Prop 64 sounds great, right? Let’s legalize marijuana for everyone.
I have been advocating this position my entire life. The drug war has been a miserable failure and has cost our society billions of dollars, ruined countless lives through incarceration and violence, and created an entire criminal underworld built on the lucrative commerce of illegal drugs.
On the other hand, a legal drug market – not just cannabis, but all drugs – would destroy the cartels, improve the quality of drugs used by addicts (and thus the safety of the same) and generate tax revenues that could be put to good social projects (like schools). At the end of the day, I believe that people that want to use drugs will do so, regardless of their legal status. Better to let them do so under safer conditions, with education rather than creating criminal addicts and everything else we see happening with this misguided drug war.
Before we talk about change, and get mired down into the complexities of legislative language, let’s take a moment to reflect on how things stand now for the lucky people of California.
California Under Proposition 215
Since 1996 California has been operating under the rules of Proposition 215, a system that continues to thrive.
• Marijuana is readily and widely available at affordable prices. San Francisco alone has more than 100 dispensaries. They are on almost every block. Additionally, you can get product delivered right to your door within an hour, or sent by courier statewide within a day of your purchase. Those are Amazon-like service levels.
• Farmers and others are able to grow, distribute and generate profits without significant risk (despite the Schedule 1 classification, meaning that regardless of state law, cannabis remains illegal as far as the federal government is concerned). Occasionally they may be visited by law enforcement, but my understanding is that this is almost always the result of a complaint by neighbors due to some obnoxious condition on the grower’s property.
• Entrepreneurs of every description are entering the market, creating innovative new products and marketing them openly through dispensaries, at trade shows, events and online. Those with good business skills are outshining their competitors with better service, quality products, marketing and education. Cannabis is one of the most innovative and fastest growing industries around, and its creating employment for thousands.
• Patients can easily connect with doctors that are open-minded about the use of cannabis for most medical issues. Becoming a legal medical marijuana patient costs around $49 (per year) from HelloMD and others, and includes the advice of a doctor on the use of cannabis for your health & wellness. There is no need to register your information with the state, your health insurance company or your employer. Your information is confidential and protected by HIPAA laws.
So why would I vote no on 64? Let’s take a look at the Proposition.
If you wanted to legalize recreational marijuana, you could do it with legislation of a few pages. The first hint of a more muscular agenda afoot is the length of the actual proposition. Over 60 pages of legalese. What could they possibly find to write about? As it turns out, quite a lot.
In the words of the actual Proposition: “The purpose of the Adult Use of Marijuana Act is to establish a comprehensive system to legalize, control and regulate the cultivation, processing, manufacture, distribution, testing, and sale of non-medical marijuana, including marijuana products, for use by adults 21 years and older, and to tax the commercial growth and retail sale of marijuana.”
So not really to ‘Legalize marijuana for recreational use” as most people think Prop 64 is all about.
What’s Wrong with Prop 64?
Rather than go through the entire bill and its intent, I am going to highlight the parts that I find most problematic.
Prop 64 imposes a cultivation tax of $9.25 per ounce for flowers, and $2.75 for leaves, along with a 15% tax on the retail price. Moreover, local municipalities are left free to impose their own taxes as well. So if you want to sell marijuana in your local town, they will determine what taxes you need to charge on top of the state tax, which might just eliminate your market.
What will the additional new tax burden be to consumers? It’s hard to tell without the local tax rate information, but I think it’s likely to be at least 29%, which will drive up the price to consumers considerably. Don’t forget that a black market also exists today, and so excessive taxation can have the effect of just perpetuating the existing (untaxed) illegal market.
How much of this revenue (estimated to be up to $1 billion annually) would be allocated to public schools and other worthy projects? None of it at all. Instead it goes into a special fund created by Prop 64 itself, the California Marijuana Tax Fund, where much of the money has already been allocated to various interests including the apparatus of managing the industry itself.
Three Tier Distribution
Prop 64 mandates that all distribution of cannabis from growers to retailers, will now have to pass through the hands of third party (licensed) distributors. Big alcohol distributors are already muscling into these incredibly lucrative positions, potentially further driving up the costs by as much as 30%.
This is a big change to the current system. Today if you are a grower, or an edibles manufacturer, you can choose to do business with a distributor, or you can choose to go directly to the retailer yourself. Many deal direct, because they have relationships, like to control their own delivery of product and feel it’s a competitive advantage to their business. Why should the government take this business decision out of the hands of the entrepreneurs?
Moreover, these new distributors are going to be in very powerful positions (since they cannot be avoided). They will mark up the cost of product, make a profit of their own and control where and how all cannabis products are distributed. This is the very definition of what is known as ‘big business’ and the end result is never good for consumers, or small business owners. I personally think that markets function best with less government interference.
Destruction of the Existing Medical System
For the past 20 years, being a medical marijuana patient in California has been very straightforward. An annual doctor’s consultation was all it took. No need to register with the state, no need for your medical insurance rates to rise, or your employer to find out or discriminate against you because of your choice to medicate. With the introduction of Telehealth services like HelloMD, this has become even more convenient. That annual doctor’s consult now happens from the privacy of your home, at a time of your choosing.
RELATED: ABOUT PROP 64 – WHAT YOU SHOULD KNOW
Not so under Prop 64. Now (if you want to remain a medical cannabis consumer) you will need to register with the state, and (in addition to what you pay your doctor) you will have to pay a $100 state fee. For many, this state registration is problematic in that there is no guarantee that your insurance company or your employer won’t find out about your medicating. Let’s also not forget that you are still committing a federal crime, and so if you work in government or think you might in the future, or you are worried about your citizenship or any other involvement or dealing with the federal government, state registration is really an issue that is going to prevent you from getting a medical card.
Let’s not forget too that the DEA is a federal agency. The FEDS have stated their intention not to interfere too much with those in compliance with their state laws, although there is nothing stopping them from doing so. Right now, Californian’s using cannabis have the protection of the medical system on their side. IE: they have doctors that have specifically authorized them to use cannabis for their health, and the protection of Prop 215, passed by the people of California on their side. Under Prop 64, for those that are considered recreational users, there is no such protection from the Feds, moral, medical or otherwise. The federal government is still trying to get its head around the idea of medical marijuana. Recreational cannabis put Californians further out of alignment with where federal policy is today.
For those of us that believe in the medical benefits this plant has to offer society, it’s important for the continued progression of the industry from the shadows of stigma, that a strong medical / health & wellness orientation is maintained. If medical cannabis is overwhelmed in the state of California by the momentum of the recreational market, we may never see the adoption of the plant by tens of millions of Americans that do not want to be associated with recreational use, but may benefit in using cannabis for their health & wellness. I am thinking of the 110m Americans with chronic pain, the 60 million that suffer from insomnia, the 76 million with migraines (the list goes on and on). For these everyday Americans to enter the market, they need to see it as an acceptable, mainstream solution to their medical concerns, without the negative association of recreational use and all that it entails.
Legislators Ability to Interfere
Do you think you will get what you are voting for? Prop 64 includes a rare provision allowing the legislative body to make alterations to the law after it gets passed. Unlike Prop 215 which can only be changed with another voter approved measure, Prop 64 can have key elements changed by the legislature with a simple majority vote on the sections pertaining to Medical and Adult Use, and just about anything at all can be changed by a two thirds vote of the legislature. This includes tax rates, taxes on medical, the intrusion of big business in the industry, or your rights to grow plants at home.
If you think this is unlikely, consider what happened in the state of Washington. Just six months after the first recreational stores opened in Washington, the legislature introduced a measure to end the states 15-year-old medical marijuana program, close all medical dispensaries and dramatically limit how much patients could grow at home. This was a deliberate move to force medical patients into the heavily taxed recreational system, where they face a whopping 37% tax on their medication, on top of the already inflated price of cannabis. Compare that sorry situation with how things currently look in California under Proposition 215!
Are My Concerns Warranted?
I am not the type of person to worry excessively. I will be the first to admit that a lot of what I have written above pertains to what ‘might happen’ as opposed to what ‘will happen’. Ultimately, a lot of the consequences will be determined by the people and companies involved as the market evolves. These are for the most part at this time, simply unknown.
That said, we should not take our rights to use, purchase, grow and possess cannabis as medical patients for granted. The system in place under 215 has served Californian’s very well indeed, and continues to do so today. I personally feel no restriction to access to under the current system, and I am pleased to have the advice and oversight of my doctor in my choice to medicate. Medical cannabis is currently in place in California, is not a broken system and helps people every day. Do we really need to replace it?
Proposition 64 at best introduces a lot of change and uncertainty, and at worst could practically destroy the medical system in California as we know it. With the Feds refusing to reschedule marijuana for the time being, I believe that California would do better to continue with the medical system created by Prop 215 firmly in place, irreplaceable other than through a voter approved initiative.
We have a lot on the line here. Let’s not screw this up.
Join me in voting NO on Prop 64.
(Whether you agree or disagree – post a comment below and let me know why)