Colorado Pot Taxes: Not a Good Deal for Schools

Recent headlines proclaimed that Colorado raked in $44 million in tax revenues on recreational pot in 2014.

Amendment 64 promised voters there would be an excise tax on wholesale sales of retail marijuana, and the first $40 million raised each year by this tax would go towards public school construction.

But the 2014 revenues from that excise tax only amounted to just over $13 million.1 That’s not much school construction; it’s probably not even one whole school building.

Even among people in the marijuana industry there’s confusion, or obfuscation, about how much money from pot sales is going to schools in Colorado. The marketing director for a marijuana-infused product quoted here claimed that $40 million of 2014’s marijuana tax revenues went to “education.”

Nope – none went to education, but $13 million (not $40 million) will eventually go to school construction.

In exchange for a few school remodels a year, Coloradans have gotten:

  1. Marijuana tourists.
  2. More public pot consumption.
  3. Less enforcement of laws about public consumption of marijuana.
  4. More pot advertisement and promotion.
  5. More kids hospitalized due to consumption of marijuana edibles.
  6. Less understanding that pot is harmful to teens’ brains.
  7. More users among our state’s population.
  8. More citizens on the medical marijuana registry than prior to legalization of recreational marijuana.
  9. More pot on middle and high school campuses.

Not such a good deal for schools.

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1. Take a look at the State Department of Revenue’s numbers. Look at the Year-to-Date numbers for May and December 2014 and add them to get the total for calendar year 2014. The total of that excise tax is $13,341,000.

Colorado’s Pot Laws Hurting Some Small Businesses

Recently, my husband was up in Summit County, Colorado, for work. Summit County is where the ski areas Breckenridge, Keystone, Arapahoe Basin, Copper Mountain and Loveland are.

He was talking to a used-furniture store owner. She said that an estimated 500 ski resort workers are “couch-surfing” this ski season because of an unusual lack of rental housing. The reason for the lack of housing is that many landlords have quit renting out their properties because of damage from tenants’ growing marijuana in their buildings.

The furniture store’s business has been hurt by this lack of people having homes – couch-surfers don’t buy furniture.

In addition to lost income, mold, mildew, and water damage to the properties are just some of the problems that landlords have experienced.

Unlike in Washington State, in Colorado, growing pot in your home for personal recreational use is legal. To grow at home in Summit County, you need a permit from the county, and permission from the owner of your home if you are a renter. Growing pot is explicitly prohibited in many leases throughout the state, but many renters are in breach of their contracts.

Clearly, not all people who grow pot at home are following the laws. Enforcement of some regulations, such as Summit County’s requirement that permission is obtained from property owners before cultivation, is economically infeasible. Illegal grows are as difficult to distinguish from legal grows as renters are from owners.

Regulation of Colorado’s pot laws isn’t effective, enforcement is infeasible, and investment property owners and other small business owners are being hurt.

The Effects of Pot Culture on Colorado’s Kids

The marijuana industry, by co-opting symbols and words that signify health care, is very effectively planting in the minds of children the idea that pot is a health product. For children in particular, the opposite is true.

Last week we visited with family on the east coast. A relative who is moving to a new neighborhood mentioned a wellness center near her new house. My 11-year-old said, “I didn’t know you had pot stores where you live.”

Stunned, she explained that the place near her has a gym and a spa, but no pot.

We explained that marijuana stores in Colorado call themselves all sorts of things, including “wellness centers.” “Medicine,” “wellness,” “clinic,” “care,” “health,” “cure,” and “healing” are common words in pot store names.

Last summer, this same child of mine was watching a lot of the Tour de France. One day he asked me if France has marijuana stores. He had been seeing all the green crosses, signs for pharmacies, along the route, and assumed they were pot stores. In Colorado, green crosses signify marijuana stores.

For their health and well-being, children must be explicitly told that pot is not a magical cure-all wellness product. They must be explicitly told that using pot can damage their developing brains. Whether their parents realize it or not, everything that kids see and hear around them, from billboards to store signs to advertisements in the newspaper, is subtly, yet effectively, telling them that pot is good for them.

“The industry should not take a knee-jerk stance against regulation.”

Part of a comment on the last post, about novice users, was this: “The industry should not take a knee-jerk stance against regulation.”

The problem is that Colorado’s marijuana industry does reflexively object to, and actively fight, restrictions and changes to the way they’ve been doing things in the medical marijuana arena. When it comes to regulations, the marijuana industry ignores the fact that most retail (recreational) users are novice users and/or are from out of state. (Most regular recreational pot users in Colorado have medical cards.)

Colorado’s retail marijuana code currently requires that no more than 100 mg of active THC be in each individually-wrapped package of retail edibles (no more than ten 10mg servings of active THC can be in one individually-wrapped package). This limit was difficult to get to, because the industry fought it.

There are no limits on THC amounts per package of medical edible. So the industry objected to initial attempts to limit the amounts of THC per retail package to 10 mg. 100 mg was a compromise that the industry was not terribly happy with. They’d have to change their packaging! That costs money! (Along with trying to increase user numbers, this reaction is a natural part of capitalism.) So they fought, but eventually compromised at 100 mg, 10 times the amount proposed by non-industry groups involved in writing the legislation.

The proposed new lower limit of 10 mg makes much more sense, and it looks as if that will go forward and become law. It’s sad that sensible limits can only be achieved after tragedy. (Of course, a piling-up of tragedies is how we ended up with seatbelts being required by law to be provided in all cars.)

Capitalism doesn’t work for all the people in a country unless there are regulations to protect consumers, who don’t have the special knowledge that the people in the industry have. Unlike people in the marijuana industry, and experienced users, novice users have no knowledge of what might happen if they eat an entire pot cookie. Maureen Dowd ate one-quarter of her pot chocolate bar. There was no labeling on the candy to suggest that would be too much.

Businesses, especially when they have investors to answer to, do not do things that cut into their profits unless required to by law – even when public safety is an issue. So the industry fights changes and restrictions. Industry always has.

Colorado’s marijuana industry absolutely owes more to its novice-user consumers, even though that might cut into their profits. They owe consumers clear labeling, they owe consumers sensible THC amounts per package, they owe consumers some respect. Novice users in this industry should not be ridiculed for mistakes made due to lack of understanding, due to lack of explanation, especially when it’s the industry itself who pushes users in the direction of edibles.

Budtenders often recommend edibles instead of flower products to novice users, especially those who don’t smoke tobacco. There were no widespread stories like Maureen Dowd’s in the early days of 2014, when Colorado’s retail marijuana shops first opened, but, because of flower product inventory concerns in January, many retail pot shops pushed edibles pretty hard to consumers. With inventory concerns, employees of the store were not eager to share their knowledge that smoking is the easiest way to consume pot without overconsuming.

Again, more users, new users, are all part of the marijuana industry’s plan. It’s time for the marijuana industry and its fans to stop ridiculing the people who call for more safety measures to protect people such as the new users that this industry will soon come to rely on in order to remain profitable.

Legalization = Commercialization = Novice Users

Pot legalization means pot commercialization. Pot commercialization means advertising to, and drawing in, novice users.

More users, new users, are all part of the marijuana industry’s plan. Full legalization, such as Colorado’s, doesn’t work without commercialization. Commercialization doesn’t work without bringing in new users to keep investors’ and owners’ profits up.

Novice users mean lots and lots of experiences like Maureen Dowd’s and some experiences like Levy Thamba’s.

The marijuana industry and its fans keep blaming the victims – saying they should have known, they shouldn’t have eaten the whole cookie, they should have quizzed the budtender who sold them the edibles on how long, how much… A novice user has no idea what questions to ask.

Quit blaming the victims. Novice users are part of legalization of pot. The recreational marijuana industry needs to admit that they accept and embrace that, and do things that safely accommodate novice users, such as, I don’t know, print serving sizes on all packages? Put only one serving of pot in each individually packaged edible? Put only one serving of pot in only one serving of food, and individually package that?

The Colorado marijuana industry needs to stop whining about the regulations that are being imposed on them in an attempt to keep the public safer, and admit their own culpability in new users’ bad (or fatal) experiences with pot.

And the rest of the country needs to understand that legalization absolutely does mean an increased number of users. Voters, ask yourselves if you’re ok with that. (Legalization of medical marijuana is just the first step to full legalization of marijuana for recreational use. Before you vote yes on medical marijuana, ask yourself if you’re ok with going all the way on this.)

 

 

 

Froma Harrop is Way Off Base on Marijuana Legalization

Froma Harrop’s recent column suggests that legalizing marijuana is a good way to reduce heroin addiction. Her main point is this: “Bringing heroin addicts in for treatment deprives the cartels of their best high-volume customers. Legalizing pot puts them out of their most lucrative business. Using tax revenues from the legal sale of marijuana to pay for treatment completes the virtuous circle.”

Her main point makes some sense, but there are some huge problems with her overall logic.

Ms. Harrop claims “Because drug cartels garner 60 percent of their revenue from the marijuana trade, legalizing pot would smash up their business model.”

The problem with this logic is that these cartels are diversified businesses. Their business models don’t just crumble when pot gets legalized. They continue to diversify, and focus on their other areas, such as human trafficking, human smuggling, weapons trade, and trade in other drugs. How could they not? They won’t just go away. Just like all of us earning a living, cartel people have employees to keep, families to feed, bills to pay. They just move their focus from marijuana to something else. In fact, they often move on from growing and trafficking in marijuana to growing for and trafficking in heroin. This Washington Post article suggests that legalization and decriminalization of marijuana in the U.S. could be the cause of more easily available heroin across the U.S., and has actually led to today’s heroin epidemic.

Ms. Harrop writes “Why the heroin epidemic now? Much of the surge in heroin use stems from the recent crackdown on prescribed painkillers.” Partly true. But mostly, an increase in heroin addiction stems from an increase in doctors’ prescribing narcotic painkillers. Doctors prescribe too much of too many drugs to too many people. Many people become addicted, and look for something cheaper than the prescription drugs and find it in heroin. The prescription drugs used to be easier to find on the street than they are now. And heroin wasn’t so plentiful on the street before widespread legalization and decriminalization of marijuana in this country.

When it comes time to make laws and policies, the marijuana industry might not want to promote legalization by saying that the tax revenues from sales of pot would go to treat opioid addiction. That’s not a great selling point.

When trying to promote a legalized recreational drug industry in our country, it’s so much easier to sell voters and legislators on tax revenues for schools than to remind them of the drug addiction problems plaguing our country.

 

Colorado’s Marijuana Bait-and-Switch

Colorado retail marijuana excise tax revenues are substantially below what was predicted. They’re way lower than what voters were sold.

Anyone remember what Amendment 64 said?1

The first $40 million raised each year by the excise tax on retail marijuana is supposed to go to public school construction. No other specific taxes, and no dollar amounts from other taxes, are mentioned in the amendment. The promise of $40 million for school construction each year is what voters were sold. If we keep going at the rate collected in February, maybe we’ll get $4 million each year. That’s not much school construction.

January’s marijuana excise tax revenues were $195,318, February’s were $339,615.2 To get to $40 million in marijuana excise tax revenues for 2014, each month’s excise tax collections would have to be $3,333,333. Whoa – yeah, that’s almost 10 times February’s collections.

I was hoping that Pat Oglesby’s theory was right, and that January was the only outlier. (Seventeen times January’s revenues would get us to the right number.) Retail marijuana stores are allowed to make a one-time excise-tax-free transfer of inventory from the medical marijuana arms of their businesses to their retail arms. This happened with all the retail marijuana stores that opened in January. (Because it’s important that we… subsidize… this industry, by giving them… tax breaks?)

So what has happened? Why isn’t Colorado getting the excise tax revenues that were projected?

Since January 1, the number of Colorado residents on the medical marijuana registry has gone up.

More people are buying medical marijuana since retail marijuana stores opened, than before they opened. On February 28, 2014, the number of people on the registry was 2,462 more than the number on the registry as of December 31, 2013. (113,441 at the end of February vs. 110,979 at the end of December.)3

Why would the registry numbers go up? More sick people?

Well, taxes on recreational marijuana are much, much higher than taxes on medical marijuana. Probably what’s happened is that users who don’t want to pay the higher taxes of retail marijuana, but whose friends quit buying medical marijuana for them once recreational pot stores opened, put themselves on the registry. Maybe there were some others who thought they’d leave the black market once recreational became legal, but realized the taxes were too high, so they went the medical route instead.

Also, the marijuana industry remains primarily a cash industry, since many banks will not give marijuana businesses accounts, because marijuana is illegal under federal law, and banks are regulated by federal laws. Cash is easy to hide; it’s possible that business owners aren’t reporting all revenues and aren’t paying taxes on all sales. This is speculation on my part. But certainly it’s feasible. Marijuana business owners are willing to break federal law. Why would we assume they’d follow all state laws?

So why is this a problem? Why should this matter to voters?

Before Amendment 64 was implemented, the only legal pot we had was medical marijuana.

  1. Medical pot can be sold only to Colorado residents who are listed on the Colorado Medical Marijuana Registry.
  2. People who are not Colorado residents cannot buy Colorado medical marijuana.
  3. Legal consumption by those on the registry is limited by law to private places. If a registered patient is caught using in view of the public, the state health agency will revoke her registry identification card (“Red Card”) for a year.4
  4. There had been some police enforcement of laws against public use of pot.
  5. Children could be given the impression that it was medicine, meant for “persons suffering from debilitating medical conditions.” (Oh, wait, we were all told that.)

With legalized recreational marijuana, we have:

  1. Marijuana tourists coming from other places to buy pot here (including one teenager who came here from Wyoming to try pot, and died after jumping from a balcony following the consumption of a pot cookie).5
  2. More public pot consumption – it’s now perfectly legal in the City of Denver to consume marijuana on your front lawn in view of the public – even next door to a school.
  3. Testimony by Denver’s police chief that enforcement of illegal public consumption of pot (on public property) will be a very low priority for the police force.
  4. More pot promotion – the Denver Post, our primary newspaper, is a big promoter of pot, and, since legalization, has featured articles about hosting catered events for marijuana users, and tips for trying marijuana-infused edibles.
  5. More kids hospitalized due to consumption of marijuana edibles.
  6. Less understanding among children and teenagers that marijuana remains illegal under federal law, and is harmful to the developing brain.

Voters were sold on big tax revenues for public school construction, but if February’s numbers continue, revenues will be well below forecasts. And it’s not that people aren’t consuming as much pot as predicted – medical marijuana sales tax revenues are higher than projected.6

Legalization, which many voters supported because of the promised tax revenue, has allowed more legal consumption in view of the public, has caused less enforcement of the few restrictions on public consumption that we do have, and has created so much commercialization and promotion of pot that the well-being of Colorado kids is at risk.

But Coloradans aren’t seeing the benefits (the tax dollars) that were supposed to outweigh these harms. Legalization of pot in Colorado turns out to have been a big bait-and-switch scheme, benefitting, to an extent, the roughly 10% of Coloradans who are consumers, but mostly benefitting those profiting from this industry – the marijuana store owners. The majority of Coloradans are left with nothing but the harms.

Notes:

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  1. Amendment 64 Ballot Title: Shall there be an amendment to the Colorado constitution concerning marijuana, and, in connection therewith, providing for the regulation of marijuana; permitting a person twenty-one years of age or older to consume or possess limited amounts of marijuana; providing for the licensing of cultivation facilities, product manufacturing facilities, testing facilities, and retail stores; permitting local governments to regulate or prohibit such facilities; requiring the general assembly to enact an excise tax to be levied upon wholesale sales of marijuana; requiring that the first $40 million in revenue raised annually by such tax be credited to the public school capital construction assistance fund; and requiring the general assembly to enact legislation governing the cultivation, processing, and sale of industrial hemp? (emphasis is mine)  http://www.leg.state.co.us/LCS/Initiative%20Referendum/1112initrefr.nsf/c63bddd6b9678de787257799006bd391/cfa3bae60c8b4949872579c7006fa7ee/$FILE/Amendment%2064%20-%20Use%20&%20Regulation%20of%20Marijuana.pdf
  2. Denver Post article on marijuana tax revenues for February: http://www.denverpost.com/news/ci_25532130/colorado-marijuana-tax-revenues-total-3-2-million
  3. Medical Marijuana Registry stats: http://www.colorado.gov/cs/Satellite/CDPHE-CHEIS/CBON/1251593017044
  4. “No patient shall… [e]ngage in the medical use of marijuana in plain view of, or in a place open to, the general public. In addition to any other penalties provided by law, the state health agency shall revoke for a period of one year the registry identification card of any patient found to have willfully violated the provisions of this section or the implementing legislation adopted by the general assembly.” Colo. Const. Art. XVIII, Section 14
  5. Denver Post article on teenager who jumped off the balcony after eating a pot cookie:   http://www.denverpost.com/news/ci_25475533/denver-coroner-man-fell-death-after-eating-marijuana
  6. Denver Post article on marijuana tax revenues for February: http://www.denverpost.com/news/ci_25532130/colorado-marijuana-tax-revenues-total-3-2-million

 

Hard to Tell Marijuana Edibles Apart from Candy

Some marijuana-infused food products look, and taste, an awful lot like familiar candy and other sweets, especially when they’re out of the package.

A number of children have already been admitted to Children’s Hospital Critical Care Unit in 2014 because they ate marijuana-infused edibles that looked, and tasted, like regular sweets, and became severely depressed and ill with “an altered mental status.”

http://denver.cbslocal.com/2014/04/10/pot-or-not-can-you-tell-which-is-the-marijuana-edible/

A couple bills heard today in the Colorado House might help keep kids safer: http://denver.cbslocal.com/2014/04/10/hash-oil-edible-pot-before-colorado-lawmakers/

 

What Does “Regulate Marijuana” Really Mean?

I have a dear friend who was pregnant with her first child years ago. She was reading up on pregnancy, childbirth, caring for a newborn, and breast feeding.

She learned about the process of expressing breast milk. One day we were driving, about to get on the highway, which I called the “expressway.” She mentioned that she thought it was strange that people call highways “expressways,” because “express means to squeeze out your breast milk.”

I pointed out that the word “express” means lots of things. She quickly realized I was right, and I quickly realized that she was so incredibly wrapped up in the changes that were happening within her body, and the plans that she had to make for the near future, that she just wasn’t thinking of other meanings of the word.

“Regulate” means a few different things.  www.merriam-webster.com defines it as:
to govern or direct according to rule
to bring under the control of law or constituted authority
to make regulations for or concerning
to bring order, method, or uniformity to
to fix or adjust the time, amount, degree, or rate of

But to pro-pot activists, “regulate” is code for “legalize.”

I get that – “regulate” marijuana means to bring it under the control of government rules and regulations, and out of the control of the black market. It’s a valid use of the word, just as expressing breast milk is a valid use of the root “express.” And one way to bring pot under the control of legal authorities is to make it legal.

The most extreme example of that can be seen here in Colorado, where pot and pot-infused products are legally sold in retail stores to anyone in the world who is 21 or older, and pot grow operations to supply stores are legal. Here pot is fully legal and is regulated by the State and municipalities. (Growers and sellers have lots of rules to follow, and state employees are supposed to check up on them to verify that the rules are being followed.)

The oldest example of regulation of pot can be seen in The Netherlands, where cannabis coffee shops, although illegal, have been tolerated, as long as they don’t keep more than the tolerated amount of pot, or sell more than the tolerated amount of pot. Large-scale growing of pot is illegal and laws against it are enforced. In The Netherlands, pot remains illegal, but many of the laws against it are not enforced – this is a form of regulation.

The Twitter account associated with this blog has had 3 or 4 comments over the last few months about how the account “doesn’t seem like it’s for regulation.” I understand why the Tweeters have been confused. In their world, “regulate” means legalize, and my tweets are often about problems with pot.

When this blog and Twitter account were started, I didn’t realize that people could be so wrapped up in their issues that a narrow use of the word “regulate” would be the only use they could conceive of. Like my friend who was so obsessed with the baby in her tummy that all she could think of when she heard “express” was breast milk. (Not expressing feelings, not express mail, not espresso, not the expressway.)

One person on Twitter actually asked if the account was a “regulate marijuana page or an anti-marijuana page.” Well, it’s a I’m-stuck-with-it-but-I’m-not-going-to-bend-over-and-take-it-any-way-the-industry-wants-to-give-it-to-me page.

What I support is MEANINGFUL regulation. I don’t think legalization is good. But as a central Denver resident, I am stuck with it, so my focus is on regulation.

This blog was started AFTER we had legalized pot here in Colorado, during the process of drafting up regulations for pot. Although I didn’t vote for legalized pot, I’m not interested in trying to change that in Colorado. I wasn’t interested in pot policy at all until the City of Denver began the process of coming up with rules to regulate pot consumption, pot growth, pot product manufacturing and retail sales within the City limits. This was a process that I felt could be influenced, and needed to be influenced, by citizens. This is why the blog and Twitter account have the word “regulate” in their titles.

I also knew that the real work of regulating (coming up with regulations) BEGAN after legalization. Some pro-pot people seem to think that “legalize” and “regulate” are synonymous, and that the work of “regulation” in Colorado ENDED with legalization. Nope.

Denver has mostly finished drafting its rules. The State seems to be mostly tying up loose ends. But lawsuits and amendments and all kinds of other legal processes still have the potential to change pot rules here in Colorado and in Denver.

Regulation, making the rules and enforcing them, is an ongoing process, and always will be. Sadly, Colorado’s enforcement of its own rules is really ineffective; Colorado’s regulation of pot is ineffective. We still have unlicensed medical marijuana dispensaries operating 4 years after they applied for licenses. And these stores are allowed to apply for retail licenses! Colorado isn’t even enforcing the medical marijuana rules it drew up years ago. 2013 audits of the State’s and the City’s medical marijuana regulation showed that they’d been doing a terrible job.

The tweets and blog posts are meant to show why it’s so important to actually regulate the pot that we’ve legalized, and to actually enforce the rules. Regulation as I see it (strict, meaningful regulation) is fully a part of Amendment 64. The words “regulate” and “regulation” are all over the place in the text of that Amendment.

What I’m realizing now is that effective regulation of such an industry may not be possible, or may take decades to achieve. Despite the tax revenues coming in for the purpose of regulation, we have some bumbling government employees, some unethical businesspeople, and lots of citizens not paying attention. It may just be growing pains, or it may be more like Pandora’s box – we have unleashed lots of things here, that we may never be able to effectively control.

Colorado Still Has Unlicensed Medical Marijuana Dispensaries Selling Pot

Despite Colorado laws passed in 2010 requiring medical marijuana businesses to be licensed, Colorado still has some unlicensed medical marijuana dispensaries that are open and selling marijuana.

Businesses that were already open before the laws were passed had to apply for licenses, and were allowed to continue to operate while their applications for licenses were being reviewed. Nearly 4 years later, some applications for licenses are still being reviewed by the State.

Two of these unlicensed medical marijuana dispensaries were recently shut down by the State for violations of the laws regulating operations of medical marijuana businesses. Alleged violations include growing more plants than allowed by law, not having the number of security cameras required by law, and not tracking plants to make sure that the plants grown in the grow operations go only to the stores, which is required by law. (The grow operations haven’t been shut down, just the stores.)

As reported in today’s Denver Post, the owner of the stores is suing the State, claiming that his stores shouldn’t have been shut down, because included in the list of alleged violations was a reference to a criminal case against the owner, related to his marijuana business. He is suing because he said that State regulators told him that they wouldn’t shut down his business as a result of this criminal case unless there was a criminal conviction.

The State has enough on him to shut his stores down without these criminal charges. (The charges are that he was “using his marijuana businesses to run an investment scam and to illegally distribute pot,” according to the Denver Post.) His dispensaries are in violation of State laws with or without these criminal charges.

This story is a good illustration of the mess Colorado has created for itself. Why do we still have unlicensed medical marijuana dispensaries selling pot? And why do some of these business owners think they can get away with anything?