Newsom Legalization Panel: Battle Banditos Before Mining Cannabis Taxes

The academics, activists and policy experts assembled by Lt. Gov. Gavin Newsom — the Blue Ribbon Commission on Marijuana Policy that seeks to influence cannabis legalization initiatives in California — released its report today. The 93-page document contains 58 recommendations. Chief among them:

Curtailing the illegal cannabis market in California should be the primary goal of legalizing the botanical drug’s recreational use in the state, and not developing another tax source.

“This industry should not be California’s next Gold Rush,” Newsom’s commission said.

The Los Angeles Times reports:

The document offers broad principles –“protecting California’s youth” — as well as nitty-gritty suggestions for collecting data and limiting advertising.

Newsom said in an interview that he hopes the report offers guidance to proponents of a legalization initiative aimed at the November 2016 ballot, as well as to help lawmakers and officials who would have to implement it if it passed.

The report does not explicity endorse or oppose legalization of recreational marijuana, although Newsom, who is running for governor in 2018, has been outspoken in support of legalization and is the highest-ranking California official to take that position.

However, Newsom said, the drafting of the report “tempered…significantly” his enthusiasm for unfettered legalization.

“I’m more cautious as a parent, more cautious as a policymaker,” Newsom said. “…We don’t want this to be the next Gold Rush.”

The report calls for strong regulation of the marijuana market from the outset. It suggests establishing licensing and training standards, and designating a central entity to oversee legalization.

The Sacramento Bee says:

Though a measured process may be difficult for some to swallow, Newsom said, it is one of the lessons he’s taken from studying other states that legalized marijuana. His group formed two years ago and held public forums in Los Angeles, Oakland, Fresno and Humboldt. It has received support from the ACLU, which reported in 2013 that African Americans are nearly four times more likely than whites to be arrested for possessing marijuana.

Newsom, who is running for governor in 2018, has said he came to support legalizing marijuana out of concern for disparities in the criminal justice system. He has also said he will carefully choose which measure to support, if any.

“It’s got to be done thoughtfully, and it’s got to be done responsibly,” Newsom said. “Period. Exclamation point.”

The San Francisco Chronicle provides highlights:

Protecting small producers: The panel encourages policymakers to not allow Big Tobacco to swoop in and dominate the fledgling legal industry. “The goal should be to prevent the growth of a large, corporate marijuana industry dominated by a small number of players, as we see with Big Tobacco or the alcohol industry.”

It suggests that the structure of the legal weed market should be similar to the craft beer market, “where many small players (local microbreweries) exist at one end of the scale, and larger players (regional craft breweries) exist at the other end of the scale, with plenty of room in the market for a large spectrum of entities.” This issue is of major importance to small, multigenerational growers in California’s “Emerald Triangle” of northern counties, where an estimated 60 percent of the nation’s herb is grown.

Help for drug felons: The report says that those who have been convicted of marijuana-related crimes should not be categorically excluded from working in the new system — depending on the nature and severity of their criminal past. “Such categorical exclusions would also exacerbate racial disparities given past disparities in marijuana enforcement,” it says. “For these reasons, categorical exclusions that are too broad, and that overly rely on past convictions as predictors of future behavior, should not be considered.”

Be labor friendly: Some labor unions have lobbied hard to be included in the new market — it’s a way to add members — and the report offers friendly suggestions: “The workforce involved in marijuana cultivation and processing should be afforded the same protections and rights as other workers in the agriculture and processing industries. This includes the right to collective bargaining, as well as other worker safety protections.” It also advocates worker training programs.

How to tax cannabis: It offers several scenarios on how to best tax cannabis, from the point of production to the point of sale. It suggests that policymakers be very flexible in this area, because the market’s landscape is expected to shift considerably if it moves from illegal to legal.

What to do with all that new tax money: The report tries to tamp down giddiness over a new stream of revenue: “We do not believe that making government dependent on cannabis taxes makes for sound public policy, nor do we believe cannabis tax revenue will be very large in relation to the total budgets of state and local government.” The tax revenue shouldn’t go to the state’s general fund, it says, but instead to programs dealing with the impacts of legalizing pot.

What to do about medical marijuana: Panel members want to “ensure continued access” for medical marijuana patients. They lean toward suggesting a separate medical program, citing problems in Washington state, which eliminated its medical pot offering when it legalized recreational use in 2012. Also important is taxation: too high a tax on recreational weed could spark a flood of new medical patients, who may not be suffering from any ailments other than an allergy to high pot prices.

What to do about people driving while stoned: The report says that “the currently available strategies of using probable cause to make traffic stops and using roadside impairment tests to establish impairment are a reliable starting point.” However, for law enforcement to apply them fairly, there needs to be more research on the connection between marijuana and crash risks. There must also be “additional tests of intoxication specific to marijuana.”

How to tell what’s in your weed: One idea would be the creation of a “statewide seed-to-sale tracking system ensuring that marijuana is cultivated, distributed and sold through the licensed, regulated system, with the minimum amount of diversion out to — or in from — the illicit market.” The report also urged testing weed for potency and fungal diseases as a way to protect consumers.

Who can grow weed: Commission members worry that since “there is currently more supply than there is demand” in California, legalization might “invite a new gold rush of people into the state to cultivate marijuana.” One idea: allowing only Californians to grow cannabis. “While a residency period would likely run afoul of the federal constitution eventually, some consideration should be given to ways to slow down the ability of out-of-state residents to enter the market.”

How to deal with the feds and banks: The federal government currently classifies marijuana as a Schedule 1 drug with no redeeming value. Banks shy away from doing business with marijuana businesses for this reason, forcing weed businesses to operate — often dangerously so — on an all-cash basis. The report urges California elected leaders to lobby the feds to relax their prohibitions, at least so businesses can use banks.

Here’s the complete 93-page report:


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