Marijuana Industry

The race to be the next state to legalize marijuana at the ballot box is on. Activists in three states -- Alaska, Arizona, and Oregon -- have taken initial steps to get the issue before the voters during the 2014 general election.

In Alaska, Lt. Gov. Mead Treadwell last Friday certified a ballot initiative application that would legalize the possession of up to an ounce of marijuana by adults. Backed by the Marijuana Policy Project, the initiative would also set up a system of taxed and regulated marijuana commerce. Adults could grow up to six marijuana plants for their personal use.

Proponents will have one year to gather 30,169 valid voter signatures to qualify for the ballot. But they have to wait a week or so for the state elections division to begin printing the petition booklets.

Alaska already allows for adults to possess small amounts of marijuana in their homes under the state Supreme Court's interpretation of the state constitution's privacy provisions.

In Arizona, Safer Arizona is sponsoring an initiative to amend the state constitution to allow for legal, taxed, and regulated marijuana use and commerce. The group filed the measure last week with the secretary of state. It now must gather 259,213 valid voter signatures by July 3, 2014 to qualify for the November 2014 ballot.

Organizers there said it would be a grassroots campaign relying on volunteers. The conventional wisdom for initiatives in high signature-count states is that they require paid signature-gathering efforts to succeed at a rough cost of a dollar or more per signature obtained.

Arizona voters approved a medical marijuana initiative in 2010, but that initiative squeaked through with barely more than 50% of the vote.

In Oregon, Paul Stanford, the controversial proponent of last year's failed marijuana legalization campaign, is back with two more measures, and other activists could file yet a third. Stanford's Oregon Marijuana Tax Act initiative largely echoes the language of last year's underfunded initiative, which picked up 47% of the popular vote, but reworks a contentious provision relating to a commission to regulate marijuana and hemp commerce. Stanford's second initiative would simply legalize the possession and production of pot by adults 21 and over with a proviso that the state could impose regulations.

Stanford's move has inspired other Oregon activists organized as New Approach Oregon to say that they will likely have a better alternative initiative. "Something will be on the ballot," the group's Anthony Johnson told The Oregonian. "Either it's going to be a responsible measure or something not as well-vetted."

Stanford said he will conduct polling on the various measures before moving forward.

If legislators can't get around to legalizing marijuana, activists in initiative states want to let the voters do it for them. That's three states aiming at 2014 so far, and we're still a year and half out from election day.

Voters approved the marijuana legalization initiative I-502 in Washington state last November, and it is now legal to possess up to an ounce of marijuana, but a full-blown marijuana commerce industry doesn't just happen overnight. The state is still months away from having a functioning system of state-taxed and -regulated marijuana cultivators, processors, and retailers, but the process is well underway, and by most accounts, it is going relatively smoothly.

Last month, the Washington Liquor Control Board (LCB), the state agency charged with setting up the state's marijuana industry, issued its initial draft rules. It took written comments on the initial draft rules through Monday and will issue revised draft rules later this month. The LCB will hold public hearings on the rules for all three envisaged licenses -- grower, processor, and retailer -- in late July, promulgate final rules in August, begin accepting license applications in September, and begin issuing licenses in December.

From then, it is still likely to be months before the first legal marijuana is sold in Washington because only once growers are licensed will legal marijuana destined for retail sale be in the pipeline. It takes a minimum of three months to bring an indoor crop to harvest. But by sometime next spring, consumers should be able to go to their local pot shop and make their selections.

"These initial rules balance our goal of developing a tightly regulated system with reasonable access for small and large business models to participate within the system," said Board Chair Sharon Foster. "They are based upon hundreds of hours of internal research and deliberation, consultation with multiple industry experts and input from the over 3,000 individuals who attended our forums statewide."

The initial draft rules reflect the Board's stated goal of developing a tightly regulated and controlled recreational marijuana market. Included in the rules are elements that address out-of-state diversion of product, traceability of product from start to sale, youth access and other public and consumer safety concerns.

Here are some of the key elements in the initial draft rules: 

License Requirements

• Application Window -- The application window would open for 30 days for all license types and be extended or reopened at the Board's discretion. This approach was similar to how Colorado opened its medical marijuana system.
• Background Checks -- License applicants and financiers would be required to submit a form attesting to their criminal history, provide fingerprints, and allow criminal background checks. 
• Point System -- The WSLCB would employ a disqualifying criminal history point system similar to liquor. An exception would be allowed for two misdemeanor convictions of possession within three years.

Public Safety

• Producer Structures -- Producer operations would be allowed in both secure indoor grows or greenhouses.
• Traceability -- A robust and comprehensive traceability software system will trace product from start to sale.
• Violation Guidelines -- In addition to the $1,000 fine for certain violations established by I-502, the initial draft rules also include a strict tiered system of violation penalties over a three year period (similar to the current standard penalty guidelines for liquor).
• Security -- The rules direct strict on-site surveillance systems similar to Colorado's current system.  
• Advertising Restrictions -- I-502 restricts advertising within 1,000 feet of schools, public parks, transit centers, arcades, and other areas where children are present. The draft rules further restrict advertising as they pertain to children.

Consumer Safety

• Behind the Counter Storage -- No open containers allowed.  
• Package and Label Requirements -- Consumers will know contents and potency of products they purchase.
• Defined Serving Size -- Serving sizes equal 10 mg of THC. Products are limited to 100 mg.
• Lab Tested -- Uniform testing standards by independent accredited labs.

With the release of the initial draft rules, the period for written comment opened up. One of the first analyses -- not a formal comment -- came from the Henry Wykowski law firm, a San Francisco marijuana law practice that recently opened a Seattle office. Drafted by Wykowski attorney Rachel Kurtz, a longtime player in the Seattle marijuana reform scene, the analysis shined a light on some of what could be described as the rules' downsides.

"Hash will not be allowed for sale at the retail stores," the analysis noted. "According to the draft rules WAC 314-55-079, 'marijuana extracts,' such as, hash, hash oil, shatter, and wax can be infused in products sold in a marijuana retail store, but RCW 69.50.354 does not allow the sale of extracts that are not infused in products. A marijuana extract does not meet the definition of a marijuana-infused product per RCW 69.50.101."

The Wykowski analysis also warned that "fingerprinting will be required and sent to the FBI for anyone with an interest in the business being licensed, including financiers." That means anyone seeking a marijuana license is potentially incriminating oneself to the federal government, which continues to consider marijuana an illegal substance, even in states that have legalized it.

After Monday's deadline for comments passed, the LCB reported that while initial comments on the rules were relatively light, the agency received extensive written comment over the final weekend and throughout Monday from public and private organizations.

"In keeping with our goal of an open and transparent process for drafting the rules, we’re going to take an additional two weeks to consider the last-minute input we’ve received," said LCB Director Rick Garza. "The Board was prepared to issue the rules on June 19. However, it's our responsibility to carefully review and consider the comments we received."

Among those commenting were Washington NORML, the Washington Cannabis Association, Seattle City Attorney Pete Holmes, organizations with concerns about impacts on minorities, and organizations with concerns about prevention, treatment, and public health, both led by the ACLU of Washington, whose Alison Holcomb took a leave of absence to lead the I-502 campaign to victory. The comments revealed a variety of interests -- some conflicting -- and concerns from various stakeholders in the issue.

The prevention, treatment, and public health groups called for tighter restrictions on packaging, labeling, and advertising, shorter hours for retail outlets, and getting rid of the logo that features a marijuana leaf centered over an outline of the state, while the minority groups called on the LCB to ensure that their communities did not become dumping grounds for marijuana retail outlets.

"Initiative 502 was designed to achieve better health and safety outcomes for our families and communities than marijuana prohibition has," said Holcomb. "It was not intended to 'mint marijuana millionaires' who prioritize profits over public health. The goal is to improve upon our experiences with alcohol and tobacco, not repeat them."

"We supported I-502 because we were very concerned about the disproportionate enforcement of marijuana possession on African-Americans and communities of color," said Jon Gould, deputy director of the Children's Alliance, which signed onto the public health comments. "Prohibition hasn't worked, and it has had damaging effects on children and families. We think regulation would be better."

"The Board needs to remember that it is setting a standard for marijuana regulation," said University of Washington professor Roger Roffman, who also signed on to the public health comments. "We have a unique opportunity to create a system that discourages glamorization of marijuana use and encourages respect for the public's health and wellbeing. Let's not waste it."

While the public health and minority communities were concerned with restraining the marijuana marketplace, other constituencies had other concerns.

"Most of our constituents are small growers with a hundred plants or less. We argued that when it comes to growing, priority should be given to individuals who are willing to have a garden of 99 plants or less," said Kevin Oliver, executive director of Washington NORML.

"Our constituency includes two separate US Attorney districts that have disparate levels of enforcement activity. If the US Attorney's Office in the Eastern District gets wind of any marijuana operations, they shut them down. They're discussing zoning for grows the size of a football field in Seattle, and good for them, but that won't fly in eastern Washington. If they ignore the little guy, that's going to cut out anybody in eastern Washington, that's why we want them to prioritize for small growers under 99 plants."

The 99 plants number is based on federal mandatory minimum sentences that kick in at 100 plants, but is also based on the observation that federal prosecutors are unlikely to go after grows that small when there are bigger fish to fry -- and bigger punishments to hand out.

"Our concerns were very similar to most everyone else who was frustrated with the board's definition of what can be sold at retail and it's not allowing extracts like hash oil," said Kurtz, who worked with the Washington Cannabis Association in crafting its comments. "Nobody is happy about that. There are a lot of business people who were counting on that for their business model. The whole purpose of the initiative was to get rid of a black market, but by not allowing that retail, a black market will remain. We might as well actually regulate because it's going to happen regardless, but they don't seem very keen to change," she said.

"The draft regs also don't allow for outdoor grows, but I have some hope they will change that," Kurtz added . "They've heard back from a lot of people about the need for outdoor grows, including Seattle City Attorney Pete Holmes. Forcing everyone indoors increases energy consumption, and growing outdoors is less expensive."

On the upside, the LCB seems to be crafting reasonable regulations for out of state visitors and for preventing diversion, although diversion probably won't be a big issue, Kurtz said.

"This doesn't limit out of state people at all," Kurtz explained. "You can buy an ounce at a time, which is the limit of what you can legally possess."

There is no integrated system to track purchasers, so out-of-staters could theoretically go from retail outlet to retail outlet, building their stashes an ounce at a time, but that doesn't mean there will be an issue with diversion to other states, Kurtz argued.

"Economically, it just doesn't make sense," she said. "If someone from North Dakota wants to sell pot there, they could come here, but they would be paying full retail and having to go to a bunch of stores, and they wouldn't have much of a profit margin paying retail. Or they could just grow some in their basement in North Dakota."

A larger issue is diversion from cultivation sites, but Kurtz argued that a combination of security and grower self-interest should limit that.

"There is going to be a lot of recordkeeping, an electronic system where growers will have to input data daily," she said. "There are product quarantines, there are security cameras. But more importantly, people are preparing to invest a lot of money in this to have a legitimate business, not to divert pot to the black market. I've been meeting a lot of people who I don't think would risk their licenses to sell to the black market."

Washington's legal, regulated marijuana commerce is still a work in progress, but stakeholders pronounced themselves generally satisfied with the process so far.

"We are in completely new territory in terms of creating a legal marketplace and we're being very vigilant. It's too soon to tell whether this new environment is going to adequately protect youth and be an effective public health approach," said the Children Alliance's Gould.

"This has been a good public process, with lots of transparency and broad engagement. They are doing a good job in terms of being open and transparent," he continued. "What is also really apparent is the enormous amount of competition this has created, with industries and individuals looking at this as an opportunity for profit. There are choices that need to be made, and we and others are speaking up, saying we need to choose public health and kids over profiteering. If the WSLCB creates an environment based on policies designed to make this more profitable, that could have a detrimental impact on children, youth, and the public health."

"We're getting there," said Kurtz. "Eventually we will have a good system, but it may take a few years to figure itself out."

And so marijuana begins the transition from illegal drug to legal commodity in Washington state. That is, if the federal government allows it to happen. So far, the federal government has given little indication it's going to do much of anything about it, but that could change. Stay tuned.

If Maine residents want to legalize marijuana via the popular vote, they may have to do it themselves. Last Friday, a bill that would have called for a referendum on marijuana legalization fell four votes short in the House. On Monday, it was defeated more decisively in the Senate.

The bill, LD 1229, sponsored by Rep. Diane Russell (D-Portland), was a detailed tax, regulate, and legalize marijuana measure when first introduced. But, with a lack of support among colleagues, the bill was amended to merely call for a popular referendum. Even that watered down version couldn't pass the House.

During debate on the bill last Friday, Russell argued that if legislators failed to act, it was likely that activists would put a legalization initiative before voters through the citizens' initiative process, and that then, lawmakers would have no say.

"I believe this is the smartest, most rational way forward… to ensure we're the ones driving the bus to do it," Russell said.

Support for and opposition to the bill wasn't a simple party line affair, with some Republicans speaking for it and some Democrats opposing.

"We have a society that’s been hypocritically fighting this war for years," said Rep. Lance Harvell (R-Farmington). "In a democratic republic, the will of the people will be expressed."

"I have seen lives ruined by addiction," said Rep Gay Grant (D-Gardiner). "I am not ready to raise the white flag on one more opportunity to destroy lives."

"You actually can't smoke enough marijuana to kill yourself. You’d fall asleep first," said Rep. Corey Wilson (R-Augusta), who argued that prohibition had failed and that the state should consider collecting taxes on marijuana to help fight more dangerous drugs.

With Maine activists eyeing the presidential election year of 2016 for a citizens' legalization initiative, the legislature still has a couple of years to act. If it doesn't, Mainers may well make the decision themselves.

The medical marijuana scene is hectic! Bill passing, raids happening, local officials pondering, and California dispensaries dwindling. Let's get to it:

California

On May 21, the Lakeport city council gave first approval to a cultivation ordinance that would require grows be conducted within detached structures on residential properties. The council will hold the second reading of the ordinance at its June 18 meeting. The document before the council on Tuesday night also prohibits outdoor cultivation and requires grows to be contained in accessory outdoor structures. However, it also puts the emphasis on complaint-driven enforcement.

On May 22, the Earth Choice Collective in Fresno closed its doors after a local TV station blew the whistle on the below-the-radar dispensary. Undercover narcotics officers served Earth Choice Collective with a notice to vacate several weeks ago, but it had remained open until the TV station aired its report.

On May 25, Anaheim authorities reported that 10 of 11 dispensaries had complied with orders to close their doors. Anaheim ordered all dispensaries to close in the wake of the California Supreme Court ruling upholding the ability of localities to ban them. One remained open and was facing fines of up to a $1,000 a day.

Last Wednesday, San Bernardino police shut down another dispensary. They, too, were acting in response to the California Supreme Court ruling. More than 100 mason jars filled with marijuana were seized at the SBPC dispensary, and several workers and customers were detained temporarily.

Last Thursday, DEA agents and San Bernardino County deputies raided two dispensaries and five homes associated with them. Targeted were the Green Oasis Collective dispensaries in Yucaipa and San Bernardino. Five people were arrested on a variety of charges, including possession of pyrotechnic explosive devices, possession of meth, and various marijuana offenses.

Last Friday, police in Garden Grove began fining medical marijuana delivery services. The move came after the services sprang up in the wake of the city's ban on dispensaries last month. They are fining the delivery businesses $1,000 a day. One dispensary, OrganaCann Wellness Centers, switched to delivery mode after the ban and reported receiving $3,000 in fines, but is vowing to vigorously defend itself.

Also last Friday, Stockton dispensary operator Matthew Davies pleaded guilty to federal marijuana charges. He had argued that his store in Stockton operated in accordance with California laws, after working extensively with accountants and lawyers before opening the business. He faces a mandatory minimum five-year prison sentence.

Also last Friday, a statewide dispensary regulation bill failed to advance, but its sponsor, Rep. Tom Ammiano (D-San Francisco) said the bill lives and he is talks with members of the Senate to advance it.

On Monday, the Healdsburg city council voted to form a task force to study cultivation issues. The task force will consider whether outdoor grows will be allowed, or whether they should be confined indoors. Police Chief Kevin Burke had proposed guidelines in response to neighborhood complaints about backyard grows, and the Planning Commission had recommended allowing patients to grow up to 12 mature plants and 24 immature ones, but limited grows to indoors and not within 300 feet of schools, churches, hospitals, child care and youth centers. But after the guidelines were publicized, they met harsh criticism, thus, the task force.

District of Columbia

As of Monday, DC medical marijuana patients were still waiting to get their medicine. Two dispensaries and three grow operations have been approved by District officials, but the District Department of Health has yet to give doctors the authority to recommend marijuana to their patients. A spokeswoman for the Department of Health said marijuana dispensaries would likely open in the middle of June.

Michigan

Last Tuesday, medical marijuana supporters held a press conference in Detroit to publicize the imminent imprisonment of several Michigan patients and caregivers. One, Jerry Duval, a kidney-pancreas transplant patient with coronary artery disease, has been sentenced to 10 years in federal prison and must report next week. Three other Michigan cultivators, Dennis Forsberg, 59, his son Lance Forsberg, 32, and Ryan Basore, 36, who were sentenced to 3-4 years in prison surrendered last Thursday. They were all convicted in federal court without being able to present evidence that they were complying with state law.

Montana

Last Wednesday, federal prosecutors appealed the sentence of a medical marijuana provider because they thought it was not stiff enough. They appealed the two-year prison sentence given to former University of Montana quarterback Jason Washington, who was convicted on federal charges for his role in a dispensary operation legal under state law. Prosecutors have also appealed the sentences of three other medical marijuana defendants out of 33 convicted in the wake of the 2011 federal crackdown in the state.

Nevada

On Monday, a medical marijuana dispensary bill passed the state legislature. The Assembly approved it the previous week, and the Senate approved it Monday. It now goes to the governor. If he signs it, up to 66 dispensaries will be allowed in the state, with up to 40 in Las Vegas and 10 in Reno.

New Hampshire

Last Thursday, the Senate approved a medical marijuana bill, but with amendments designed to placate Gov. Margaret Hassan (D) that advocates say will make the bill unworkable. The Assembly had already passed the bill; now a conference committee must try to reconcile the two versions.

New York

Last Thursday, more than 600 New York physicians came out for pending medical marijuana legislation. They signed a statement affirming that doctors should not be punished for recommending the use of marijuana for seriously ill people, and that seriously ill people should not be subject to criminal sanctions for using marijuana if the patients' physicians have told them such use may be beneficial. The bill also has the support of the state’s leading medical organizations, including the New York State Nurses Association, The Hospice and Palliative Care Association, Pharmacist Society of the State of New York, among others.

Last Friday, New York City Mayor Michael Bloomberg trashed medical marijuana, calling it "one of the greatest hoaxes of all time." The former pot-smoker's comments came as the legislature is considering the medical marijuana bill.

On Monday, the medical marijuana bill passed the Assembly. It now goes to the Senate, where three previous medical marijuana bills approved by the Assembly in recent years have died. But the pressure is on.

Ohio

Last Wednesday, the sponsor of a medical marijuana bill testified on its behalf, but acknowledged that it is going nowhere in the Republican-controlled legislature. Instead, Rep. Bob Hagan (D-Youngstown) is urging support for a constitutional amendment on the issue.

Oregon

Last Thursday, DEA agents and local law enforcement raided four southern Oregon dispensaries. Raiders hit the Greener Side in Eugene and three Medford dispensaries. Several people were arrested.

Also last Thursday, the state legislature approved adding PTSD to the list of ailments for which medical marijuana can be used. The Oregon House passed Senate Bill 281 36-21, following a 19-11 vote in the Senate.  The bill awaits Gov. Kitzhaber's signature.

South Carolina

On May 23, an attempt to legalize medical marijuana in the state failed in the House. Rep. Todd Rutherford (D-Columbia) tried to amend a bill dealing with controlled substances to add marijuana to the list of drugs that doctors could prescribe, but his amendment was ruled out of order.

Washington

On Monday, it was revealed that the DEA has sent threatening letters to 41 Seattle-area dispensaries that have effectively closed some of them. At least one Spokane dispensary has also received a threat letter, but from the US Attorney, not the DEA.

[For extensive information about the medical marijuana debate, presented in a neutral format, visit MedicalMarijuana.ProCon.org.]