Pubdate: Fri, 16 Dec 2016
Source: Globe and Mail (Canada)
Copyright: 2016 The Globe and Mail Company
Contact:  http://www.theglobeandmail.com/
Details: http://www.mapinc.org/media/168
Author: Gary Mason
Page: A13

MANY POTHOLES IN MARIJUANA LEGALIZATION

There are lessons for Canada in Washington State, which got a quick
reality check about the market for recreational weed

About a year ago, I visited Seattle to see how pot legalization was
going. Not well, as it turned out.

A few years earlier, Washington State became one of the first U.S.
jurisdictions to vote in favour of legalizing and regulating the sale
of marijuana for recreational use. In 2014, the system designed to
manage the commercialization process was operational - and it didn't
take long for some early grumbling to become a nascent revolt.

Growers complained there were too many of them to make any money.
Store owners protested that the government taxes on pot were so
onerous it left them little financial gain. Meantime, medical
marijuana remained so cheap and easy to get few saw any impetus to go
to the more expensive government-regulated outlets. Police and others
echoed this sentiment, saying the black market was alive and well
thanks to the overpriced weed being sold in state-sanctioned outlets.

Needless to say, Washington State's system underwent some serious
tweaking. Taxes on pot had to be lowered (they now sit at 37 per
cent). Also, legislators voted to fold the medical marijuana system
into the same one designed for recreational use - and tax it at the
identical rate. This eliminated the incentive to purchase medicinal
pot instead.

There are also far more stores where you can now buy weed, which
helped clear the glut that made growers unhappy. The system isn't
perfect, but it's far better than the one initially introduced.

These are all important lessons for Canada as it prepares to launch
its own version of Washington State's regulatory regime. A report
tabled in Ottawa this week that made dozens of recommendations on how
it might best be done generally received high marks, and from all
points of the partisan spectrum. It highlighted some of the problems
Washington State and others encountered in the design of their
regulatory scheme.

There is lots still to figure out, not the least of which is: Where
will the stuff be sold? Government liquor stores seem to be out as an
idea - which is a good thing. But will you be able to get it from your
neighbourhood corner store or at the pharmacy stationed in the back of
your supermarket? The pot panel recommends a centralized distribution
system. But what impact would a government monopoly on distribution
create? Will it cater to just big producers, who can supply in bulk,
or will thresholds be low enough to accommodate smaller, craft growers?

How long will it be before we see major players big-footing everyone,
the way Tim Hortons and Starbucks have in coffee land? Would this even
be a bad thing?

All of these issues, to some extent, take a back seat to the biggest
question: How much will it cost?

If Ottawa and the provinces are looking at pot as one gigantic cash
cow then we're in trouble. There naturally will be a temptation to tax
the stuff at a high level, as the government does cigarettes. But if
that occurs, then those who were willing to use legitimate outlets for
purchasing cannabis will quickly revert to getting it from a friend of
a friend. The black market will barely flinch as users turn their
backs on high-priced government outlets. Therefore, there is a huge
imperative for governments to find that price-point "sweet spot" that
can both entice consumers and allow those along the supply chain to
make some money.

It would appear that the government has no plans to tamper with the
medical marijuana regime as it exists now, including the cost. So
people who can convince a doctor they need weed for their headaches
will still be able to get it mailed to them at a far cheaper rate than
they would pay at a store. Whether that creates the problem it did for
Washington State remains to be seen.

Pot is a multibillion-dollar enterprise. And until now, it was mostly
bad guys who were reaping its rewards. Pushing them out of the market
will have its own consequences; they will find other things to
traffic, stuff that is more dangerous and even more lucrative, such as
fentanyl or heroin. While solving one problem we may have just created
another, more deadly one.
- ---
MAP posted-by: Matt