Pubdate: Fri, 09 Jan 2015
Source: Wall Street Journal (US)
Copyright: 2015 Dow Jones & Company, Inc.
Contact:  http://www.wsj.com/
Details: http://www.mapinc.org/media/487
Author: Dan Frosch

IN COLORADO, POT LEGALIZATION FAILS TO MATCH PREDICTIONS  OF SUPPORTERS

Forecasts of Big Tax Windfall, Dire Social Consequences Don't Prove
Entirely True

DENVER - Before Colorado became the first state to allow marijuana for
recreational purposes, supporters boasted that legalization would
generate a sizable tax windfall, while opponents warned it could have
serious social consequences.

Just over a year into the state's experiment with sanctioning pot
sales to adults 21 and over, neither prediction is proving entirely
true. Marijuana so far hasn't been the boon or bane that many
expected, offering potential lessons to other states considering
legalization.

The office of Colorado Gov. John Hickenlooper last February estimated
the state would haul in nearly $100 million in revenue from
recreational marijuana taxes in the fiscal year that began in July.
But sales have been slower than expected""due in part to a 25% tax
rate that experts say has steered potential users toward medical
marijuana, which is cheaper.

State economists revised their own, separate forecast on Dec. 22,
estimating that recreational pot sales would generate $58.7 million in
tax revenue for the fiscal year, down from $67 million.

"It was an educated guess, because we were dealing with a federally
illicit product,"  said Larson Silbaugh, a senior economist with the
Colorado Legislative Council.

Meanwhile, fears that legalization would trigger a marked jump in teen
drug use also don't seem to have been realized. Fewer high-school
students reported using marijuana in 2013 than 2011, according to a
survey released in August by the Colorado Department of Public Health
and Environment.

After Colorado voters approved a landmark measure legalizing pot in
2012, the drug became legal for adults in the state to possess and
grow in 2013, though retail sales didn't begin until the start of
2014.

"All of the concerns you had about kids and spikes in uses, none of
that materialized,"  said Christian Sederberg, a partner with Vicente
Sederberg, LLC, a Denver law firm that represents the marijuana industry.

Washington became the second state to allow recreational pot sales
last summer, and Oregon and Alaska approved legalization measures in
November. Activists are pushing legalization in several other states,
including California, where they aim to put a measure on the ballot in
2016.

To be sure, there have been problems with marijuana safety in
Colorado, especially with edible forms of the drug, which the state is
struggling to regulate.

As of Nov. 30, the number of calls to the state's Rocky Mountain
Poison and Drug Center by people experiencing adverse effects from
marijuana nearly doubled, to 202, compared with the whole of 2013,
according to the latest available data.

Several Colorado doctors recently reported in the Journal of the
American Medical Association that local hospitals had seen an uptick
in patients who became sick from ingesting too much marijuana,
particularly children.

According to a recent federal survey, marijuana use among Coloradans
age 12 and over went up slightly between 2011 and 2013, to 12.7% from
10.4%.

"oeThis is exactly what we were worried about,"  said Kevin Sabet,
director of the drug policy institute at the University of Florida,
and co-founder of a group, Smart Approaches to Marijuana, that opposes
legalization.

Neighboring states are also complaining that Colorado marijuana is
flooding their jurisdictions. Nebraska and Oklahoma last month sued
Colorado in the U.S. Supreme Court, claiming that legalization has
resulted in more interstate drug trafficking and violates federal law.

In some ways, however, marijuana has been woven into everyday life in
Colorado, as more than 200 highly regulated retail businesses sell
their wares around the state.

State lawmakers and economists say pot is indeed contributing to
Colorado's economy, spurring tourism and the conversion of blighted
warehouses into marijuana grow-houses.

According to state figures, nearly 16,000 people are now licensed to
work in the marijuana industry in Colorado. And a study conducted last
year for the state by the Marijuana Policy Group, a Colorado research
firm, found that tourists accounted for nearly half of recreational
sales in the Denver area and 90% in popular mountain
communities.

Warehouses in Denver are now selling for $75-$100 a foot, up from
$40-$60 a foot last year, according to Tim Shay, a senior vice
president at Colliers International brokerage firm, who noted that the
pot industry was the driving force behind the price surge.

On a recent day in the Denver suburb of Edgewater, several customers
milled about Live Green Cannabis, eying an expansive display of pot
strains like "Star Nebula"  and "Sour OG."

"As an industry, we're excited that we're setting a model for
the rest of country,"  said Brooke Gehring, a former commercial
banker who owns Live Green and several other pot stores around
Colorado. She noted that since recreational marijuana sales began Jan.
1, 2014, Live Green has seen up to a tenfold increase in daily
customers, with sometimes as many as 500 a day.

While tax revenues may have been less than originally forecast,
experts note that a number of municipalities chose to wait before
allowing recreational sales, or banned them outright, which ended up
affecting tax collections. Collections have generally been increasing
since last January, according to the state's department of revenue.

Some lawmakers initially against legalization have since committed
themselves to making it work, including state Sen. David Balmer. The
Republican from Arapahoe County said many of the concerns voiced by
critics of marijuana legalization haven't been realized, and the
drug is proving to be a viable economic contributor.

"I just had the same knee-jerk opinion as all of the other elected
officials,"  he said. "But once I toured the dispensaries and the
warehouses, and I saw the dramatic regulatory framework that has been
set up, I wanted to help the business community succeed."  
- ---
MAP posted-by: Jo-D