important thing was to make it "law abiding".
So how are things turning out? I would characterize the current situation as "not a complete failure". That kind of language is frequently just a polite way of saying "it's a fiasco but we don't want to say so". But in this case I think "not a complete failure" is accurate. I think it is also accurate to characterize the situation as a "work in progress". How so?
Well, recreational Marijuana is now legal in Washington State. It is also legal in Colorado, which passed an initiative the same time Washington did. Other jurisdictions (Oregon, Washington D.C., others) have either followed suit or look likely to soon. The Federal Government has weighed in. But the word from the Feds has been ambiguous. There is no official change in anything. Marijuana is still a "Schedule 1" drug. It is still illegal. I believe the position of President Obama is "let the experiment play out". I would characterize the present overall Federal position as one of "tolerance".
A side note, "tolerance" has a bad record in these parts. For many years extending to the '50s the Seattle Police Department had a "gambling tolerance policy". This tolerance extended to other areas like prostitution, "after hours clubs" where liquor was sold outside legally permitted hours, and other areas that generally fall into the category of vice. The idea was if you kept your establishment clean and quiet then the cops wouldn't hassle you. What the system evolved into was an extensive bribery and protection racket run by and for the benefit of the police department. Things finally got so bad that several major scandals resulted in the whole "tolerance" regime being shut down. So "tolerance" looks like a bad long term strategy to me. But it has at least allowed the experiment to proceed.
So it is now possible to buy Pot in Washington State for recreational uses legally, sort of. For very good reasons the state has proceeded very slowly. They turned regulatory authority over to the state Liquor Control Board, the agency that handles alcohol. The LCB is bound by the strictures of the initiative. And they have to deal with ambiguous Federal policies. This has caused them to run a very tight ship. They have put in stringent licensing procedures and kept the number of licenses available small. They have defined three groups: growers, retail sellers, and a middle group of processors. Each group has to operate under stringent regulations specific to their group. All product is tracked. High levels of security must be implemented. Strict quality control must be maintained. There are also stringent siting requirements (1,000 feet away from schools, for instance). The result is there are very few legal Pot shops around, prices are high, and selection is modest. The shops that are open do seem to be doing well but two years in only a tiny part of the Pot business in the state is handled through the new "recreational" system.
There has also been an unexpected hurdle thrown in. Several counties, cities, an other jurisdictions in the state have decided to ban the business outright. The LCB had allocated licenses to these areas (the LCB spread the few licenses they allowed out so that the state would be covered evenly). So those licenses are going to waste because the state Attorney General has issued an opinion that these lower level bans are legal. If I was the LCB I would have redistributed the licenses designated for the banned areas to areas where it was legal but so far they haven't done this.
As a result I believe there are now three legal Pot shops in Seattle. (And there is ongoing litigation surrounding at least one of them that may result in it shutting down or having to move.) Contrast this to the fact that there are over three hundred Medical Marijuana shops in Seattle. For the most part these establishments don't seem to cause trouble. Both the state and the City of Seattle are trying to figure out what to do about this. But so far they are still in the "I'm thinking about it" stage. From a practical matter these shops can't be shut down or drastically curtailed until there is a big enough "recreational" industry to step in. Such a recreational business looks years away at best, if things continue as they now are.
So the new "recreational" business is rolling out very slowly. In the mean time the "medical" business has been filling in the gap. I know the recreational market is too small to have an impact on the criminal business. I suspect the medical business is already big enough to have taken a big bite out of the illegal business. But I can't find any information to confirm or refute my suspicion. And there is some indication that criminals are running at least some of these "medical" businesses. At least one large "medical" business was recently shut down. But the cases are still pending in court and the operators are vociferously complaining that they are "legitimate" and the whole thing is "political" or a case of "discrimination".
It looks like things will move faster in 2015 but the pace will still be way slower than I would like. It hasn't been that way in Colorado. Colorado got up and running much more quickly than Washington did. Why? Most people agree it is due to the fact that Colorado had a good scheme for running their "medical" business. So they were able to flip their medical business into a recreational business quickly and smoothly. As I indicated in my previous post, Washington tried several years ago to put in a good "medical" program but the effort was sabotaged by the local Federal Prosecutor in Seattle. While this was going on the rest of the Federal government stood by silently and let it happen.
At its present rate Washington may have a large, well run, stable, recreational Marijuana industry that is big enough and successful enough to put the illegal industry out of business in about ten years. The LCB is planning on roughly tripling the size of the of the recreational business in 2015, as compared to 2014. But the three Seattle Pot shops need to turn into a hundred or more based on the number of "medical" shops currently operating. It is feasible for the LCB to continues to triple the size of the recreational business every year for a few years. Then they will have to slow the rate of growth down. And at some point they will want it to flatten the growth rate out completely. The LCB kept the number of "state stores" (the state had a monopoly on the sale of hard liquor until just recently) constant for many years. And what this means is that it will be ten to twenty years before the benefits I hope to see from a legalized Marijuana business to transpire. That's too long.
There is some reason to believe that the dam is finally breaking, however. Oregon legalized Pot in late 2014. This means that a fierce competitor will be located on Washington's southern border. The Oregon Initiative has lower tax rates and is much looser than Washington's. The Washington state legislature is supposed to leave initiatives alone for two years. That means that they can start fiddling with the Washington Pot initiative in 2016. The thing most likely to move state legislators to act in a pro-Pot direction is an argument that "Oregon is stealing business away from us".
If a bunch of states follow the Washington/Colorado path and put in legislation to legalize recreational Pot it will put more pressure on the Federal government to move to change regulations and perhaps laws to be more accommodating. One of the biggest current impediments is banking regulations. Banks are afraid to open up business accounts for Pot businesses. So the recreational Pot business is a "cash only" business. This means that Pot stores handle large amounts of cash. This means they are targets for robbery and it is hard for them to pay employees, deal with suppliers, pay rent, etc. If they could be "mainstreamed" from a banking perspective it would make it much easier to be in the Pot business. Again. the current situation harkens back to when the mob ran Las Vegas. If you want legitimate business people to run these businesses you need to let people do business legitimately.
In summary, with respect to Marijuana we are a long way from where I want to be. But we are moving in the right direction. And we are moving, just way too slowly. I also mentioned the second biggest segment of the illegal drug business in my previous post, Cocaine. The arguments for legalizing Cocaine are more or less the same as those for legalizing Pot. There is little or no evidence of any medical benefit to taking Cocaine. The evidence for harm is also more substantial in the case of Cocaine than it is for Marijuana. But the purported harm seems wildly exaggerated compared to the actual harm, just as it has been for Marijuana. And all the criminal and societal arguments are pretty much the same. Legalizing both Marijuana and Cocaine would pretty much destroy the "Robin Hood" argument, namely "while lots of people in the business are bad people this person is a good person". This is an argument that is at least slightly plausible with respect to the Marijuana and the Cocaine businesses. It completely lacks plausibility when it comes to other drugs. So I think we need to eventually move to legalize Cocaine too. But I think we need to move on Marijuana alone for a while and see how it goes before turning any attention toward Cocaine.
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