The state of Washington’s Initiative-502 to legalize, tax and regulate marijuana is one of three legalization initiatives on a state ballot this year, but the only one which tries to protect teens, children and the public against potential marijuana abuse and abusers. However, this law has generated much opposition within marijuana community.
The inaugural press conference of a medical marijuana advocacy group went up in smoke last Tuesday in Seattle. Safe Access Alliance, a marijuana trade industry association, was torn apart by conflict as another group, No on I-502, crashed their event and accused the new group of taking away its donations. Both groups have patients or producers of medical marijuana in their organizations.
Attendees at Seattle’s Hempfest August 17-19, were also deeply divided on the legalization initiative. Advocates for the initiative, called New Approach Washington, have raised over $3 million, including donations from Peter Lewis, founder of Progressive Insurance, and travel writer/entrepreneur Rick Steves.
Washington’s Initiative-502 safeguards the public with reasonable DUI limits for drivers with THC in their blood. A driver over age 21 must have no more than 5.0 nanograms of marijuana per milliliter or will face a mandatory 90-day license suspension. Drivers under age 21 may have 0.0 nanograms of marijuana or they will also face the mandatory 90-day suspension. This law could greatly restrict marijuana use among those ages 15-20, since marijuana stays in the body for awhile. Teenagers who want to drive at all would think twice before lighting a joint. (Washington has similar restrictions in place to curb teen alcohol abuse.) Refusal to take the test would result in denial or revocation of the license for one year.
Pot-supporting opponents to the Initiative, including a leading medical marijuana producer in Washington, sued the state last month to keep it off the ballot in November, claiming the voters have a right to know how much the measure would cost.
Legalizing marijuana could bring in $2 billion over 5 years, or nothing, according to a report which the Office of Financial Management issued on August 10. The analysts said they could not determine the ultimate effect of 1-502 on state finances. They based their calculations on 100 state-licensed growers supplying 328 marijuana stores selling to at least 363,000 customers paying $12 per gram. Washington does not have a state income tax, so taxing the substance is an important part of its legalization.
The initiative on the ballot in Washington has a 25% tax rate, and taxes apply to all stages of production. An excise tax of 25 percent of the sales price is imposed upon each wholesale sale from producer to processor and on each wholesale sale from processor to retailer. A separate 25 percent excise tax is also imposed on each retail sale. The liquor control board of Washington would tax and regulate all production and only licensed farmers and individuals would be allowed to grow it. Twenty-five percent of this tax income would be earmarked for drug education and prevention.
Colorado’s Amendment 64, Regulate Marijuana Like Alcohol, only allows marijuana to be taxed at a maximum of 15%. It was written because the medical marijuana laws of the state were deemed to restrictive, and some local governments banned medical marijuana. The law would create a system for retail stores, cultivation, manufacturing and testing facilities. Individuals would be allowed to grow up to six plants or own ounce of marijuana, although there is not a system for taxing individuals. The state’s Department of Revenue would license marijuana establishments, tax it and regulated distribution.
Oregon’s law would only allow a 15% tax rate. In fact, Oregon’s Cannabis Tax Act (Measure 80) calls for self-regulation in the marijuana industry and is full of provisions that would lead to corruption. Individuals would not need a license to grow marijuana and would not be taxed. An editorial in the Oregonian explained flaws and the lack of transparency written into the Oregon Cannabis Tax Act.
Currently the average pack of cigarettes in the US is taxed at a rate of slightly more than 100%, considering all federal, state and local taxes. Only the Washington measure would generate a substantial tax to offset the cost of regulation. Studies of the Rand Institute have reported the lack of economic benefit in taxing and regulating legalized marijuana. The Cato Institute, has determined a tax benefit to marijuana, BUT only if equal to the tax on cigarettes, which none of the ballot initiatives do.