As More Voters Legalize Marijuana, States Left With Regulatory Hurdles

By: - January 27, 2017 12:00 am

Rich Pedroncelli/Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

Marijuana watering

An employee waters plants at a medical marijuana dispensary in Sacramento, California. Voters in the state legalized recreational marijuana in the November 2016 election.

© The Associated Press

The battle to legally grow, sell, buy and smoke pot in California has been a long one.

Voters in the state ushered in medical marijuana 20 years ago, but took until last fall to approve a plan to legalize and regulate recreational marijuana.

Now, California officials are faced with setting rules for a product that has been outlawed by the federal government since the 1930s — a challenge that lawmakers and regulators in the other states that chose some form of marijuana legalization in the November election also are confronting.

Like California, Maine, Massachusetts and Nevada voted to legalize recreational marijuana. They also will need rules about where pot shops can be located and whether dispensaries can sell food and candy infused with marijuana. They will also have to dovetail their recreational regulations with an existing medical marijuana industry, while Arkansas, Florida and North Dakota will be building medical systems from the ground up.

It could take several years. Colorado and Washington paved the way for recreational marijuana by legalizing it in 2012, but they are still sorting out policy details.

There is often a gap between the language of ballot measures like California’s and the detailed regulations needed to get marijuana markets off the ground. And the referendums that voters approve often call for quick implementation, giving legislators and regulators little or no time to enact policies before the drug becomes legal.

“There’s no perfect implementation, there’s no perfect legalization effort,” said Michael Correia, a federal lobbyist for the National Cannabis Industry Association. “There’s going to be hiccups.”

In Montana, medical marijuana has been legal since 2004, but had become out of reach for many patients following a series of limitations issued by the Legislature. Now, after a November referendum, the state is poised to roll back restrictions on the number of patients a medical marijuana grower can serve, effectively opening the medical marijuana market once again.

Maryland, which approved medical marijuana in 2014, is now dealing with a spate of lawsuits against the commission charged with awarding sales licenses. Shops just opened in Alaska in October — almost two years after recreational marijuana was legalized there — and in Oregon, officials rushed to approve new packaging and labels just days before new rules took effect in October.

Arkansas and Massachusetts already are discovering the difficulty of setting up a regulatory system. Arkansas has delayed the launch of its medical marijuana program to give public agencies more time to prepare and lawmakers have introduced bills to restrict how the drug is used. Massachusetts lawmakers delayed the opening of marijuana shops by six months and proposed bills that would limit how much can be grown and possessed.

States also face banking challenges, licensing skirmishes and drugged driving debates. But despite all the difficulties, more states are expected to jump into the legalization fray. 

Already this year, at least 12 states are considering legislation to legalize and regulate marijuana. Another seven are looking at measures to decriminalize simple possession of marijuana and nearly 30 ballot measures related to marijuana are being considered for elections in 2017 and 2018.

States that have legalized recreational marijuana have been led there by voters emboldened by existing medical marijuana programs, a dying stigma surrounding cannabis use and a .1 billion industry.

And they have been able to adopt marijuana policy largely unbothered since 2009, when the federal government announced that it would not interfere with state laws that legalized cannabis. It is unclear how Republican President Donald Trump will approach marijuana policy.

Lessons Learned

No state has legalized recreational marijuana through its legislature. Even in Vermont’s General Assembly, which has already legalized medical marijuana and decriminalized possession of small amounts of pot, a recreational marijuana bill failed to pass last year.

But lawmakers in Colorado and Washington who have toiled over marijuana policy for almost five years say legislation, rather than the ballot box, is the way to go.

Building and regulating a new industry can be costly. For example, in 2014 Oregon estimated that it would cost almost $4 million annually to legalize marijuana — though states project tax revenue could far outweigh costs.

Frank McNulty, a former Republican state representative from Denver, opposes legalization. But he advises other states to work with the marijuana industry to establish a regulatory framework if a ballot initiative appears likely to pass.

In Colorado, the 2012 recreational marijuana ballot initiative took effect 30 days after the election. That left lawmakers without enough time to work on regulations, McNulty said. And, he said, poorly aligned medical and recreational systems have fed into black market sales. 

Three years after marijuana could first be bought and sold in Colorado, officials are still working through regulatory changes. This year already, bills have been introduced that would create a licensing system for marijuana smoking clubs, prohibit advertising marijuana without a sales license, and allow the use of medical marijuana for stress disorders.

Similarly in Washington, which legalized marijuana on the ballot in 2012, lawmakers are considering legislation that would allow retailers to sell marijuana merchandise like clothing that bears a store’s logo, regulate in-home marijuana production, and standardize the packaging and labeling of edible marijuana products.

Edible Marijuana 

Regulators also should brace themselves for a plethora of marijuana-infused edible products, such as candies and baked goods, which can be popular with first-time users who may be averse to smoking the plant.

Edibles affect the body differently than smoking marijuana. Because THC, marijuana’s psychoactive compound, is absorbed through the stomach rather than the lungs, it takes longer to feel its effects and the resulting high is lengthier than a smoker’s.  

This can be a problem for inexperienced marijuana users who ingest too much and find themselves paranoid, uncoordinated or hallucinating. Though marijuana proponents argue that too much marijuana can’t kill you, cannabis consumption has been associated with deaths, including that of a 19-year-old man who jumped from a hotel balcony after consuming a cookie that contained six times the suggested amount of marijuana in 2014.

What’s more, candied products can easily be confused with regular sweets and ingested by children who can experience even more severe effects. Emergency room visits and calls to poison control centers for children who accidentally consumed marijuana increased dramatically in Colorado after legalization.

Colorado has passed laws that require explicit labels and markings on edible products and set limits on serving sizes. But McNulty, who now lobbies the Colorado General Assembly, said the state needs to go further and regulate potency. Marijuana plants have been engineered to be more potent than they were 40 or 50 years ago and need to be regulated accordingly, he said.

Bringing California Online

One test of how well legalized marijuana is working will be when California, with about 39 million people and the sixth largest economy in the world, opens its recreational marijuana shops.

Market researchers estimate that the California cannabis market will grow by 18.5 percent annually over the next five years, reaching $6.5 billion by 2020. By comparison, revenue in Massachusetts and Nevada, which also legalized recreational marijuana in November, is expected to be about $1.07 billion and $629.5 million, respectively.

But regulating the California market won’t be easy. Already there are rumblings of pushing implementation back a year from 2018 to 2019.

And it won’t be entirely up to the state. Local governments will have a lot of say in determining when and where marijuana is bought and consumed.

They can ban commercial marijuana activity within their borders and will also oversee code enforcement as marijuana growing facilities are built. Ahead of the November vote, San Jose and other cities in California banned pot sales, at least in part to give themselves more time to develop regulations.

Some cities want to restrict felons with recent drug convictions from cultivating marijuana at home, while others have proposed a permit system for at-home growers, said Jordan Ferguson, an attorney who works for city governments around California.

Cities could also boost their treasuries by imposing additional taxes and fees on marijuana and the businesses that sell marijuana. Ferguson spoke of cities that could potentially double their annual budgets through development agreements with marijuana business owners eager to start operating.

“Some [cities] are taking a very conservative position and [remaining] hands-off until they see how the dust settles,” Ferguson said. “Some are saying, ‘Well, we’re going to regulate what we think is [reasonable] and if somebody disagrees with us, ultimately a court may have to settle it.’ ”

This is Part Five of the State of the States 2017 series.

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Sarah Breitenbach

Sarah Breitenbach, who writes about the business of government for Stateline, has spent much of her professional life writing about Maryland politics and policy. She began her career covering education and state government for the Frederick News-Post and has worked for the Gazette of Politics and Business and The Associated Press.