Marijuana Law, Policy & Reform

Editor: Douglas A. Berman
Moritz College of Law

Sunday, January 24, 2016

"Should Bernie Sanders’ Home State Embrace Socialized Cannabis?"

Vermont Seal TokeoftheTown2013-thumb-200x239-thumb-205x244The question in the title of this post is part of the headline of this effective new International Business Times article highlighting some interesting aspects of the the on-going debate over marijuana legalization in Vermont.  I recommend the article in full (especially for students in my marijuana reform seminar), and here are a few excerpts:

As one of Vermont’s approximately 2,500 official medical marijuana patients, Robert Gwynn is excited his state lawmakers are considering legalizing cannabis.  Born with neurofibromatosis type 1, a tumor disorder that has left him with debilitating nerve pain, limited appetite and ongoing fatigue, the 31-year-old has been part of the state’s medical marijuana program for the past two years.  Medical marijuana, he says, has helped him halve his 14-pill-a-day pharmaceutical regimen, which had left him so mentally disconnected from reality he was afraid to drive.  But he thinks a recreational market could encourage the sort of competition, proficiency and price constraints lacking in the state’s current system of four nonprofit dispensaries statewide.  Once a month, Gwynn drives to a dispensary in Brandon, a four-hour round-trip drive from where he lives in Brattleboro, since he says the medicine quality and patient care at the dispensary 10 minutes from his house are so poor, he won’t shop there.

If Vermont legalizes marijuana, Gwynn figures it will look similar to programs up and running in Colorado, Washington state and Oregon, where for-profit businesses produce and sell marijuana.  He hasn’t noticed anyone proposing alternatives.  “I haven’t really heard it come up,” he says.  “When people talk about it, I don’t think it is something that comes to mind.”

Gwynn isn’t the only one who assumes legalized marijuana in Vermont, which could occur in coming months, will resemble cannabis markets elsewhere.  But drug policy experts say the state is perfectly positioned to go in a bold new direction, one that challenges widely held assumptions about the country’s mounting marijuana movement. Among those options could be a state-run system similar to how Vermont controls the sale of hard liquor within its borders.  Alternatives like this could limit the public health impacts of a marijuana market while still generating state revenue — that is, if lawmakers are willing to consider them.  And if Vermont isn’t willing to deviate from the path set by legalization efforts that came before it, does that mean the only realistic U.S. cannabis model moving forward is a free-market free-for-all?

With recent encouragement from both a former state attorney general and Gov. Peter Shumlin, Vermont lawmakers are actively considering becoming the fifth state (not counting Washington, D.C.) to legalize marijuana, building on a medical marijuana law the state passed in 2004 and a dispensary system it launched in 2011.  The state’s Senate Judiciary Committee is in the midst of three weeks of in-depth testimony and statewide public hearings on the issue, with the goal of voting Friday on whether to advance a legalization bill.  “I’m impressed,” says Matt Simon, New England political director for the Marijuana Policy Project, who’s based in Vermont.  “I’ve been studying this issue for 20 years, and here you have politicians sitting in rooms, asking the right questions and trying to understand it for the first time in my life.”

If such a bill passes in the near future, Vermont would become the first state in New England, much less the entire Northeast, to legalize marijuana.  While just 626,000 people live in Vermont, the second least populated state in the country, roughly 2.7 million regular marijuana users live within 200 miles of the state, including those in New York City.  That means whatever legalized marijuana system Vermont chooses could have financial and political impacts far beyond its modest borders.

Because Vermont does not have a ballot initiative system like many states, the only way it can legalize marijuana is through the legislative process.  And if it does so this legislative session, it will be the first time marijuana ever has been legalized by lawmakers, not voters.  According to some experts, this means Vermont has the option of considering legalization models not likely to be floated at the polls.  “The initiative process is going to be driven by folks who want something to happen, who want legalization,” says Pat Oglesby, a tax attorney who studies marijuana at the Center for New Revenue in North Carolina.  “The legislative process could result in a more moderate, middle-ground approach.”

It’s why last year a Rand Corp. legalization study commissioned by the state for $20,000 (the rest of the study’s $120,000 price tag was covered by the philanthropic foundation Good Ventures) urged lawmakers to consider “that marijuana policy should not be viewed as a binary choice between prohibition and the for-profit commercial model we see in Colorado and Washington.”  Instead, the report’s authors, a who’s who of drug policy authorities nationwide, laid out a series of alternatives, including a nonprofit-only system, a supply chain overseen by a public authority similarly to how the Vermont State Housing Authority manages affordable housing initiatives and a market only open to “benefit corporations,” or b-corporations, that have positive social impact.  But the report focused special attention on one option in particular: a government-run monopoly model where the state controls marijuana production and distribution.

According to experts, a state-run marijuana system could have several benefits.  For starters, government-run cannabis outlets wouldn’t have the same sort of financial incentive to promote excessive marijuana consumption similar to how alcohol companies market to heavy users.  Instead, government marijuana outlets could focus on the sort of social protections that are a top priority for Shumlin.  “You would like a system where nobody has an incentive to encourage overuse of a drug,” says New York University marijuana policy expert Mark Kleiman. “State-monopoly retailing could be a better option if the state officials involved didn’t have any incentive to encourage problematic drug use and even better if they had a responsibility to discourage it.”  Reviews of private versus state-run alcohol systems have found “strong evidence that privatization results in increased per capita alcohol consumption, a well-established proxy for excessive consumption and related harms.”...

But now, as Vermont lawmakers narrow possible legalization, there’s little indication the state will deviate significantly from legalization efforts that came before.  One of two legalization bills being considered by the state judiciary committee (it will likely end up voting on a hybrid bill containing elements of both) would provide licensing preferences to the sort of b-corporations detailed in the Rand report.  But the bill’s author, Democratic state Sen. David Zuckerman, says the other alternatives proposed in last year's report are likely political nonstarters.  “I think the extremes on both ends — straight unfettered capitalism and a government-run monopoly — are off the table,” says Zuckerman, adding, he believes the chances of a legalization bill passing this year “are a little better than 50-50.”

Some observers are disappointed. “It’s kind of surprising,” says Dan Rifle, Marijuana Policy Project’s former federal policy director, who left the organization over concerns industry interests were taking over the marijuana movement.  “If there’s any state where this should be happening, it’s Vermont.  They commissioned a report, and no one seems to have read it.”

But others say options like a state-controlled system aren’t being considered because they don’t make sense. Government-run programs such as this are prone to bureaucratic bloat, and, as MPP's Simon points out, anyone who’s seen the billboards just over New Hampshire's state lines advertising the Granite State's tax-free alcohol stores knows government-controlled outlets can still promote heavy use.  Plus, adds Simon, there’s no indication the legalization models already up and running are broken, so why bother fixing them?  “We could spend years discussing hypothetical models, but that would be missing the fact that Vermonters are spending hundreds of millions of dollars in the worst possible marijuana model right now,” he says.  “We want to move this from the illicit market, and Colorado and Oregon and Washington have already shown that can be done in a responsible fashion.”...

But likely the biggest reason of all options like a state-run program aren’t getting more attention is that many people worry having state workers sell marijuana would put Vermont on a collision course with the federal government.  “If you are thinking about this from a public-health perspective and are still trying to bring in state revenue, the approach that probably makes the most sense is the government monopoly,” says Beau Kilmer, co-director of Rand’s Drug Policy Research Center and co-author of the Vermont report.  “However, because of the government prohibition, most states aren’t really talking about this because they don’t want to put their employees at risk of arrest.”...

[B]etween such legal questions and the lack of political will around the issue, it’s easy to understand why a state-run marijuana system and other alternatives aren’t getting more airtime as Vermont moves ever closer to recreational marijuana.  Some experts say that’s too bad, since the state might offer one of the last best chances to take a hard look at what, exactly, legalized marijuana has to look like.  “It could matter enormously if Vermont does something that nobody else does,” says Kleiman.  “But if it doesn’t, and California goes the commercial marijuana route this year, as it probably will, then it might be too late.  When Congress gets around to legalizing cannabis, you won’t be able to consider models that aren’t focused on commercial production because the commercial interests involved will dominate the political process.”

I have suggested before that the big Rand report on Vermont's marijuana reform options (released around this time last year and blogged about here and here) is a must-read for any and all persons seriously considering different possible models for marijuana legalization.  However, I have long thought the report tended to over-emphasize the potential harms of a free-market approach to legalization, and also under-emphasized the potential harms of a government-run system.  In particular, my sense of government-run systems (I am thinking here about schools, prisons and health-care systems) is that they tend to move slowly in response to changing conditions, tend to have relatively high costs for the provision of even limited services, and also tend not to invest effectively in product innovations.  Especially in the marijuana space over the next few years, where legal and market realities keep changing, where elevated costs are likely will keep the black-market running, and where market innovation might be especially important as we move from black-to-grey-to-freer markets, I worry about a government-run system of full legalization potentially being the worst of all possible short-term solutions.

That all said, one key point about this debate in Vermont that is highlighted by this article is the reality that blanket marijuana prohibition at the federal level is impeding the opportunity for state labratories to seriously consider all possible experimental approaches to marijuana reform.  This is one of the many reasons I am hopeful that before too long Congress will have the good sense to recognize that blanket marijuana prohibition at the federal level is already having a significant and likely harmful impact on sensible state development of sound marijuana policies.

http://lawprofessors.typepad.com/marijuana_law/2016/01/should-bernie-sanders-home-state-embrace-socialized-cannabis.html

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Comments

I found it interesting that one of Oglesby's arguments in favor of a state-run system is that it would have more flexibility to enter into a price war with the black market. This runs counter to Mr. Berman's critiques of government run systems, specifically that they have a relatively high costs for the provision of limited services. I agree with Mr. Berman's opinion in this regard, and any "flexibility" of the state run marijuana system to lower its costs would be sorely restricted by the inefficiencies prevalent in a system not dependent on profit. The end result would be less availability of product and a worse system than is currently under operation in Vermont .

Posted by: Adam | Jan 27, 2016 12:15:30 PM

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