Pathways Report: Policy Options for Regulating Marijuana in California

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Marijuana Policy Forum

Executive summary

The question of whether or not California should legalize adult use of marijuana beyond medical purposes is gaining increased attention by voters and policymakers in California. Four states and the District of Columbia have voted to legalize recreational marijuana use, and each offers important lessons for California. But there are circumstances that are unique to our state that must be thoughtfully analyzed before we move forward with any legalization effort.

The question may well appear on the 2016 statewide ballot. With public opinion polls showing that a narrow majority of likely voters are supportive of the concept of legalization (Public Policy Institute of California, March, 2015), now is the time to think through how such a system could be designed and implemented.

The Blue Ribbon Commission on Marijuana Policy (BRC) was created for this purpose. This Commission report provides guidelines and offers analysis of key issues to be considered by policymakers and voters as they contemplate the legalization and regulation of cannabis in California.

Neither the Commission nor this report is intended to make the case for or against legalization. Rather, this report serves as a resource to help the public and policymakers understand the range of policy issues and options to consider in advance of such a decision.

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The process of legalization: core strategies

One of the major findings of the Blue Ribbon Commission's work is that the legalization of marijuana would not be an event that happens in one election. Rather, it would be a process that unfolds over many years requiring sustained attention to implementation.

That process of legalization and regulation will be dynamic. It will require the continued engagement of a range of stakeholders in local communities and at the state level. This report is based on a recommendation that the process the state would embark upon must be based on four macro-level strategies operating concurrently:

  1. Promote the public interest by ensuring that all legal and regulatory decisions around legalization are made with a focus on protecting California's youth and promoting public health and safety.
  2. Reduce the size of the illicit market to the greatest extent possible. While it is not possible to eliminate the illicit market entirely, limiting its size will reduce some of the harms associated with the current illegal cultivation and sale of cannabis and is essential to creating a well-functioning regulated market that also generates tax revenue.
  3. Offer legal protection to responsible actors in the marijuana industry who strive to work within the law. The new system must reward cooperation and compliance by responsible actors in the industry as an incentive toward responsible behavior. It must move current actors, current supply and current demand from the unregulated to the regulated market. And the new market will need to out-compete the illicit market over time.
  4. Capture and invest tax revenue through a fair system of taxation and regulation, and direct that revenue to programs aligned with the goals and needed pliicy strategies for safe legalization.

Goals of legalization and regulation

The Commission believes any legalization effort should be clear on the goals it is setting out to achieve for the people of California. Other stakehliders may propose different or additional goals. The Commission recommends the flilowing nine goals:

  1. Promote the health, safety and wellbeing of California's youth, by providing better prevention, education and treatment in school and community settings and keeping youth out of the criminal justice system. Limit youth access to marijuana, including its concurrent use with alcohol and tobacco, and regulate edible products that may appeal to children.
  2. Public Safety: Ensure that our streets, schools and communities remain safe, while adopting measures to improve public safety.
  3. Equity: Meet the needs of California's diverse populations and address racial and economic disparities, replacing criminalization with public health and economic development.
  4. Public Health: Protect public health, strengthen treatment programs for those who need help and educate the public about health issues associated with marijuana use.
  5. Environment: Protect public lands, reduce the environmental harms of illegal marijuana production and restore habitat and watersheds impacted by such cultivation.
  6. Medicine: Ensure continued access to marijuana for medical and therapeutic purposes for patients.
  7. Consumer Protection: Provide protections for California consumers, including testing and labeling of cannabis products and offer information that helps consumers make informed decisions.
  8. Workforce: Extend the same health, safety and labor protections to cannabis workers as other workers and provide for legal employment and economic opportunity for California's diverse workforce.
  9. Market Access: Ensure that small and mid-size entities, especially responsible actors in the current market, have access to the new licensed market, and that the industry and regulatory system are not dominated by large, corporate interests.

Evaluating various policy options

The Commission studied policy options in seven major areas related to regulation of the industry, which is the primary focus of this report. The goals of protecting youth and public safety are embedded in this report, but additional information on those specific topics is also available on the Blue Ribbon Commission website.

Although these major policy areas overlap to some extent, we discuss them separately in this report for ease of presentation. Beyond the above 13 recommended strategies and goals, the Commission offers 45 additional and related recommendations within the following policy areas for the public, policymakers, and lawmakers to consider:

  1. Defining the Marijuana Industry Structure
  2. Regulating Marijuana Cultivation and Processing
  3. Regulating Marijuana Marketing, Sales and Consumption
  4. Taxing Marijuana
  5. Enforcing the New Rules
  6. Data Collection and Monitoring
  7. Using The New Revenue from Marijuana

Considering California's unique characteristics

California policymakers and regulators must craft California-centric solutions to the complex problems that surround cannabis legalization. Policymakers should also take regional variations into account, and realize that challenges that face the northern part of the state, for example, may be fundamentally different than those in the south. These factors include people and demographics, land and environmental protection, industry and commerce, and government at all levels.

Applying lessons from other states and other industries

While considering our state's unique characteristics, policymakers can learn lessons from different approaches taken by other states and study what has worked and what has not.

The Blue Ribbon Commission on Marijuana Policy has monitored the implementation of marijuana legalization in Washington and Colorado, and has reviewed the early policies and practices of Oregon, Alaska and Washington D.C. Throughout the body of this report, we reference lessons from Washington and Colorado, and to a lesser extent our neighbor to the north, Oregon. In addition, California can apply lessons from its own 20-year history of medical marijuana, including the lack of statewide regulation, the lessons learned from divergent approaches to local regulation and the best practices developed by responsible actors in the industry.

Policymakers can also draw from the lessons of the regulation of other industries in California over many decades, notably tobacco and alcohol,4 even though cannabis is different than both tobacco and alcohol in its production, processing and physiological effects.

By virtue of references to those substances, the Commission is not making a statement about relative risks or harms of these substances, but we can draw lessons from the various approaches to regulating those substances and apply these lessons to any new legal marijuana industry from the outset:

  • Public health and regulatory tools can be adopted to discourage problematic or unhealthy use and educate consumers about health risks associated with such use. In the case of tobacco these tools have helped reduce consumption and associated health risks substantially in California.
  • A broad array of civil enforcement tools are available to address alcohol and tobacco sales that are out of compliance with the regulatory system, without first resorting to criminal enforcement.
  • Tax policy and its impact on price can be a tool to address problematic use, but only one tool. Cigarette taxes have had a positive effect in reducing use.
  • Alcohol taxes, set differently according to beer, wine and spirits (though not necessarily based on alcohol content) provide a model of differential taxing.
  • Regulation for beer provides a licensing model that recognizes both function and size, with production caps for smaller entities, strict rules for retail sales, and a separate and distinct function for distributors.
  • Large corporations tend to gain influence and exercise greater commercial power in the market, generating greater revenue from regular rather than occasional users.
  • Industries can exert influence over political and regulatory decisions; adequate capacity is needed in regulatory agencies to actively monitor those industries given the large number of licensees, and safeguards need to be put into place to ensure against improper industry control of the regulatory process.

Commission recommendations

While the Blue Ribbon Commission is not making overly specific or prescriptive recommendations, the Commission does offer over 50 recommendations by identifying core strategies, goals, and policy options.

They can serve as guidelines for consideration by the public and policymakers. Some of these recommendations may be appropriate to include in a ballot measure, others in subsequent implementing legislation or regulation. In order to be effective, many of these recommendations would need to be put into place at the outset, whereas others could be sequenced during implementation as greater regulatory and industry capacity evolve.

While the Blue Ribbon Commission is not making overly specific or prescriptive recommendations, the Commission does offer over 50 recommendations by identifying core strategies, goals, and policy options.

There are tradeoffs inherent to the transition from an illegal to a legal market. In the transition to a legal market, the purpose of public policy would be to reduce the harms associated with the prohibition of marijuana, including the criminalization of people, while minimizing the harms and capturing the benefits of a legalized system.

Voters and policymakers will need to balance competing priorities. To be clear, some advocates have set out potential goals that the Blue Ribbon Commission believes should not be priorities. Among them: lowering the price of marijuana for recreational users, creating and promoting the largest industry possible or raising the maximum amount of tax revenue. If these were goals, they would encourage or depend upon the heavy use of cannabis.

If and when California begins the process of legalization, these policy options can be evaluated in relation to achieving the desired policy goals. This framework is illustrated in the Logic Model below:

 Download the full Pathways Report »

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