Passage will impact the entire country.
What happens in the state of California won’t stay in the state of California should voters decide to legalize recreational marijuana in the fall.
According to the following report in USAToday, changing the laws in the nation’s largest – albeit largely illegal – cannabis marketplace would most certainly set new standards all around the U.S.
Four states and the District of Columbia have already legalized recreational cannabis use, but advocates say California’s sheer size and position as a cultural trendsetter means any decision by its voters could accelerate legalization elsewhere. The state’s current loosely regulated medical system is worth about $2.7 billion, and experts say that will easily double within a few years if the voters allows adults to consume pot for fun.
“The entire industry is going to be reshaped and recreated … and I think it’s going to have reverberations across the country,” said Leslie Bocskor of the cannabis investment and advising firm Electrum Partners. “As this transitions into being a regulated market with taxes and fees, everything changes. And what’s going to happen is California is going to be reinvented into a well-regulated, profitable industry that will generate a lot of tax revenue and get all of that money out of the black market.”
Will require lab testing
The ballot initiative creates a system for taxing and regulating cannabis, requires contaminant testing, and establishes new rules for keeping pot out of the hands of kids. Many longtime legalization advocates in California, including former Facebook president Sean Parker, are backing the effort. The California Secretary of State announced Wednesday that the initiative gathered enough signatures from voters to qualify for the November ballot.
The stakes are huge. Experts say legal will pump billions of dollars into the state through a new network of licensed cultivation, distribution and testing facilities, all of which will need employees, construction workers and equipment. Today, the vast majority of that work takes place underground and almost entirely tax free.
One estimate values California’s recreational market at nearly $4 billion annually by 2020. Marijuana remains illegal at the federal level, although the Justice Department is generally leaving alone those states with strictly regulated industries and is instead focusing on large-scale operations violating both state and federal laws. If passed, the measure would create a new Bureau of Marijuana Control, require growers and sellers to pay taxes, and establish stiff penalties for anyone caught illegally diverting water, an aspect popular with environmentalists. It would also bar use by anyone younger than 21.
What legal weed would allow
The measure would allow adults to possess up to an ounce of marijuana at a time and grow six plants without needing a license. It also would bar public consumption grant business licensing priority to recognized medical marijuana producers. Giving preference to established medical marijuana industry players means they’ll get a jumpstart on their competition.
“It really tightens up what had been the most loosely regulated marketplace in the country,” said John Kagia, the executive vice president of industry analytics for New Frontier Financials, an data-analysis firm. “By and large … these are people who have always had access to cannabis. They’re just changing where they’re getting from.”
Bocskor said few medical marijuana providers seem to understand that they’ll need to play by the state’s newly passed medical regulations in order to be considered for recreational licenses. He said that will change rapidly once entrepreneurs get attorneys, land-use planners and investment advisers involved. As tax-paying businesses, he said, companies operating under a legal marijuana system will expect police, code enforcers and even zoning regulators to target the bad apples.
“All of a sudden there are going to be people spending time and money to get their licenses … they’re going to call up and say we’re being competed with by people who aren’t following the rules,” he said. “90% (of existing dispensaries) are going to be pushed out of the business in the first two years.”
Backers have already raised more than $3.5 million to support the initiative, and industry experts expect them to now flood California’s airwaves with advertising. The last major effort to legalize recreational marijuana in California failed to qualify for the ballot in 2014 and backers this time appear unwilling to make the same mistake twice.
Expected to pass
While the initiative is widely expected to pass, there’s significant internal debate in the marijuana community about whether it’s the right approach. Many small-scale marijuana growers worry they’ll be pushed out of their grey market industry in favor of industrialized farmers better able and willing to meet strict environmental and regulatory rules. That conflict is already visible in Humbolt County, one of the biggest producers of marijuana, where county officials created tighter medical marijuana rules and have seen only about 60 producers get permitted, out of the hundreds who are still growing illegally.
Kaia, who recently visited Humboldt County to better understand the simmering conflicts, said he thinks marijuana tourism could quickly become a major industry for California, the way people visit Napa and Sonoma counties to sample and buy wines.
“There is a potentially very significant tourism opportunity,” he said. “Regardless of what your perspective is … a tour through Humbolt is a profoundly fascinating experience.”