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The Six Main Ways Marijuana Can Be Legalized

As the world moves away from prohibition and towards marijuana legalization, I’d like to give an overview of what that could mean. There are potentially more than a hundred different ways legal marijuana could be treated with dramatically different impacts, but I want to provide a detailed look at the six big categories that are likely to be used highlighting their advantages and disadvantages. The list will in general move from the most restrictive to the least.

I explore many of these issue in greater depth in my book After Legalization: Understanding the future of marijuana policy

1) Personal possession only

I consider this the bare minimum of what can be legitimately called a “marijuana legalization” law. It simply allows adults to possess up to a set amount of marijuana and use it in private without being arrested, fined, punished, coerced into treatment, or having their marijuana confiscated. This policy is similar to “decriminalization” but without the fines or the requirement to forfeit one’s marijuana to law enforcement. Under this system, adults should be allowed to possess marijuana at home or carry it with them without any worry at all. In some respects, this type of regulation treats marijuana like sex — adults can have it in private or even give it away, but no one is allowed to sell it.

This was technically the policy in place in Washington State from December 2012 until retail marijuana stores finally opened in the summer of 2014.

Legalizing personal possession ends the needless arrest and punishment of regular users. As we saw in Washington in 2013, arrests for modest marijuana possession plummeted. The main problem with this system is that it provides no legal way for adults to get marijuana, so the black market will continue to thrive and even possibly grow. It also denies consumers a way to access safe, regulated and conveniently sold marijuana.

Pros

  • Ends small possession arrests
  • No commercial industry which might have incentive to encourage excessive consumption

Cons

  • Black market remains extremely strong
  • Generates no revenue for state
  • No legal way for people to get marijuana
  • No safety inspection of marijuana being consumed
  • No selection or convenience for adults consumers
  • No labeling of strength of marijuana being used
CommunityJust Say Now

The Six Main Ways Marijuana Can Be Legalized

As the world moves away from prohibition and towards marijuana legalization, I’d like to give an overview of what that could mean. There are potentially more than a hundred different ways legal marijuana could be treated with dramatically different impacts, but I want to provide a detailed look at the six big categories that are likely to be used highlighting their advantages and disadvantages. The list will in general move from the most restrictive to the least.

I explore many of these issue in greater depth in my book After Legalization: Understanding the future of marijuana policy

1. Personal possession only

I consider this the bare minimum of what can be legitimately called a “marijuana legalization” law. It simply allows adults to possess up to a set amount of marijuana and use it in private without being arrested, fined, punished, coerced into treatment, or having their marijuana confiscated. This policy is similar to “decriminalization” but without the fines or the requirement to forfeit one’s marijuana to law enforcement. Under this system, adults should be allowed to possess marijuana at home or carry it with them without any worry at all. In some respects, this type of regulation treats marijuana like sex — adults can have it in private or even give it away, but no one is allowed to sell it.

This was technically the policy in place in Washington State from December 2012 until retail marijuana stores finally opened in the summer of 2014.

Legalizing personal possession ends the needless arrest and punishment of regular users. As we saw in Washington in 2013, arrests for modest marijuana possession plummeted. The main problem with this system is that it provides no legal way for adults to get marijuana, so the black market will continue to thrive and even possibly grow. It also denies consumers a way to access safe, regulated and conveniently sold marijuana.

Pros

  • Ends small possession arrests
  • No commercial industry which might have incentive to encourage excessive consumption

Cons

  • Black market remains extremely strong
  • Generates no revenue for state
  • No legal way for people to get marijuana
  • No safety inspection of marijuana being consumed
  • No selection or convenience for adults consumers
  • No labeling of strength of marijuana being used

2. Personal plus home cultivation

One modification to the above system would be to also allow adults to grow a small amount of marijuana at home. Adults could just automatically be allowed to grow at home, or the government could make them register and pay a permit fee first. People would be allowed to give away their excess marijuana but not sell it.

This was basically the legal framework in Colorado from December 2012 until January 2014 when recreational stores first opened. This is also what the marijuana legalization initiative currently on the Washington, D.C. ballot would do, since D.C. ballot laws prevented the initiative’s authors from adding provisions to tax and regulate marijuana.

If home growing were the only legal way to acquire pot, a significant number of marijuana users would definitely take part, but the black market would still exist. According to a 2013 European Commission report, 21 percent of intensive marijuana users in the Czech Republic reported getting their marijuana primarily by growing their own. This is the highest rate in Europe, possibly because growing up to five plants was decriminalized there.

The government could also do things to make it easier for individuals to grow their own marijuana, like allowing companies to sell seeds and immature clones. This could increase the number of marijuana consumers that grow at home, but there will always be users who will not grow all their own marijuana because of a lack of space, skill, time, issues with their rental lease, or a failed crop.

While there would still be a black market, its structure would probably change significantly, depending on how much people are allowed to grow and how marijuana laws are enforced. The black market would likely be dominated by small networks of individual growers selling the excess from their legal home cultivation.

Pros

  • Ends possession arrests
  • Adults have a legal way to get marijuana, albeit a very difficult one
  • No commercial industry which might have incentives to encourage excessive consumption

Cons

  • A slightly diminished and changed black market continues to exist in a significant way
  • Difficult for adults to legally access marijuana, especially if the sale of clones/seeds is kept illegal
  • No safety inspection of marijuana being consumed
  • No selection or convenience for adult consumers
  • No labeling of strength of marijuana being used
  • Generates  no revenue for state

3. Home cultivation and cooperatives

Taking this “only grow your own” strategy to the logical extreme, the law could allow people to grow marijuana at home or as part of a cooperative. A version of this legal framework basically exists in Spain at the moment.

Theoretically, it might be possible to eliminate the vast majority of the black market without allowing for-profit commercial marijuana businesses by providing most marijuana users an easy way to legally obtain marijuana via non-profit cooperatives. Of course, the devil is in the details, and getting them right would require a serious balancing act. If the rules are too restrictive people won’t use the cooperatives, and the black market will continue to thrive. If the rules are too lenient the cooperatives could end up becoming de facto for-profit commercial businesses under a regulatory system that is not designed to handle that. A system of regulated commercial marijuana businesses isn’t inherently bad (and will be discussed later), but trying to regulate de facto commercial businesses using loophole-ridden laws meant to govern only non-profit cooperatives would be an idiotic legal mess.

There is a vast spectrum of policy options that could all be classified as cooperative systems, because there are a huge number of seemingly small questions that need to be decided. Cumulatively, those decisions can have a major impact: How many members can a marijuana co-op have? Is there a wait to become a member? Can someone be a member of more than one co-op? How will the co-op be financed? Will the government charge co-ops a large operations fee? How much can co-op workers be compensated? How will the marijuana be distributed to members? What is required to remain a member in good standing? Should marijuana produced at co-ops require testing? Etc…

On one extreme, cooperatives could be restricted to being only marijuana community gardens. People would only be allowed to rent a specific space in a secure grow facility. They would need to plant their own marijuana, regularly check its process, harvest it and process it themselves. Members would only get what they directly grew on their space. The co-op could provide basic help like regularly watering the plants and controlling the light, but it would be prohibited from directly providing members with marijuana.

On the other extreme, a very lax cooperative might be able to exploit loopholes so it runs effectively like a for-profit store. For example, a co-op could write rules stating that every member can get up to 5 grams of co-op produced marijuana a day. It could then set up a storefront that only offers a “one-day membership” for $40 to any adult that walks through the door.

The medical marijuana system in Washington state provides an example of how rules governing collectively-grown marijuana can be exploited if they’re not written well. The law allowed “collective gardens” to serve up to ten patients, so some gardens effectively operated as stores by having customers sign up as one of the ten patients, provide them marijuana, then immediately removing them from the list so the next customer in line could be signed up as patient.

A similar weird, widely exploited loophole slowly developed in Utah’s alcohol regulations, when bars were still technically banned but private clubs that sold alcohol were not. Any adults could go to the “private club,” take few seconds to fill out a membership form and within minutes order a drink. They were basically bars in all but name.

Probably the best ways to assure that marijuana co-ops function as real, non-profit membership organizations — rather than stores offering “30-second memberships” — are to create a waiting period, say 24 hours, before a member can get marijuana from the co-op and to put a real limit on a co-op’s revenues. The limit would need to be high enough that people would take part but low enough that it would not make sense for large companies to try to find a way to exploit it.

There would be ways for the government to potentially generate revenue from this by charging a co-op licensing fees, a per membership fee, and/or some charge per amount of marijuana product. This system, though, doesn’t neatly lend itself to that goal.

Pros

  • Ends small possession arrests
  • Adults have a legal way to get marijuana, which may or may not be easy
  • Black market could be significantly reduced, depending on the rules
  • Potentially no commercial industry which might have incentives to encourage excessive consumption
  • Government could or could not require co-op marijuana to be inspected for contamination and labeling
  • Government might generate some revenue if it requires co-ops to pay licensing fees
  • Relatively inefficient system would keep prices high, discouraging use

Cons

  • Black market might exist, depending on the rules
  • Marijuana could still be difficult for some adults to legally get, depending on the rules
  • Potentially poor selection for adult consumers
  • Relatively inefficient system would keep prices high for consumers
  • Fine tuning the rules could be a complicated regulatory and enforcement task
  • Risk of bad rules creating de facto commercial stores with regulations not properly designed to handle it
  • System might not lend itself well to having all marijuana inspected and labeled
  • Would likely generate relatively little revenue for the government

(Note on all retail marijuana systems and how they can coexist with home cultivation)

Many of the advantages that stem from allow marijuana retail stores are present in basic every system so won’t be discussed individual in the last three. Those include enabling retail marijuana to be tested for safety, having its THC content labeled, allowing marijuana products to be recalled if there is a problem, creating a safe way for adults to buy marijuana, and giving people legal recourse if they have a problem.

In addition, retail marijuana systems can be allowed with or without permitting home cultivation. For example, Colorado’s law allows for home marijuana cultivation, but Washington State’s does not. It was legal for adults to buy beer for years in the United States, but homebrewing was only re-legalized under federal law in 1978, and homebrewing was still illegal in a few states until 2013. Similarly, while distilled spirits are widely sold, it is illegal to distil your own hard alcohol at home in the United States.

Assuming the state creates a functioning retail marijuana system, it is unlikely very many people would grow their marijuana even if it is legal. Given the required investment in time, space, and money, it’s likely that only a small number of hobbyists would choose to grow their own. Among European countries, the Netherlands has the lowest number of intense users who grow their own at just 5 percent because it is so easy to buy marijuana from coffee shops.

4. Complete state monopoly

The most restrictive retail model would be a complete government monopoly. The government would grow the marijuana, package the marijuana, and sell it in government run stores. The monopoly can be a direct part of the federal or state government. It could also be some quasi-independent corporation controlled by the government, like Amtrak. Certain functions could be contracted out, but as long as the government remained control on all the important decision-making, it would still effectively be a complete state monopoly. It would take a significant upfront investment on the part of the government to build the whole system.

Obviously, this model would give the government maximum control over everything marijuana related. It could decide how much marijuana is grown, what price it is sold for, when it is sold, where it is sold, what type of marijuana is sold, and how it is advertised.

Since the government would control all aspects of the industry, all of the profits from marijuana would go to the government. It would also enable the government to easily adjust marijuana prices. It could use this power in several ways to achieve policy goals. For example, it could choose the price which generates the most total revenue, or it could set the price just low enough to drive almost all of the black market out of business but still keep marijuana relatively expensive.

This incredible level of control could potentially make it easier to ensure everyone is carded, eliminate advertising or to shape the tastes of the market. The state monopoly could easily set prices to favor vaporizing or smokable marijuana, extracts over flower, or edibles over inhaled cannabis. It would also have the power to easily prevent ads or products that might appeal to children by simply choosing not to produce them.

There are, of course, possible ideological and moral objections to this system. Some people ideologically oppose government run industries, while others might consider it unacceptable for the government to be directly involved in a business they think is immoral. I want to focus, though, only on the practical issues.

Monopolies, be them public or private, can often lead to inefficiency, waste, possible corruption and really bad customer service. People often complain about the government run DMV, but I’ve found dealing with cable/internet providers which have de facto monopolies in an area to be significantly more rage-inducing.

There is the concern that a complete government monopoly over marijuana might not provide the selection, quality, price, business hours, and/or store locations marijuana consumers would want. If these problems are minor, they would be only an inconvenience for many, but if they are bad enough, they would enable a black/grey market to continue to exist, undermining one of the main goals of legalization.

A government monopoly would probably be saddled with multiple mandates that would often be at odds with each other. For instance, the agency controlling the monopoly would probably be charged with discouraging use, generating the most possible revenue, and keeping customers happy.

It is worth noting that it would be theoretically possible to have a government marijuana monopoly that would provide consumers better prices, better selection, and more store locations than some system made up of very tightly regulated private companies, but we are unlikely to ever see that for two reasons. One is the lack of market competition the monopoly would face, and the other is political. Any government that decides to go this route will likely do it because they want to create very restrictive controls over legal marijuana to discourage use.

Pros

  • Ends small possession arrests
  • Adults have a legal way to easily get marijuana
  • Black market  would likely be eliminated
  • Maximizes government ability to shape the market
  • All retail marijuana would be inspected for safety and properly labeled
  • No commercial industry which might have incentives to encourage excessive consumption, but the state’s desire for revenue might
  • Could maximize government revenue from marijuana
  • Government can set prices

Cons

  • If monopoly is too strict or poorly run, a black market would remain
  • Potentially poor selection, quality and/or customer service for adult consumers
  • Risk that the inefficiency of the monopoly would waste some of the revenue generated
  • Possible higher prices for consumers
  • Requires large upfront investment from the government
  • Government is on the hook for any losses due to bad business decisions

 5. Partial government monopoly

Most of the main advantages of a government monopoly, like maintaining tight control over the market, can be accomplished without the government running every aspect of the industry. The government would have significant power with just a monopoly on the wholesaling and/or retail sales of marijuana. This is effectively how hard alcohol regulation works in the “control states” that use a government monopoly to regulate it. Many private distilleries sell to the state Alcohol Beverage Controls. In some states the government has a monopoly over the wholesale of alcohol, but there are private producers and private stores.  Other states also run their own government run liquor stores. In some states, the hard alcohol on the shelves in private stores is still under the government’s ownership, but the retailers get a commission on each sale.

Having a competitive market for licensed marijuana producers could increase the quality and variety of marijuana products that better fit the taste of adult consumers. Potentially they will also be more efficient as a result.

Similarly, allowing a competitive market of retail stores could produce more locations, better hours and better consumer service — if the regulation allows it. States with licensed liquor retailers often set the hours that stores can be open and have rules that limit competition. For example, Washington State set a hard cap on how many marijuana stores could be licensed in each part of the state. The limit is so low that most stores will be fairly far apart, creating relatively little actual competition, arguably providing little market benefit for consumers over government-run stores.

Using licensed private companies to create parts of the marijuana industry would reduce the amount of start up costs for the government. Private companies would also be assuming much of the risk.

At the same time, the government can remain a critical gatekeeper to the industry by holding a monopoly on wholesaling and controlling the licensing process. Every item passing through the government’s oversight could be easily tracked and tested. This monopoly power can allow it to extract most of the profits from the system as government revenue. It gives the government substantial control over setting prices and significant power over shaping the market. Any products the government thinks are “inappropriate” or “unhealthy,” it can just refuse to carry. This power, though, could be seen as the “government picking winners and losers,” creating possible corruption issues.

The biggest concern with introducing any private companies into the system is that they would have an incentive to encourage excessive consumption. Companies might aggressively advertise and direct those ads to groups most likely excessively consume. Think of how most beer commercials you have seen.

Another concern is that private companies would develop lobbying power. It is possible that even if rules governing them start out strong and well written, the industry would quietly lobby for loopholes. It is potentially a concern, but the relatively small size of the marijuana market and the fact that marijuana use is still viewed negatively by many politicians makes it unlikely the industry will develop a powerful lobby any time soon.

It is worth noting that Uruguay’s marijuana legalization plan is based on a government monopoly system that also allows home cultivation. Similarly, Canada’s Centre for Addiction and Mental Health has called for marijuana legalization with it controlled by the government monopoly.

Pros

  • Ends small possession arrests
  • Adults have a legal way to easily get marijuana
  • Black market would likely eliminated
  • Government can extract significant revenue
  • All retail marijuana would be inspected for safety and properly labeled
  • Government has significant power to shape the market
  • Likely better selection and quality for consumers
  • Government has significant power over price

Cons

  • If monopoly is too strict a black market would remain
  • Potentially still suboptimal selection quality and customer service for adult consumers
  • Possible higher prices for consumers
  • Requires some upfront investment from the government
  • Risk that the inefficiency of the monopoly would waste some of the revenue generated
  • Commercial industry which might have incentives to encourage excessive consumption
  • Marijuana industry could develop lobbying power to push for loopholes or bad policies

6. Licensed private industry

For nearly every sector in the United States, the government licenses and regulates private businesses. This is likely how marijuana will be treated in this country, for two reasons: First of all, this is how marijuana is already regulated in Colorado and Washington State. Additionally, as long as marijuana is still illegal under federal law, it will be legally very difficult for any individual state to try to set up a government monopoly system.

There is a huge range of potential policy options that fit under this umbrella. For example, both the sale of firearms and tomatoes are treated fit under this umbrella. There are so many different ways the government could regulate licensed marijuana businesses that it deserves its own in-depth article; this is just a brief overview.

Basically, the government sets the rules that licensed companies must follow to operate in the market. The government can force companies to follow the rules with fines, the threat of withdrawing licenses, or even jail time. Since the industry is run by private companies, the setup cost for the government should be minor.
Using this system the government can take a relatively hands-off approach or use tough regulation to exercise a significant amount control. With aggressive regulation the government can still play a big role in setting prices, shaping the market and determining how readily available marijuana is. The government can also directly ban things it doesn’t like, such as marijuana infused candy, or make all new products get pre-approval before they can be sold. For example, currently every new beer label is approved by the federal government before it can be used. Using tax policy, the government can also play a significant, albeit slightly indirect, role in setting prices and favoring one style of consumption over others.

The main drawback is that the regulators are more likely to be reactive than proactive. If an unforeseen problem develops, they may even need to wait for legislation to make changes, which can cause long delays. For example, the Oregon is a control state and this enables the Oregon Liquor Control Commission to rather easily raise surcharges on its own, but a tax increase takes legislative action and in some states might even require a measure on the ballot

What a competitive private market is very good at is providing consumers with what they want, how they want it, and when they want it. It creates new business opportunities that reward people for meeting these needs. It can even make people want things they don’t yet know they want. As long as the regulations aren’t crippling, a license system can provide consumers with the best quality, variety and customer service. Of course, that is a double edged sword if you are talking about a product you want to discourage some people from using.

Most of the regulations around cigarettes are basically about making the market less effective. Over the years, tough regulation has been very effective at discouraging tobacco consumption with rules that often strongly inconvenience tobacco users. We would likely see similar marijuana regulations making similar trade offs.

It is worth noting we don’t have enough data to definitively say that regulations aggressive discourage marijuana use would automatically be the best thing for overall public health. If any increase marijuana use mainly due people using it instead of alcohol or opioids that could be a net positive for public health. After all one study did find opioid overdoses dropped significantly in states after they adopted medical marijuana laws.

Pros

  • Ends small possession arrests
  • Adults have a legal way to easily get marijuana
  • Black market should be eliminated
  • Government could extracts substantial revenue
  • All retail marijuana could be required to be inspected for safety and properly labeled
  • Government would have some power to shape the market
  • Likely very good selection and quality for consumers
  • Likely lower prices for consumers
  • Government would have some indirect control over prices
  • Very little upfront investment needed from the government

Cons

  • If regulations are too strict a black market could remain
  • Commercial industry might have incentives to encourage excessive consumption
  • Government might be slower to respond addressing issues
  • Lower prices might lead to higher consumption
  • If the original law doesn’t give regulators enough power, getting new laws approved to fix problems could be very slow and difficult
  • Marijuana industry could develop lobbying power to push for loopholes or bad policies
  • If the original law doesn’t give regulators enough power, getting new laws approved to fix problems could be very slow and difficult (more…)
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Jane Hamsher

Jane Hamsher

Jane is the founder of Firedoglake.com. Her work has also appeared on the Huffington Post, Alternet and The American Prospect. She’s the author of the best selling book Killer Instinct and has produced such films Natural Born Killers and Permanent Midnight. She lives in Washington DC.
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