Pot Goes Legit

What the end of prohibition looks like in Colorado

"What we need," said Norton Arbelaez, a thirtysomething attorney and businessman in a suit and tie, "is a vertically integrated, closed-loop regulatory framework." The bureaucrats, politicians, and entrepreneurs crowding the conference room took notes, watched his PowerPoint slides, and furrowed their brows. This was the fourth meeting of a working group set up by a task force appointed by the governor of Colorado, and if you happened to wander by you would think it sounded as dull as the average subcommittee session anywhere.

Until you discerned the subject of the meeting. "We will be, and are, the cannabis industry in Colorado," Arbelaez proclaimed. "It is our necks that are on the line."

Last November, 75 years after Congress enacted national marijuana prohibition, voters in Colorado and Washington decided to opt out. After Coloradans approved Amendment 64, which legalized the production, possession, and distribution of marijuana for recreational use, Gov. John Hickenlooper appointed the Amendment 64 Implementation Task Force to advise state legislators on how to regulate the nascent cannabis industry, which for years had served patients under Colorado's medical marijuana law but now was authorized to supply any adult 21 or older. And as in all sorts of industries, the incumbents were trying to write the rules in their favor.

"We need to maintain the edifice of what continues to work in Colorado," said Arbelaez, who co-owns two medical marijuana dispensaries in Denver and serves on the board of the Medical Marijuana Industry Group. Among other things, he said, that means retaining a rule that requires pot retailers to grow at least 70 percent of what they sell while selling no more than 30 percent of what they grow to other outlets. Arbelaez argued that the 70/30 rule, designed to prevent recreational consumers from obtaining medical marijuana, would help stop diversion of recreational marijuana to minors or to other states and thereby discourage federal interference.

The other members of the working group seemed unpersuaded. Liquor stores do not make the distilled spirits they stock, and pharmacies do not produce the drugs they sell. Why should pot stores have to grow their own marijuana?

"I am still left scratching my head about vertical integration and why it's so important," said Denver City Councilman Chris Nevitt. "The 70 percent rule is endlessly complicated and confusing." Nevitt alluded to the financial interests at stake: When the rule took effect in 2011, more than a decade after Colorado voters approved the medical use of marijuana, dispensaries had to invest in growing space and equipment, and they were forced into sometimes awkward business partnerships with growers. "I totally understand the anxiety of an industry that has made all of these investments," Nevitt said. "But I am still scratching my head."

Jessica LeRoux, owner of Twirling Hippy Confections, a Denver business that supplies cannabis-infused chocolates and cheesecakes to medical marijuana centers (MMCs) across the state, concurred. "The 70/30 rule does not work," LeRoux stated flatly. "This is not vertical integration. This is vertical protectionism."

But most MMC owners in the room seemed to support the 70/30 rule. "The current medical marijuana system works for us," said Erica Freeman of Choice Organics in Fort Collins. "Changing the rules again will force new mergers," warned Tad Bowler of Rocky Road Remedies in Steamboat Springs. "The small centers won't be able to compete." Michael Elliott, executive director of the Medical Marijuana Industry Group, declared "we are united" in supporting the 70/30 rule.

A straw poll of the working group revealed that its members were overwhelmingly opposed to requiring vertical integration, instead favoring a more flexible approach that would allow retailers to grow whatever percentage of their inventory they wanted, including zero. But in the end, after several more weeks of meetings, the dispensaries represented by Elliott's group prevailed. In its March 13 report, the task force recommended that the 70/30 rule remain in effect for at least three years and that new entrants be excluded from the market for 12 months. Two months later, Gov. Hickenlooper signed a marijuana regulation bill that included watered-down versions of both ideas, extending 70/30 until October 2014 and giving MMCs a three-month head start in the licensing process.

"The industry did a really good job of building a coalition," explains University of Denver law professor Sam Kamin, a member of the task force. "They convinced law enforcement and public health that part of keeping the industry in check and part of keeping it diverse and keeping the feds at bay was the current model."

Rob Corry, a Denver attorney and longtime marijuana activist, is less polite, calling the 70/30 rule "completely unworkable and economically illiterate." But Corry sees a bright side to the dispute over vertical integration. "On the one hand," he says, "I'm disappointed at rent-seeking behavior and businesses that seek the heavy hand of government to prevent new competition. On the other hand, it means that our industry has grown up and is behaving like every other industry out there."

Conservatives for Cannabis

Normalizing a formerly criminal business is the avowed goal of Amendment 64, which declares that "marijuana should be regulated in a manner similar to alcohol." The initiative will succeed to the extent that it transforms a countercultural symbol into a capitalist commodity. Dutch officials like to say, regarding their policy of tolerating the retail sale of cannabis, that they made marijuana boring by making it legal. Something similar is happening in Colorado, where the head rush of passing Amendment 64 has given way to the headache of implementing it.

That process, which is supposed to culminate in state-licensed pot stores by next January, aims to address the concerns of marijuana's detractors as well as its fans. Among other things, that means trying to avoid a crackdown by the federal government, which cannot force Colorado to ban marijuana but can make trouble for businesses openly selling a product that remains illegal under the Controlled Substances Act. Wariness of the feds has shaped every aspect of the new legal regime, from the size of store signs to the size of marijuana brownies, from the amount of tax charged on a quarter-ounce of Hidden Valley Kush to the amount of THC allowed in a driver's bloodstream. These are the mundane details that will define Colorado's momentous experiment in pharmacological tolerance. Boring debates about vertical integration could signal the beginning of the end for the war on drugs.

Colorado and Washington are two of the 11 states that opted out of alcohol prohibition through ballot initiatives that voters approved in November 1932, more than a year before the 21st Amendment (which repealed alcohol prohibition nationally) was ratified. Eighty years later, Colorado and Washington used the same method to opt out of marijuana prohibition, by surprisingly strong margins of about 10 points in both states. The victory was especially striking in Colorado, which is more Republican than both Washington and California, where a marijuana legalization initiative lost by seven points just two years earlier. Four years before that, Colorado voters had resoundingly rejected Amendment 44, which would have merely made it legal to possess up to an ounce of marijuana. Amendment 64 accomplished that while also legalizing home cultivation and authorizing commercial production and distribution. Yet it was supported by 55 percent of voters, compared to the 41 percent who went for Amendment 44 in 2006.

Former Colorado congressman Tom Tancredo, a conservative Republican, supported Amendment 64 but did not expect it to pass. "The only thing I can attribute it to [is that] we presented a case for conservatives to vote for it," Tancredo says. "The exit polling showed that we had a much stronger support from Republicans and conservatives than they ever had in the past." Mason Tvert, who spearheaded both the 2006 and 2012 campaigns, notes that "we won El Paso County, which is insane." El Paso County-which includes Colorado Springs, home of the U.S. Air Force Academy and Focus on the Family-is "considered one of the most conservative parts of the country," he says. "We won it by 10 votes, but if we lost by 5,000 I would still tout it as unbelievable."

In an op-ed piece published by the Colorado Springs Gazette about six weeks before the election, Tancredo announced that "I am endorsing Amendment 64 not despite my conservative beliefs, but because of them." He compared the ban on marijuana to alcohol prohibition, "a misguided big-government policy experiment," and argued that legalizing marijuana would strike a blow against murderous Mexican drug cartels. Tancredo, who had criticized aspects of the war on drugs during his decade in Congress, combined practical arguments with an explicitly libertarian appeal. "Our nation is spending tens of billions of dollars annually in an attempt to prohibit adults from using a substance objectively less harmful than alcohol," he wrote. "Marijuana prohibition is perhaps the oldest and most persistent nanny-state law we have in the U.S. We simply cannot afford a government that tries to save people from themselves. It is not the role of government to try to correct bad behavior, as long as those behaviors are not directly causing physical harm to others."

The wastefulness and unfairness of enforcing marijuana prohibition was underlined by a report released a month later. Queens College sociologist Harry Levine and two co-authors showed that police in Colorado were arresting more than 10,000 pot smokers every year, even though the state legislature supposedly had decriminalized marijuana possession in 1975. Possession of small amounts (initially less than an ounce, raised to two ounces in 2010) remained a crime, albeit a "petty offense." Pot smokers were not doing hard time, but they were still burdened by the cost, inconvenience, and humiliation associated with an arrest, not to mention the lasting disadvantage of a criminal record.

Tvert says several factors help explain why Coloradans decided it was time to treat pot smokers like consumers instead of criminals. Nationwide support for legalization has been rising more or less steadily since the 1980s, hitting 50 percent in the Gallup Poll for the first time in 2011. And unlike in 2006, voters were picking a president in 2012. "We see much greater turnout in presidential election years," Tvert says, "and when there is more turnout, there is virtually always more support for making marijuana legal." He also credits six years of public persuasion emphasizing the theme reflected in the name of the group he co-founded in 2005, SAFER (Safer Alternative for Enjoyable Recreation), and the title of the 2009 book he co-wrote, Marijuana Is Safer. Tvert cites polling data indicating that people who accept that premise are much more likely to support legalization than people who don't. "Our strategy all along," he says, "was to bring that message and break people's fears of marijuana down to the point where they would go ahead and go with their gut feeling on making it legal."

Supporters of Amendment 64 had a big financial advantage in getting their message across (although not as big as the one enjoyed by legalizers in Washington, who outspent their opponents by 400 to 1). According to campaign finance reports, seven groups backing the initiative raised about $2.7 million, the vast majority of it from out-of-state donors, including the Marijuana Policy Project and the Drug Policy Alliance. The opposition, which consisted largely of law enforcement groups, raised about $560,000, half of it from out-of-state donors. The biggest backer of the No on 64 campaign was Save Our Society From Drugs, a Florida-based group co-founded by Mel Sembler, a Republican fundraiser and drug treatment entrepreneur who co-founded Straight Inc., the notorious (and now-defunct) chain of behavior modification centers for troubled teenagers.

Tvert argues that, contrary to what you might expect, the switch from merely decriminalizing use to legalizing the marijuana business improved Amendment 64's prospects, because it promised to eliminate the black market and addressed the question of where people would get the pot they were now allowed to smoke. Voters' familiarity with state-regulated medical marijuana centers also helped. "When you talk about legalizing marijuana in the abstract," says Rob Kampia, executive director of the Marijuana Policy Project, "people say, 'I don't understand. What does it look like?' The visual matters. The medical marijuana dispensaries have been regulated since 2010, and there were already hundreds of stores voters would walk past every day."

'Like Any Other Business'

On the first floor of a professional building at the foot of Broadway in Colorado's capital is a black awning displaying the words "Denver Relief" in sans-serif type next to a green cross. Inside you find a waiting room with tan walls and brown leather couches flanking an Oriental rug on which sits a coffee table displaying issues of National Geographic. The shop-which began in May 2009 as a delivery service, making it "the second-oldest continuously operating medical marijuana center in the state of Colorado," according to co-owner Kayvan Khalatbari-is located in the same complex as an urgent care clinic. It looks like a cross between a dentist's office and a law firm. "There are no Bob Marley posters," notes Khalatbari, a 30-year-old Nebraska native who moved to Denver in 2004 for a job in electrical engineering, became an active member of SAFER, and now has a stake in two pizza places as well as the dispensary. "We want to be treated like any other business."

At the intake window, customers have to show their state-issued medical marijuana cards, which indicate that they have "a debilitating medical condition" for which a doctor has recommended cannabis as a treatment. Then they can gain entry to a back room, through two locked steel doors, where they will find a partitioned black granite counter of the sort where people might sit to try on sunglasses or lipstick. Displayed on racks attached to a brick wall behind the counter is an array of marijuana products, including drinks, pastries, lollipops, chocolate bars, sunflower seeds, e-cigarette cartridges, and two dozen varieties of buds in glass jars.

For visitors accustomed to the black market's meager selection, iffy quality, and high prices, the back room at Denver Relief is a revelation. The prices range from $30 to $40 for an eighth of an ounce. Other Denver dispensaries, such as Medicine Man on Nome Street, charge as little as $20, with $25 being fairly typical. According to data collected by the website Price of Weed, Americans commonly spend twice as much, around $50, for the same quantity of high-quality marijuana in the black market.

Denver Relief's grow operation, which produces several hundred pounds of marijuana a year, occupies a nondescript warehouse in an area of the city zoned for light industry. There is a separate room for each stage of growth, each with its own lighting scheme, calculated to maximize the production of psychoactive resin. The process, which starts with cuttings from mother plants and ends in a drying room where buds are packed in plastic crates, takes about five months.

The operation produces more than 30 strains of pot, with names like Hashberry, Daywrecker, Durban Poison, Q3 (Purple Urkle crossed with Space Queen), and Blue Dream (DJ Short's Blueberry crossed with Santa Cruze Haze). "There is way more of a difference than most laymen or novices imagine," says Nick Hice, Khalatbari's partner and Denver Relief's cultivation manager. "People think 'it's all green.' That's like someone who doesn't drink beer or wine saying 'it's all beer' or 'it's all wine.' Every one of these strains is different, and there are connoisseurs out there who can pull out the different aromas." Even to my uneducated nose, the strains have distinctive smells, including not just the hops and pine you might expect but surprising fruit notes such as lemon, orange, mango, banana, and pineapple.

The different varieties also have noticeably different psychoactive effects, says Hice, especially when you compare the two major types of marijuana, Cannabis sativa and Cannabis indica. "For medical purposes," he says, "we would usually recommend a sativa for the beginning of the day or early in the day when you still have things to do and you still need to function, whereas the indicas can be more lethargic and give you more of a whole-body high, where your whole body becomes slower and sluggish." According to Denver Relief's website, for example, Ghost Train Haze, a sativa-dominant hybrid, "will keep you active while letting you maintain lucidity." By contrast, Bio-Jesus, an indica-dominant strain, "is recommended for evening pain relief when functionality is not a requirement."

The quality and variety on which connoisseurship depends are an important but rarely mentioned benefit of legalization. While alcohol prohibition may have inspired creative cocktail recipes aimed at disguising the taste of black-market booze, it was hardly conducive to the enjoyment of fine liquor. The difference between black-market pot and the cannabis products available at a shop like Denver Relief is the difference between bathtub gin and the dozens of premium gin brands available today, each with its own aroma and flavor.

The Myth of 'Seed-to-Sale' Oversight

While today's medical marijuana centers give you a sense of what fully legal cannabis will look like in Colorado, they operate under restrictions that make little or no sense for businesses serving the recreational market. To begin with, there's that requirement that customers have "a debilitating medical condition." To qualify, a condition must either be listed in Amendment 20, the 2000 initiative that legalized medical use of marijuana, or approved by the Colorado Department of Public Health and Environment, which is charged with maintaining the state's registry of approved patients. Those rules are stricter than California's Compassionate Use Act, which allows people to use marijuana for treatment of six specified conditions (including chronic pain), plus "any other illness for which marijuana provides relief."

Under Colorado law, a medical marijuana center is allowed to grow up to six plants for each patient who designates it as his "provider" in the registry. Denver Relief, for example, has about 400 members, meaning it is allowed to grow around 2,400 plants. Every plant is notionally assigned to a patient, but patients are not limited to pot from "their" plants, and they need not buy exclusively from their designated provider. Furthermore, MMCs can sell marijuana to each other, as long as it's no more than 30 percent of what they grow. MMCs are supposed to account for every last gram they produce and file reports whenever they transport marijuana. The rules are aimed at preventing diversion to people who are not registered patients, whereas in the recreational market the government's main concern will be preventing diversion to minors (defined as people younger than 21) and to other states.

Although Colorado's regulations are often credited with allowing dispensaries there to operate relatively unmolested by the federal government, a state audit released in March revealed that all the talk of strict oversight was more aspirational than descriptive. Colorado's vaunted "seed-to-sale" monitoring system, which was supposed to include electronic plant tags, 24-hour video surveillance, and records of every marijuana transfer, was never actually implemented. "The envisioned seed-to-sale model does not currently exist in Colorado," said State Auditor Dianne Ray, and in any case "may not make sense," especially with the legal marijuana market expanding to include recreational users.

As a result of inadequate manpower, funding shortages, and poor financial management, Ray said, the Medical Marijuana Enforcement Division (MMED) not only had failed to create the planned high-tech tracking system; it did not even "review forms designed to track medical marijuana activities and inventories and ensure that medical marijuana is not being diverted from the system." That's right: Although medical marijuana businesses were required to file forms whenever they moved any of their product, no one ever looked at them.

Furthermore, state inspectors would visit medical marijuana businesses during the application process but generally did not check in again after they were up and running, so it was hard to say how many of 1,440 or so operations officially overseen by the MMED (including dispensaries, their growing operations, and producers of cannabis edibles) were actually complying with regulations such as the 70/30 rule or the limit of six plants per patient. "The current code is extremely difficult to regulate," MMED Director Laura Harris, now head of the repurposed Marijuana Enforcement Division, told me in January. "What you will hear from many in industry is that this works. Well, I'm not as optimistic about it working."

Harris said enforcement was "complaint-driven," although "we have to prioritize our complaints because we have a limited number of investigators whose primary mission at this point has to be conducting pre-licensing inspections." The auditor's report recommended discontinuing those inspections in favor of "risk-based on-site inspections of the licensed businesses as part of a comprehensive monitoring program." The report estimated that pre-approval inspections of all 2,400 applicants who sought state licenses prior to a two-year moratorium that began in August 2010 "would take about 12,300 hours, which equals the work of six full-time equivalent staff in a year." It added that "the number of Division staff available to perform these on-site inspections has been as high as 19 but has been reduced to 10 as of February 2013."

You can start to see why it took so long to obtain a license. According to the audit, "The shortest approval time was 436 days, while the longest approval time was 807 days." The average was about two years. "Out of about 2,400 pre-moratorium applications," the report said, "the Division has approved or denied only 622, or about 26 percent [as of October 2012]. The rest of the applications were still pending (41 percent) or were voluntarily withdrawn by the applicant (33 percent)." Pre-moratorium cannabis businesses were allowed to continue operating in the meantime.

Marijuana taxes are supposed to change all this, giving Harris' agency the resources to regulate in reality as well as theory. In addition to existing state and local sales taxes (which total 7.6 percent in Denver), a bill signed by Gov. Hickenlooper in May would impose an excise tax of 15 percent, as envisioned by Amendment 64, and a special sales tax of 10 percent. Both levies are subject to approval by voters this fall, as required by Colorado's constitution. An April report by researchers at Colorado State University estimated that, together with the standard state sales tax of 2.9 percent, a 15 percent excise tax and a 15 percent special sales tax (which legislators were considering at the time) would add $34 or so to the retail price of an ounce, making it about 23 percent higher than it would otherwise be. The estimated final price, based on a production cost of $600 a pound, was $185 an ounce, about the same as the price many dispensaries currently charge. The report's estimate of total state revenue, which hinged on various questionable assumptions about total consumption and other factors, was $131 million a year, which would go mainly to the Department of Revenue and a school construction fund.

Legalize It, but Don't Advertise It

In addition to the taxes, the legislature enacted various restrictions on the production and sale of marijuana, many of them suggested by the Amendment 64 Implementation Task Force. While visitors to Colorado will be allowed to buy marijuana, for instance, they will be limited to a quarter of an ounce per transaction. Residents, by contrast, can buy up to an ounce at a time. The idea is to discourage interstate smuggling by making it more difficult to accumulate large quantities. But the residence-based restriction may be vulnerable to challenge under both the state and federal constitutions.

One regulation approved by the legislature was so clearly unconstitutional that the state decided not to enforce it. A provision introduced by state Rep. Bob Gardner (R-Colorado Springs) would have required that "magazines whose primary focus is marijuana or marijuana businesses" be kept out of sight in stores open to people younger than 21. Gardner, who likened marijuana magazines to pornography, imagined that his rule would be upheld as reasonable restriction on commercial speech. But as the American Civil Liberties Union of Colorado pointed out in a federal lawsuit it filed on behalf of bookstores and newsstands, "the government's content-based restriction on…non-commercial truthful information cannot pass constitutional muster" because marijuana magazines "are not within a recognized category of unprotected speech." Colorado Attorney General John Suthers agreed in a June 5 memo advising the Department of Revenue to refrain from enforcing Gardner's amendment in light of its conflict with the free speech guarantees of the state and federal constitutions. Denver attorney David Lane, who represented High Times in another lawsuit challenging the magazine rule, told Westword, "You would think a responsible adult in the legislature would have spoken up."

Other restrictions on marijuana-related speech may also be constitutionally vulnerable. The new marijuana law requires state regulators to ban "mass-market campaigns that have a high likelihood of reaching minors," for instance. The U.S. Supreme Court has rejected more modest restrictions on tobacco advertising that were likewise aimed at shielding minors from messages about products they are not allowed to buy. In the 2001 case Lorillard Tobacco v. Reilly, the Court overturned a Massachusetts ban on tobacco billboards within 1,000 feet of a school or playground, saying the rule banned outdoor tobacco advertising from "a substantial portion of Massachusetts' largest cities" and in some places amounted to "nearly a complete ban on the communication of truthful information about smokeless tobacco and cigars to adult consumers." Although it's not clear how federal courts would view restrictions on ads for products banned by federal law, Colorado courts traditionally have read the state constitution's free speech guarantee even more broadly than the Supreme Court has read the First Amendment.

Child protection is also the rationale for a provision calling upon the Marijuana Enforcement Division to create "requirements…similar to the federal Poison Prevention Packaging Act of 1970," which describes "special packaging" that is "designed or constructed to be significantly difficult for children under 5 years of age to open or obtain a toxic or harmful amount of the substance contained therein within a reasonable time and not difficult for normal adults to use properly." But while it may be relatively straightforward to put marijuana buds in bottles with childproof caps, it's not clear how "special packaging" for cannabis-infused brownies or candy bars will work. Laura Harris, head of the Marijuana Enforcement Division, notes that legislators contemplated a similar requirement for medical marijuana. "They said…you create a rule that describes a kind of packaging we want that will be child resistant," Harris says. It was never done, she adds, because "that's a thorny issue. What does that look like?"

Although the childproof packaging mandate will raise prices and may cause some inconvenience, the rules about what you can do inside a pot shop are more significant from a consumer's point of view. Customers will not be able to buy alcohol, tobacco, or cannabis-free snacks or drinks, and they will not be allowed to consume marijuana on the premises. The latter rule apparently puts the kibosh on dreams of Amsterdam-style cannabis cafés sprouting on the streets of Denver and Fort Collins. But what if you buy marijuana in a pot shop and take it with you to a bar or restaurant? In an effort to forestall such BYOW arrangements, legislators added marijuana to Colorado's Clean Indoor Air Act, which bans smoking in bars and restaurants. But as amended, the law applies only to "combustible marijuana" and "marijuana smoke," leaving open the possibility that bars and restaurants could allow patrons to use vaporizers or consume cannabis-infused foods purchased elsewhere.

There may be other legal options for people who want to consume marijuana in a social environment similar to a café or tavern. Last New Year's Eve, after the Amendment 64 provisions protecting possession and home cultivation took effect, Rob Corry, the attorney and marijuana activist, held the first meeting of a floating pot party he dubbed Club 64 at a hemp clothing store in Denver. "We had a DJ, lights, dancing, good music," Corry says. "We did serve alcohol, [but] we gave it away because we didn't have a liquor license for that event. We also had marijuana that we were giving away. We weren't selling it. The main way we raised revenue was with an event fee of $30." A variation on this theme would be charging for food and coffee but giving pot away, which could result in something like Amsterdam's so-called coffee shops.

Either operation seems to satisfy Amendment 64's requirements, although much depends on how the initiative's ban on consuming marijuana "openly and publicly" is interpreted. Corry argues that the phrase imposes two distinct conditions: To be prohibited, marijuana use must be "open" (visible to passers-by) and "public" (occurring on public property). Smoking pot while walking down a crowded sidewalk would be the paradigmatic example. But according to Corry's reading of the law, smoking pot in a secluded area of a park would be public without being open, while smoking pot on your front porch or on the patio of a restaurant (where the Clean Indoor Air Act does not apply) would be open without being public.

Denver Relief's Kayvan Khalatbari takes a different view. "On-site consumption is not going to happen," he asserts. "This is not going to be an Amsterdam. It's supposed to be done in the privacy of your own home behind drawn shades. You're not supposed to use it in front of anybody in public. Period."

Free Pot! (Donation Encouraged)

Another gray area is the nonprofit production and distri­bution of marijuana. Under Amendment 64, Coloradans may privately grow up to six plants and possess the marijuana from them (which could be a lot more than an ounce) on the premises where it was produced. They are also allowed to "assist" others in growing and possessing marijuana, and they can legally transfer up to an ounce at a time "without remuneration." These provisions seem to leave considerable leeway for various cooperative arrangements. Corry advises clients that seeking compensation for the costs they incur in growing marijuana, including rent, supplies, and utilities, is perfectly legal. Even seeking compensation for one's time should be acceptable, he says, although it is risky because that could be interpreted as "remuneration."

Last January police in Colorado Springs busted three guys for running Billygoatgreen MMJ, which was giving away marijuana while accepting "suggested donation[s] towards researching [marijuana] and improving our cultivation operation." The suggested donation for a quarter-ounce of Sour Kush, for instance, was $55. A spokeswoman for Attorney General Suthers told the The Denver Post such operations were clearly illegal, since "distributing marijuana in exchange for suggested donations is a scam to get around the laws against the sale of marijuana." Colorado Springs Police Lt. Mark Comte, who works in the Metro Vice, Narcotics, and Intelligence Division, seemed to disagree in an interview with The Colorado Springs Independent: "If I show up at your house with less than an ounce of marijuana, I'm 21, you're 21, and I say, 'Hey dude, it cost me 50 bucks in gas to get over here,' and you give me 50 bucks for my gas, there's nothing illegal. I mean, you and I both know what's going on with it, but they know what the loopholes are right now." Comte nevertheless defended the Billygoatgreen arrests, saying those guys were transferring more than an ounce at a time.

In May The Denver Post reported that "an untold number" of cannabis collectives "have formed in Colorado since Amendment 64's passage." They included MJ Proper, a 501(c)(3) organization that sought to "foster the charitable [activity], scientific investigation, and education necessary to safely grow and consume recreational cannabis responsibly." According to MJ Proper's website, the benefits of joining the organization included eighth-ounce bags of Dark Star buds and six-packs of cannabis-infused beer, both delivered for $37.50 each. Offended by such creative interpretations of the law, state legislators banned distribution of marijuana by any unlicensed "business or non-profit, including but not limited to a sole proprietorship, corporation, or other business enterprise." Although that provision led MJ Proper to suspend operations, it apparently does not apply to less formally organized efforts. In any case, it is hard to see how the legislature can ban cooperative cultivation without violating Amendment 64, which is now part of the state constitution.

The provisions allowing home cultivation and nonprofit transfers, which cops tend to view as dangerous loopholes, are actually a pretty clever insurance policy. If state-licensed pot shops open as planned, the do-it-yourself sector will account for a tiny share of marijuana consumption, just as home brewing accounts for a tiny share of beer consumption. Why grow your own if retailers are offering a nice selection of high-quality marijuana at reasonable prices? But unless and until that scenario materializes, the allowance for noncommercial production provides an alternative.

In a Brookings Institution paper published last April, legal analyst Stuart Taylor cites that alternative as a reason for federal drug warriors to think twice before trying to stop legalization in Colorado. Taylor warns that "a federal crackdown would backfire by producing an atomized, anarchic, state-legalized but unregulated marijuana market that federal drug enforcers could neither contain nor force the states to contain." The feds could use threats of prosecution and forfeiture to shut down state-licensed stores or prevent them from opening. That approach worked well for John Walsh, the U.S. attorney in Colorado, who last year sent threatening letters to the landlords and operators of more than 50 medical marijuana centers he deemed too close to schools. According to Laura Harris, all of them closed, with nary a raid or arrest. But if the Justice Department succeeded in blocking recreational pot shops, it would be confronted by thousands of small, inconspicuous growers instead of a few hundred openly operating retailers. Taylor argues that if the feds cooperate with Colorado officials to prevent diversion of marijuana, they will have a better chance of limiting the impact on states that continue to treat cannabis as contraband.

For those who favor confrontation, aggressive enforcement is not the only option. Opponents of legalization, including anti-drug activists, former heads of the Drug Enforcement Administration, and several members of Congress, want the Justice Department to fight it in court. They argue that Colorado's marijuana laws are invalid under the Constitution's Supremacy Clause (which says federal statutes are "the supreme law of the land") because they are pre-empted by the Controlled Substances Act (CSA). They note that the Supreme Court, based on a very broad interpretation of the power to regulate interstate commerce, has upheld enforcement of the CSA's ban on marijuana even in states that allow medical use.

But the fact that the feds can continue to enforce marijuana prohibition in Colorado does not mean they can compel Colorado to help. Under our federal system, states have no obligation to punish every action that Congress decides to treat as a crime, and Congress cannot command state officials to enforce its laws. Furthermore, the CSA itself expressly limits pre-emption to situations where there is "a positive conflict" between state and federal law "so that the two cannot consistently stand together."

As Vanderbilt University law professor Robert Mikos explains in a Cato Institute paper published last December, "a positive conflict would seem to arise anytime a state engages in, or requires others to engage in, conduct or inaction that violates the CSA." If state officials grew medical marijuana or distributed it to patients, for example, they would be violating the CSA, and the law establishing that program would be pre-empted. But specifying the criteria for exemption from state penalties does not require anyone to violate the CSA. Mikos concludes that Congress "has left [states] free to regulate marijuana, so long as their regulations do not positively conflict with the CSA."

It is notable that in the 17 years since states began legalizing marijuana for medical use, the Justice Department has never tried to overturn those laws in court with a pre-emption argument, even though it has interfered with the distribution of cannabis to patients in various other ways. "They know they can't force a state to criminalize a given behavior, which is why the federal government has never tried to push a pre-emption argument [against] these medical marijuana laws," Alex Kreit, a professor at the Thomas Jefferson School of Law who has studied the pre-emption issue, told the Drug War Chronicle last year. "Opponents of these laws would love nothing more than to be able to pre-empt them, but there is not a viable legal theory to do that.…The federal government recognizes that's a losing battle. I would be surprised if they filed suit against Colorado or Washington saying their state laws are pre-empted. It would be purely a political maneuver, because they would know they would lose in court."

A Yellow Light for Legalization

At the end of August, nearly 10 months after Colorado and Washington voters decided to legalize marijuana, the Justice Department finally responded. In a memo to U.S. attorneys, Deputy Attorney General James Cole indicated that if the two states adequately address federal concerns about issues such as drugged driving, sales to minors, and diversion to other states, the feds will allow their experiments to proceed. But if regulation and enforcement are not strict enough, he said, the Justice Department may yet decide to prosecute growers and sellers who comply with the new marijuana laws or challenge the laws themselves in federal court.

A bill introduced by Rep. Dana Rohrabacher (R-Calif.) in April would take the decision away from the Obama administration by barring federal prosecution of people who grow, possess, transport, or sell marijuana in compliance with state laws. The Respect State Marijuana Laws Act of 2013 has 18 cosponsors, including three Republicans in addition to Rohrabacher: Justin Amash and Dan Benishek of Michigan, which has a medical marijuana law, and Don Young of Alaska, where it is legal to possess less than four ounces of cannabis in your home.

A more modest bill introduced last November by Rep. Diana DeGette (D-Colo.), clarifying that state regulation of marijuana does not violate the Controlled Substances Act, attracted the support of another Republican, Mike Coffman, a conservative who succeeded Tom Tancredo as representative of Colorado's 6th Congressional District in 2009. Coffman had never before shown any inclination to favor drug policy reform. But Amendment 64 won about 52 percent of the vote in Adams, Arapahoe, and Douglas counties, which make up Coffman's district. That's four percentage points more than Coffman, who was re-elected with a 48 percent plurality. "I think he's a smart guy," says Christian Sederberg, a Denver lawyer who was involved in passing and implementing Amendment 64. Coffman, Sederberg suggests, realized that "if this issue got more votes than I did, that's a very clear signal that it's time to evolve." Amendment 64, incidentally, also received more votes in Colorado than Barack Obama did.

Wanda James, co-owner of a marijuana edibles business in Denver called Simply Pure, argues that politicians ignore growing public support for legalization at their peril. "Three million people in America on election night voted to legalize marijuana," says James, who plans on jumping into the recreational market with both feet. "I can't imagine the United States government starting some arrest campaign on people who are compliant with their state laws. I just can't see the American government doing this when the will of the people is saying 'enough.' " Anyway, she says, "What court in Colorado is going to convict me?"

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Rich||

    "What we need," said Norton Arbelaez, a thirtysomething attorney and businessman in a suit and tie, "is a vertically integrated, closed-loop regulatory framework."

    Dude.

    *** shakes head ***

  • Metazoan||

    Yay, a regulatory elephant walk

  • Almanian!||

    *sounds of the "Baby Elephant Walk" echo in the background*

  • Austrian Anarchy||

    Good Lord! These people cannot manage to leave the most simple of things simple. It is legal, you don't need to do anything else!

    The next thing you know, they will be regulating dirt. Wait, I think that is near where this crap started.

  • Mike Laursen||

    Well, what about the part where my 80-year-old aunt became a pot fiend the day it was legalized?! Oh, wait, she didn't. Nobody I know in Colorado became a fiend because of legal pot.

  • Rich||

    Yet.

    /drug warrior

  • Almanian!||

    This is about teh childrunz, not your near-dead grandmama.

    Where's that fucking Death Panel when we need it.

    OH YEAH - SERKWERSTERSHUTDOWNED - THANKS TEAHADISTTHUGLITARDS!

  • Rich||

    OT (sorry, Jacob): Beyond the "Barrycades"

    Did anyone see this covered by the MSM?

    Nope, me neither.

  • Almanian!||

    So - what's my chances with the "We Don't Want Young Men - We Want YOU!" MILF's in the ads?

    Zero? Yeah...that's what I thought.

    *rats*

  • AlmightyJB||

    If you have the dime, they have the time.

  • AlmightyJB||

    "This is not vertical integration. This is vertical protectionism."

    In a nutshell.

  • DEATFBIRSECIA||

    Denver Relief's Kayvan Khalatbari takes a different view. "On-site consumption is not going to happen," he asserts. "This is not going to be an Amsterdam. It's supposed to be done in the privacy of your own home behind drawn shades. You're not supposed to use it in front of anybody in public. Period."

    Reminds me of the pot scene in Animal House.

  • mrvco||

    With MMJ being well established and generally accepted by the citizenry of Colorado, all we really needed to get the ball rolling on discretely ending the prohibition of recreational use was "legal" possession, cultivation and transfer without remuneration.

    Unfortunately "retail recreational sales" is an easy target for the fear mongering weed-phobic douche bags. Denver's elected officials in particular seems to be going out of its way to "save us from ourselves" by implementing a bunch of idiotic laws and regulations in an attempt to undermine recreational retail sales and consumption while ignoring all of the inevitable and predictable unintended consequences.

    A painful process, but fascinating nonetheless.

  • Gadianton||

    It's supposed to be done in the privacy of your own home behind drawn shades. You're not supposed to use it in front of anybody in public. Period.

    This strikes me as the way the libs want us to exercise our rights as well. "Yes, you have the rights we permit you, but don't actually do anything with them where we have to watch you.

  • Robert||

    a partitioned black granite counter of the sort where people might sit to try on sunglasses or lipstick.


    My mind must be off for Columbus Day. For a full minute, I kept reading that as "try to sit on sunglasses or lipstick", my eyes going over & over it with me wondering what metaphor Jacob was going for.

  • Kathleen Chippi||

    "Opponents of legalization, including anti-drug activists, former heads of the Drug Enforcement Administration, and several members of Congress, want the Justice Department to fight it in court. They argue that Colorado's marijuana laws are invalid under the Constitution's Supremacy Clause (which says federal statutes are "the supreme law of the land") because they are pre-empted by the Controlled Substances Act (CSA). They note that the Supreme Court, based on a very broad interpretation of the power to regulate interstate commerce, has upheld enforcement of the CSA's ban on marijuana even in states that allow medical use."

    There is no case law specifically anywhere that says the feds preempt on medical marijuana--zero--yes they preempt on interstate commerce--no on (specifically) medical marijuana. I have been trying to argue this in the Colorado courts for years but the Supreme Court refuses to hear it and I am broke....

    -as a matter of fact The Single Convention Treaty of 1961--the language that created the CSA, excludes federal preemption of medical marijuana in states that regulate it and marijuana for research and hemp.

    The feds do preempt on recreational cannabis--no question--but not medical.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Progressive Puritans: From e-cigs to sex classifieds, the once transgressive left wants to criminalize fun.
  • Port Authoritarians: Chris Christie’s Bridgegate scandal
  • The Menace of Secret Government: Obama’s proposed intelligence reforms don’t safeguard civil liberties

SUBSCRIBE

advertisement