Saturday, November 22, 2014
The title of this post is the headline of this interesting and lengthy NBC News article. Here are excerpts:
The specter of corporate cannabis loomed large on Tuesday, when the family of Bob Marley appeared on NBC’s Today Show, announcing the creation of Marley Natural. The world’s first global brand of marijuana launched with the support of $50 million dollars in private equity and the same marketing machine that took Starbucks to the masses.
“We see the inevitability of large, well-run companies to sell cannabis,” said Brendan Kennedy, the CEO of Privateer Holding, the Seattle-based company that’s behind the Marley brand. “That train left the station a long time ago.”
Less than a year after Colorado and Washington state opened the first commercial pot markets, and less than a month after two more states voted to follow suit, such frank capitalism has shocked the smiling wise-men of weed and their crusading friends in the legalization movement. Most hoped the market would remain a cottage industry of small-scale growers, collectives and dispensaries. Few expect it will....
Alcohol and tobacco interests are also keeping an eye on the burgeoning market. The alcohol industry in particular has been communicating with representatives of NORML, DPA, and the Marijuana Policy Project, according to sources on both sides of the table.
They want to know whether pot will be a friend or a foe — a complement to their products, or, as some marijuana reformers have argued, an alternative that could sap America’s love of drinking. The marijuana lobby accepts these overtures out of a combination of curiosity, realism, and smart strategy. If a takeover is inevitable, they figure, it’s better to be prepared.
“Beer, wine and tobacco people — I’ve met with them all,” said Allen St. Pierre, the executive director of NORML, which is above all a consumer rights organization. He doesn’t love the idea of Big Pot, but he believes it will help guarantee that users get a quality product at a fair price....
St. Pierre hopes to create a “Dionysus lobby,” built on the shared interests of alcohol, tobacco and pot. All three industries want low taxes, the right to advertise freely, and the ability to make convenient sales, he said. But so far the legal marijuana markets in Colorado and Washington are plainly over-regulated, he added, prejudiced against pot consumers, who should be allowed to buy marijuana as easily and safely as they do beer or wine or a pack of smokes.
“I’ve tried to say, ‘look, none of us should be hiding,’” he said. “All of us are involved in a problematic adult consumer product and all of us enjoy using one or more of these products,” he continued. “What do we want? We can get it down to four words, almost a Wal-Mart bumper sticker: ‘Best product, lowest cost.’”
He said that one of his warmest receptions came from the Distilled Spirits Council, or Discus, which represents the leading producers and marketers of liquor in the United States. One day last July a senior member of Discus called St. Pierre, according to an account of the conversation that St. Pierre emailed to a colleague.
That account along with a follow-up interview with St. Pierre illustrates how marijuana has sent a twinned-bolt of fear and excitement through the spines of alcohol executives. The Discus executive congratulated the industry on its wins at the ballot box, St. Pierre recalled. The executive also assured the marijuana lobby that the nation’s largest liquor makers would not fight legalization as long as the public supported it.
He estimated that a third of Discus board want to get into the marijuana business, a third oppose legalization, and a third believe that the industry should take a neutral position, according to St. Pierre’s recollections. But Discus conveyed a threat as well, a complaint against the way marijuana advocates were demonizing alcohol in their campaigns. “Marijuana is safer than alcohol,” is perhaps MPP’s most used slogan in fact, and the group relentlessly argues that America would be a healthier place if we put down our tumblers and decided to toke.
If such talk continued, the Discus rep said, according to St. Pierre’s recollection, the liquor industry would have no choice but to launch a counter-attack. That, St. Pierre agreed, wouldn’t be good for anyone....
The Beer Institute, which represents the nation’s 2,800 breweries, and the Wine & Spirit Wholesalers of America also confirmed meetings and calls with the marijuana lobby but denied wanting to get into the business.
All three show signs of the same double vision of marijuana as both opportunity and threat. Earlier this year, Brown-Forman Corp., which owns Jack Daniel's, told investors that the spread of legalization could hurt its sales. The Beer Institute is officially neutral on the question of marijuana legalization. But Chris Thorne, the vice president of communications, seemed to take a shot at the new industry and its claim as a safe alternative to booze.
“We believe that it’s misleading to compare marijuana to beer,” he said in a phone interview. “We are committed to responsible advertising, working with public officials and law enforcement, and supporting communities in the countries where we operate. I don’t think any of that is true for marijuana. There are a lot of unanswered questions about marijuana — questions about its effect on the brain, and on young people — and we think legislators would be wise to look at these questions as they consider the legalization of marijuana.”
But at the same time, the Wine & Spirit Wholesalers of America may be ready to make marijuana work for it. Earlier this year, in a letter sent to all fifty U.S. attorneys general and governors, the president of the WSWA argued that if a state decides to legalize marijuana, it should regulate it with the same three-tiered distribution system set up for alcohol after prohibition — a move some analysts interpreted as a sign that alcohol companies would be open to moving pot as well....
Tobacco executives, meanwhile, have been studying the marijuana industry for years, according to Stanton Glantz, a professor of medicine at the University of California, San Francisco. His research has drawn an 80-million page archive of tobacco industry documents, spanning the 1960s to the late 1990s. Many of the documents reference softening pot laws, rising use, and the dual threat/opportunity of a third major vice industry.
Wednesday, November 19, 2014
CNN has this notable new commentary authored by Jeffrey Miron urging Congress to follow the lead of states on modern marijuana reform. (Miron is senior lecturer and director of undergraduate studies in the economics department at Harvard University as well as a senior fellow at the Cato Institute.) Here are excerpts:
Marijuana legalization is a policy no-brainer. Any society that professes to value liberty should leave adults free to consume marijuana.
Moreover, the evidence from states and countries that have decriminalized or medicalized marijuana suggests that policy plays a modest role in limiting use. And while marijuana can harm the user or others when consumed inappropriately, the same applies to many legal goods such as alcohol, tobacco, excessive eating or driving a car.
Recent evidence from Colorado confirms that marijuana's legal status has minimal impact on marijuana use or the harms allegedly caused by use. Since commercialization of medical marijuana in 2009, and since legalization in 2012, marijuana use, crime, traffic accidents, education and health outcomes have all followed their pre-existing trends rather than increasing or decreasing after policy liberalized.
The strong claims made by legalization critics are not borne out in the data. Likewise, some strong claims by legalization advocates -- e.g., that marijuana tourism would be a major boom to the economy -- have also not materialized. The main impact of Colorado's legalization has been that marijuana users can now purchase and use with less worry about harsh legal ramifications.
Yet despite the compelling case for legalization, and progress toward legalization at the state level, ultimate success is not assured. Federal law still prohibits marijuana, and existing jurisprudence (Gonzales v. Raich 2005) holds that federal law trumps state law when it comes to marijuana prohibition. So far, the federal government has mostly taken a hands-off approach to state medicalizations and legalizations, but in January 2017, the country will have a new president. That person could order the attorney general to enforce federal prohibition regardless of state law.
Whether that will happen is hard to forecast. If more states legalize marijuana and public opinion continues its support, Washington may hesitate to push back. But federal prohibition creates problems even if enforcement is nominal: Marijuana business cannot easily use standard financial institutions and transactions technologies such as credit cards; physicians may still hesitate to prescribe marijuana; and medical researchers will still face difficulty in studying marijuana.
To realize the full potential of legalization, therefore, federal law must change. The best approach is to remove marijuana from the list of drugs regulated by the Controlled Substances Act (CSA), the federal law that governs prohibition.
Standard regulatory and tax policies would still apply to legalized marijuana, and states would probably adopt marijuana-specific regulations similar to those for alcohol (e.g., minimum purchase ages). State and federal governments might also impose "sin taxes," as for alcohol. But otherwise marijuana would be just another commodity, as it was before the Marijuana Tax Act of 1937.
A more cautious approach would have Congress reschedule marijuana under the CSA. Currently, marijuana is in Schedule I, which is reserved for drugs such as heroin and LSD that, according to the CSA, have "a high potential for abuse ... no currently accepted medical use in treatment in the United States ... [and] a lack of accepted safety for use." Hardly anyone believes these conditions apply to marijuana.
If marijuana were in Schedule II, which states it as "a high potential for abuse ... [but a] currently accepted medical use in treatment in the United States," doctors could legally prescribe it under federal law, as with other Schedule II drugs such as cocaine, methadone and morphine....
This "medicalization" approach, while perhaps politically more feasible than full legalization, has serious drawbacks. Federal authorities such as the Drug Enforcement Administration could interfere with marijuana prescribing -- as sometimes occurs with opiate prescribing. Taxing medical marijuana may be harder than taxing recreational marijuana. And the medical approach risks a charge of hypocrisy, since it is backdoor legalization. But medicalization is still better than full prohibition, since it eliminates the black market.
For 77 years, the United States has outlawed marijuana, with tragic repercussions and unintended consequences. The public and their state governments are on track to rectify this terrible policy. Here's hoping Congress catches up.
Tuesday, November 18, 2014
I am intrigued and pleased to see that the Room for Debate section of the New York Times has gathered some of the leading advocates in the marijuana reform debate to discuss whether and how marijuana reform ought to proceed. Here is the section's set up:
It looks like the use of recreational marijuana is heading down the path of legalization across the country. Voters in Alaska, Oregon and the District of Columbia approved legalizing measures on Nov. 4, but with key differences. The District of Columbia, for instance, will repeal all criminal and civil penalties for personal possession and allow limited, private cultivation of the drug. Oregon on the other hand would give its Liquor Control Commission the power to regulate marijuana as it does alcohol.
Some say a profit-driven model for legalization runs the risk of increasing marijuana use, while others argue that a regulated market is the best way to keep use safe for consumers. What’s the right approach to legalizing recreational marijuana?
Here are the contributions, with links via the commentary titles:
Legalization Doesn’t Have to Lead to Commercialization by Mark A. R. Kleiman
Racial Justice at the Core of the Movement by Malik Burnett
A Market Will Benefit Consumers and Society by Steve Fox
A Gateway to Profits by Kevin A. Sabet
The title of this post is the subheading of this notable commentary by Jacob Sullum at Reason.com. Here are a few excerpts:
At a press conference last week, Eleanor Holmes Norton, the District of Columbia's congressional delegate, urged her colleagues to respect the will of the voters who overwhelmingly approved marijuana legalization in the nation's capital on November 4. She was joined by three congressmen, including Dana Rohrabacher (R-Calif.), who said trying to block legalization in D.C. or in Alaska and Oregon, where voters also said no to marijuana prohibition this month, would flout "fundamental principles" that "Republicans have always talked about," including "individual liberties," "limited government," and "states' rights and the 10th Amendment."...
Initiative 71, which passed by a margin of more than 2 to 1, allows adults 21 or older to possess two ounces or less of marijuana, grow up to six plants at home, and transfer up to an ounce at a time to other adults "without remuneration." It does not authorize commercial production or distribution, although the District of Columbia Council is considering legislation that would. "I see no reason why we wouldn't follow a regime similar to how we regulate and tax alcohol," incoming Mayor Muriel Bowser said at a press conference after the election.
In theory, there are a couple of ways that Congress could try to stop all this from happening. It could pass a joint resolution disapproving Initiative 71, or it could bar the District from spending money to implement the measure. But neither of these approaches looks very promising....
Strictly speaking, "states' rights" do not apply to the District of Columbia, which was created by Congress and is subject to much more extensive federal control than the states are. But as Obama suggests, the arguments for federalism — in particular, the idea that political decisions should be made at the lowest feasible level to facilitate citizen influence, policy experimentation, and competition among jurisdictions — apply to D.C. as well as the states. Given the president's views on the subject, it seems reasonable to assume that he would take a dim view of attempts to nullify Initiative 71.
November 18, 2014 in Federal Marijuana Laws, Policies and Practices, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)
As reported in this BuzzFeed piece, which is headlined "California’s Attorney General Thinks Legal Weed Is Inevitable," the top lawyer in California had a a lot of interesting and notable things to say recently about marijuana reform. Here are the details:
California Attorney General Kamala Harris, a rising star in the Democratic Party, says she’s “not opposed” to her state legalizing marijuana. The state was one of the first to legalize medical marijuana in 1996, but so far hasn’t legalized it for recreational use, like Colorado, Washington, and others.
“I am not opposed to the legalization of marijuana. I’m the top cop, and so I have to look at it from a law enforcement perspective and a public safety perspective,” Harris told BuzzFeed News in an interview in Washington, D.C. “I think we are fortunate to have Colorado and Washington be in front of us on this and figuring out the details of what it looks like when it’s legalized.”
“We’re watching it happen right before our eyes in Colorado and Washington. I don’t think it’s gonna take too long to figure this out,” Harris said. “I think there’s a certain inevitability about it.”
Harris is one of the few state-level officials appearing at an event on Wednesday at the Center for American Progress, an influential left-wing think tank seen as a feeder institution for the Obama administration. Talked up as a contender to replace Eric Holder as attorney general, Harris, who is one of the Democratic Party’s likely prospects for higher office in California, said that even with legalization it’s important that states have systems in place for regulating use of the drug.
“It would be easier for me to say, ‘Let’s legalize it, let’s move on,’ and everybody would be happy. I believe that would be irresponsible of me as the top cop,” Harris said. “The detail of these things matters. For example, what’s going on right now in Colorado is they’re figuring out you gotta have a very specific system for the edibles. Maureen Dowd famously did her piece on that… There are real issues for law enforcement, [such as] how you will measure someone being under the influence in terms of impairment to drive.”
“We have seen in the history of this issue for California and other states, if we don’t figure out the details for how it’s going to be legalized the feds are gonna come in, and I don’t think that’s in anyone’s best interest,” Harris said....
“I don’t have any moral opposition to it or anything like that. Half my family’s from Jamaica,” Harris said with a laugh.
UPDATE: I just noticed that our Senior Superstar California Correspondent, Alex Kreit, also posted here about AG Harris's comments. His post, titled "Kamala Harris Coming Around on Marijuana Legalization," includes a lot of astute political observations about the importance of what AG Harris is now saying.
Saturday, November 15, 2014
The question in the title of this post is prompted by the headline of this new Motley Fool posting, "This Could Be the Make-or-Break Marijuana State." Here are excerpts:
Although state elections are now in the books for another two years, it's not too early to start thinking about which states could be the next to introduce legal marijuana and medical marijuana legislation in the next election. Though we could theoretically see as many as a dozen states bringing some degree of marijuana vote in front of their citizens in 2016, no state has greater make-or-break potential for the marijuana movement than California.
The most populous state in the country, according to The Los Angeles Times, came incredibly close to putting legal marijuana on the ballot in this past election, however it lacked an adequate amount of funding that would have been required to make a run at legalization. The Drug Policy Alliance, the same group that helped get marijuana legalized for adults in Washington and Colorado, and medical marijuana legalized in Massachusetts, has been continuously drumming up support, but all efforts to draft the Control, Regulate, and Tax Marijuana Act have been put off until the 2016 elections.
As you may have figured, the implications for California and the rest of the nation are enormous. As the most populous state, California is poised to become the biggest consumer of marijuana, as well as the biggest generator of tax revenue. Based on data from NerdWallet, California has nearly 25 million people aged 25 and up, of which 6.74% admitting to smoking marijuana within the past month. Out of the 50 U.S. states, only eight had a higher percentage of admitted marijuana users, and in four of those (Colorado, Washington, Oregon, and Alaska), recreational use is now legal.
In other words, California could be poised to reap more than $500 million in annual tax benefits based on a forecast that calls for a flat 25% tax on marijuana. That's no small chunk of change, and it can go to support the state's ailing education system, or even help pay for the maintenance of its state-run health exchange.
Sunday, November 9, 2014
The question in the title of this post is prompted by this new local article headlined "Momentum to legalize marijuana in California is growing." here are excerpts:
After Tuesday’s election, just one piece of the West Coast remained unwelcoming to recreational pot: California. But with voters in Oregon and Alaska legalizing the use and sale of marijuana — joining Washington and Colorado in inviting retail spreads of cannabis-infused teas and brownies and joints — advocates see fresh momentum behind the slow shift in how the public regards the green stuff and those who enjoy it.
California residents rejected legalization in 2010, with a 54 percent vote against it, but supporters of recreational marijuana are growing more confident about reversing that result in the 2016 election.
“I see a parallel — not a perfect parallel, but a parallel — with marriage equality,” said Ben Tulchin, a San Francisco-based pollster who has watched sympathy for both same-sex unions and marijuana climb. “The first battle you may lose, like in California, but you start a conversation and get the dialogue going. … And you eventually see a very big shift.”
California, alongside Arizona and Nevada, have legalization measures in the works for the 2016 election, when the presidential race is expected to deliver younger voters to the polls who tend to be more supportive of pot. Proponents are considering other states as well. “I got to believe that the wins this week, coupled with the wins in 2012, will provide momentum,” Tulchin said....
Backers in California acknowledge that victory won’t come easy. Although polls show a majority now supports the idea, selling voters on a specific plan gets tricky. Concerns about how the drug will be taxed, and who can sell it, helped sink Proposition 19 four years ago. Even leaders in the medical marijuana community decided they didn’t like the details of the rollout and came out against the initiative. A lack of funding for the 2010 campaign was also an obstacle.
Lt. Gov. Gavin Newsom, a supporter of the 2016 push for legalization, is chairing a task force to study the issue in a bid to head off problems. “A lot of things weren’t thought through with Proposition 19,” said Newsom, who will be termed out of his office in 2018 and doesn’t see support of pot as hindering his political future. “We want to make sure we have the answers to the tough questions.”
Many Californians are waiting for those answers, including Kevin Reed, the founder and president of The Green Cross, a medical marijuana dispensary in San Francisco’s Excelsior. He said he’s not sure if his customers and his business will benefit from legalization.
Saturday, November 8, 2014
I am pleased (and not surprised) to see that Professor Franklin Snyder continue to post lots and lots of great new content at Cannabis Law Prof Blog. Here are just some of the great posts worth checking out that provide various perspectives on perspectives after the big election this past week:
Thursday, November 6, 2014
The title of this post is drawn from the headline and substance of this new Washington Post piece. Here are excerpts:
“The stage is now set for 2016, when measures to regulate marijuana like alcohol are expected to appear on ballots in at least five states,” said Mason Tvert, communications director for the Marijuana Policy Project, which was instrumental in passing legalization in Colorado and bankrolled the successful campaign in Alaska. The group contributed about 84 percent of the nearly $900,000 raised by the Campaign to Regulate Marijuana Like Alcohol in Alaska, which successfully lobbied for passage of the ballot measure in Alaska.
The five states where MPP has established committees to push similar ballot measures in 2016 are Arizona, California, Maine, Massachusetts, and Nevada. An independent Democratic activist in Mississippi is also pursuing a ballot measure there. The measures there will likely mimic the Colorado model, as the measures in Oregon and Alaska did. (The measure passed by voters in Washington in 2012 is typically viewed by advocates as more restrictive than Colorado’s.)
But the group also plans to work to help shepherd legalization through a state legislature for the first time, with a particular focus on Rhode Island, Vermont, New Hampshire, Delaware, Hawaii, and Maryland. New Hampshire’s state House in January became the first legislative body in the country to approve legalization, though the effort ultimately reached a dead end. That state, Rhode Island and Vermont may see action soonest among that group.
The upcoming push to legalize in those nearly dozen states will no doubt draw heavily on lessons learned during the successful campaigns so far, which fall roughly into two categories, Tvert said. Advocates in Alaska and Colorado felt they needed to focus on disarming fears about the harm of marijuana early by drawing the comparison to alcohol, while Oregon and Washington played it safer by arguing that legalization is safer than prohibition....
In Oregon, the campaign tended to focus on the ills of prohibition, offering legalization as a safer alternative. What worked? Peter Zuckerman, communications director of the successful Yes on 91 campaign, said legalization advocates were smart to avoid marijuana leaf imagery, wear suits when appearing on TV, and pursue endorsements from unusual or unexpected individuals and groups. His group aired ads featuring Washington’s King County Sheriff John Urquhart, local mothers, and a former top state official in charge of mental health and addiction services. Support from the Oregon League of Conservation Voters and the social media-savvy group of moms backing the measure helped, too, he said. The campaign might have seen more success by starting earlier and encouraging supporters to quote news sources in voter pamphlet statements, he added.
There are lessons to learn from failure, too. While all the legalization measures were approved on Election Day, a measure to allow medical marijuana in Florida failed to gain the 60 percent share of the vote necessary for passage, though it did earn majority support. The campaign there could have promoted the patients who would have benefitted more and been less reactive, said Tom Angell, chairman of Marijuana Majority.
“They spent a lot of time trying to undercut the opposition’s arguments about the so-called loopholes in Amendment 2 and from what I saw they really didn’t do enough of a job of telling the story of the patients who are going to be helped by this,” Angell said.
Wednesday, November 5, 2014
Alaska, Oregon, and the District of Columbia just voted to legalize recreational marijuana. In a sense, they broke no new ground -- Colorado and Washington already legalized recreational marijuana two years ago. But the passage of these measures is extraordinary in another sense: marijuana legalization no longer surprises anyone. Even the federal government, which continues to ban marijuana, seems unlikely to raise a fuss. Indeed, following similar votes in Colorado and Washington in 2012, the Department of Justice announced that it would refrain from prosecuting marijuana users and dealers who comply with state law, so long as they do not implicate a distinct federal interest (like stopping inter-state shipments of the drug). As control of the Congress shifts to the Republican Party, it seems unlikely that the federal government will do anything but continue to sit on the sidelines for the next two years.
The votes on Tuesday are interesting for two other reasons as well. First, these votes arguably foretell how marijuana laws will evolve in the states over time. The four states and DC that were the first to legalize recreational marijuana were also among the first to legalize medical marijuana: Alaska, Oregon, and Washington legalized medical marijuana in 1998, Colorado did so in 2000, and DC first tried in 1999. This suggests that voters might be more comfortable taking the plunge (i.e., legalizing recreational marijuana) after dipping their toes in the pool first (i.e., legalizing medical marijuana). It also suggests that the next states to legalize recreational marijuana are likely to be ones with more mature medical marijuana programs, such as California (1996) and Maine (1999).
Second, the defeat of a medical marijuana initiative in Florida is as unsurprising as the passage of legalization elsewhere. The south has been resistant to marijuana reforms; it remains the only region of the country without a legalization state. To some extent, southern resistance might be due to public attitudes toward marijuana; but it also might stem from lawmaking procedures used in many southern (and some other states) that impede the adoption even of popular reforms. After all, over half (58%) of Florida voters actually supported legalization of medical marijuana; but that figure just was not enough to change state law – the constitutional initiative process requires 60% support, higher than the simple majority needed in many other states, like California. A vote to legalize marijuana elsewhere in the country might not be surprising anymore, but when it happens in the south it will be noteworthy.
November 5, 2014 in Criminal justice developments and reforms, Current Affairs, Initiative reforms in states, Medical Marijuana State Laws and Reforms, Political perspective on reforms, Polling data and results, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)
Monday, October 27, 2014
Dr. Jeffrey Miron, who is director of economic studies at the Cato Institute and director of undergraduate studies in the Department of Economics at Harvard University, has just produced this significant new Cato working paper titled "Marijuana Policy in Colorado." The paper is relatively short, though it includes lots of data, and here is its Executive Summary and its closing paragraphs:
In November 2012, voters in the states of Colorado and Washington approved ballot initiatives that legalized marijuana for recreational purposes. Alaska, Oregon, and the District of Columbia are scheduled to consider similar measures in the fall of 2014, and other states may follow suit in the fall of 2016.
Supporters and opponents of such initiatives make numerous claims about state-level marijuana legalization. Advocates believe legalization reduces crime, raises revenue, lowers criminal justice expenditure, improves public health, improves traffic safety, and stimulates the economy. Critics believe legalization spurs marijuana use, increases crime, diminishes traffic safety, harms public health, and lowers teen educational achievement. Systematic evaluation of these claims, however, has been absent.
This paper provides a preliminary assessment of marijuana legalization and related policies in Colorado. It is the first part of a longer-term project that will monitor state marijuana legalizations in Colorado, Washington, and other states.
The conclusion from this initial evaluation is that changes in Colorado’s marijuana policy have had minimal impact on marijuana use and the outcomes sometimes associated with use. Colorado has collected non-trivial tax revenue from legal marijuana, but so far less than anticipated by legalization advocates....
The evidence provided here suggests that marijuana policy changes in Colorado have had minimal impact on marijuana use and the outcomes sometimes associated with use. This does not prove that other legalizing states will experience similar results, nor that the absence of major effects will continue. Such conclusions must await additional evidence from Colorado, Washington, and future legalizing states, as well as more statistically robust analyses that use non-legalizing states as controls.
But the evidence here indicates that strong claims about Colorado’s legalization, whether by advocates or opponents, are so far devoid of empirical support.
Friday, October 24, 2014
Patrick Gleason, who is the Director of State Affairs at Americans for Tax Reform, has this notable new commentary at Forbes headlined "Marijuana Taxes On The Ballot This November." Here are excerpts:
Voter approval of retail marijuana sales in Colorado and Washington State in 2012 presented lawmakers in those state capitals with a difficult task not faced before in the U.S.: how to tax and regulate legal recreational marijuana. As Joe Henchman, Vice President at the non-partisan Tax Foundation has pointed out, “Because marijuana can be purchased as a cigarette, an edible, a liquid, or vapor, all with a wide variety of concentrations, a specific excise tax is untenable.” Since then, Colorado and Washington State lawmakers have imposed onerous and excessive taxes on marijuana; but on Nov. 4, Washington State voters will have the opportunity to tell their representatives in the state legislature to reconsider.
During the 2014 session of the Washington legislature, state lawmakers passed Senate Bill 6505, which deemed the marijuana industry to be non-agricultural, thereby removing excise tax protections that apply to the state’s agriculture industry. This redefining of the industry will permit, if allowed to stand, more than $24 million in higher taxes over the next decade than would’ve otherwise been the case. On Nov. 4, Washington residents will vote on Advisory Question Number 8, a ballot measure that would urge the legislature to either maintain or repeal this reclassification of marijuana products as non-agricultural.
Washington State taxes marijuana with a 25 percent assessment on sales from producers to processors, a 25 percent tax on sales from processors to retailers, followed by another 25 percent tax on retail sales. That’s not all. Then there is the Evergreen State’s Business & Occupation gross receipts tax, a 6.5 percent state sales tax, along with local sales taxes. Altogether this brings the estimated effective tax rate on marijuana products to approximately 44 percent. In light of the onerous tax treatment of marijuana products and companies tied to that industry, it would be a positive development for Washington voters to vote repeal on Advisory Question 8 and urge lawmakers in Olympia to reverse the non-agricultural reclassification that will beget such punitive taxation.
But it’s not just at the state level where the marijuana industry faces excessive and unfair taxation. It’s a basic principle of sound tax policy that the code should not pick winners and losers or disproportionately target certain industries or groups of taxpayers. Yet unlike any other business, newly-legalized cannabis dispensaries are not allowed to deduct ordinary and necessary business expenses like equipment, rent, and wages from their federal taxable income....
Section 280E of the tax code denies ‘ordinary and necessary’ business expenses as a deduction against income derived from Schedule 1 substances. Unfortunately, tax law does not make any distinction between illegal street drug sales and state-established, legal cannabis dispensaries. These latter businesses comply fully with state law, pay all applicable taxes, and are vigorously regulated. There is no reason why the tax code should deny ordinary and necessary business expenses to legitimate businesses established under state law. The result is an arbitrary and punitive situation where legal employers face very high average effective tax rates that Congress never sought to impose on businesses.
Colorado, like Washington State and the federal government, exorbitantly taxes marijuana. Between the state’s 15 percent wholesale excise tax, a 10 percent state tax on marijuana retail sales, plus traditional state and local sales taxes, the effective rate on cannabis approaches 30 percent in the Rocky Mountain State.
It’s great to have 50 laboratories of democracy across the U.S., and the trials with legal marijuana taking place in Washington and Colorado will be instructive for other states and the federal government. Yet, when such heavy and unreasonable taxation is imposed, it blunts the positive effects of legal cannabis – such as the eradication of black markets and drug cartels – and makes it impossible to fully learn from the experience. Washington voters and members of Congress have the opportunity to help get it right, if they so choose.
Tuesday, October 21, 2014
This new Denver Post article, headlined "Proposed Colorado marijuana edibles ban shows lingering pot discord," documents the enduring challenges and debates over the best regulatory frameworks for states which have moved away from total marijuana prohibition. Here are excerpts:
Colorado's health department proposed an industry-spinning ban on the sales of nearly all forms of edible marijuana at recreational pot shops Monday but then quickly backed away from the plan amid an industry outcry and questions over legality.
After a heated, four-hour hearing, the public policy Tilt-A-Whirl ride ended where it began: with lawmakers, regulators and stakeholders still in disagreement — now more than 10 months after the start of recreational pot sales — on the best way to manage marijuana in Colorado. "This is by far the simplest recommendation," state Rep. Jonathan Singer, D-Longmont, said of the health department's proposal. "But I don't know if it gets us to where we want to be."
The aim of the state advisory group that met Monday to consider the health department's proposal and several others is to prevent people — mostly kids — from accidentally eating marijuana-infused products. Such accidental ingestions have sent children to the hospital, caused an increase in calls to poison-control hotlines and become one of the key measures lawmakers use in discussing whether legal marijuana sales can fit harmoniously in society.
Sales of infused edibles make up about 45 percent of the legal marijuana marketplace, said Dan Anglin, the chairman of the Colorado Cannabis Chamber of Commerce.
The health department's recommendation was one of 11 proposals the group considered Monday. Most suggested the state create clearer labels for marijuana-infused products or require producers to make edible marijuana items in a unique shape or dyed a unique color.
Many of those proposals, though, quickly met with a familiar back-and-forth. One side would offer the suggestion; the other side would bat it down. Stamp a symbol onto edibles denoting the products contain marijuana? Too easily rubbed off, edibles producers said. Improve labeling and require edibles to stay with their packages? Too easily ignored to spread unmarked edibles, groups concerned about marijuana said.
Require producers to dye their products a specific color or airbrush on a symbol? "You can't force a company to use an ingredient they don't want to," said advisory group member Julie Dooley, an owner of Julie & Kate Baked Goods, an edibles producer.
In the debate, there was talk of Sour Patch Kids and marijuana-infused sodas, discussion of the cost of chocolate molds, and these words: "I think soft candy is such a broad category."
Amid this atmosphere, Colorado health department official Jeff Lawrence presented the department's proposed ban on the sales of all edibles except hard candies and tinctures. Lawrence said the disagreement over more-nuanced regulations pushed the department to propose something more sweeping. "If it couldn't be achieved," he said, "we were looking at something that could be achieved."
But the proposal — word of which spread in an Associated Press report before the meeting — quickly met a buzz saw. Industry advocates questioned whether edibles could be banned under Amendment 64, Colorado's marijuana-legalization measure. Singer worried a ban would create a "marijuana Whac-A-Mole situation" where edibles production moved into the black market. Andrew Freedman, the state's marijuana policy coordinator, said the governor's office did not support a ban.
The health department later in the day put out a news release acknowledging that the department did not consider the proposal's constitutionality or ask the governor's office to review it. Instead, the proposal was put forward to generate discussion. "Considering only the public health perspective, however, edibles pose a definite risk to children, and that's why we recommended limiting marijuana-infused products to tinctures and lozenges," Larry Wolk, the executive director of the department, said in a statement.
The discussion seemed mostly over by the end of Monday's meeting, as talk returned to more incremental forms of edibles regulation. Any final proposals from the advisory group will be presented in a report to the legislature next year. The Department of Revenue, which regulates marijuana businesses, must adopt final rules on the topic by 2016.
Monday, October 20, 2014
This lengthy local article from Oregon provides a detailed look at the state of political debate in Oregon just a few weeks before final votes are cast concerning Measure 91 to legalize recreational marijuana in the state. The piece is headlined "High stakes in marijuana vote: Legalization measure draws nationwide attention," and here are some excerpts that caught my eye:
The flow of campaign cash from out-of-state donors has shifted south across the Columbia River in support of Measure 91. It has fueled an advertising blitz virtually absent two years ago. Meanwhile, opponents of legal recreational pot are struggling to fill a much smaller campaign war chest.
The measure would let adults 21 years and older legally use, grow, produce and store marijuana and associated edibles and drinks at home within set limits. It would let adults provide marijuana as well as marijuana edibles and drinks within the limits to another adult, as long as no cash is exchanged. It also would direct the state to regulate the legal recreational marijuana industry, including growers, producers and retailers. And it projects the state would collect millions of dollars in pot tax revenue to be divided among schools, law enforcement and treatment programs.
The two sides of Measure 91 cite statistics that they say show Washington’s and Colorado’s laws are either failed or sound policy, to buttress their own chief arguments....
New Approach Oregon has raised nearly $3.3 million in cash and in-kind contributions, according to online campaign finance filings with the Oregon secretary of state’s office. New Approach Oregon sponsored the measure on the Nov. 4 ballot and is the main committee supporting its passage. The money has fueled a wave of statewide ads.
Out-of-state donors have put in big money. Drug Policy Action, the political arm of Drug Policy Alliance, has contributed $940,000. Billionaire investor George Soros is a major financier of the alliance, which has a stated aim of ending marijuana prohibition. New Approach PAC, a committee The Oregonian reported was formed by family members of the late billionaire insurance executive Peter Lewis, contributed $750,000. Lewis, who died in November, personally contributed $96,000....
In contrast, the No on 91 campaign has raised just $168,337, state data shows, with the Oregon State Sheriff’s Association and another statewide law enforcement association kicking in almost all the cash.
Clatsop County Sheriff Tom Bergin, past president of the sheriff’s association, acknowledged the campaign hasn’t raised a lot of money. He noted, however, the coffers for the respective campaigns would be similar if out-of-state money going to the pro-measure side were excluded. Bergin said the lack of money going into the No on 91 campaign isn’t apathy but a sign that Oregonians are still dealing with financial hardships. “We’ve got to keep mowing the yard and hope we keep the weeds out, no pun intended,” he said....
The most recent poll, conducted by Portland-based DHM Research on behalf of Oregon Public Broadcasting and a Portland television station, found 52 percent of likely voters supported Measure 91 and 41 percent opposed it, with a 4.3 percentage point margin of error.
John Horvick, DHM’s research director, said it has conducted four polls since last year either on marijuana legalization or the measure. The results have been close, with the percentage in favor running between 49 and 54 percent. He said the outcome could hinge on the youth vote, which is less likely to cast ballots during mid-term elections. “You just have to get over that hump,” he said.
Horvick said he doubts the outcomes in Colorado and Washington will influence how voters here cast their ballots. Rather, he said, the attitudes of voters and their friends and family members shaped by “real-life experiences” with marijuana will have more impact than two-year-old election results in The Highest and Evergreen states.
October 20, 2014 in Initiative reforms in states, Polling data and results, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms, Who decides | Permalink | Comments (0)
Saturday, October 18, 2014
The question in the title of this post is prompted by this notable AP piece from Oregon headlined "Economist: Benefits of legal pot outweigh societal costs." Here are excerpts:
University of Oregon economist said Thursday the best-case estimates for Colorado's legal marijuana tax revenue were overstated because of a faulty model. Economist Ben Hansen said at the Oregon Economic Forum that misjudgments in Colorado's revenue estimates stemmed from a term familiar to students in Econ 101: Elasticity of demand.
Previous estimates of demand for recreational marijuana only looked at the potential shift from the black market to the legal market. But with the medical market suctioning off some new consumers, revenue forecasts changed. With various substitutes available, from synthetic marijuana to medical and black-market pot, Hansen said, guessing at the potential revenue impact in Oregon remains difficult....
Colorado has decided to spend pot taxes in arrears, meaning taxes aren't projected but spent only once collected. The unusual budgeting maneuver was adopted because the pot market is expected to be highly volatile for the first several years.
Legalizing marijuana increases its supply and drops its price, Hansen said. That price drop makes additional taxes harder for consumers to notice. That's important when the tax rate people pay in Colorado and Washington for legal pot is north of 40 percent. In Oregon, the same rate is anticipated to be about 15 percent.
While police agencies will no longer arrest or fine people caught with marijuana if it's legalized, Hansen says taxes function as a kind of fine for marijuana consumption. "With legalization, we can kind of double-dip," Hansen said. "We're no longer paying to arrest and incarcerate people, and we're getting tax revenue from it."
Hansen also says he doesn't anticipate a dramatic impact on the alcohol market, though he says studies have shown heavy drinking and beer sales decline in markets where medical marijuana is approved.
Harvard University economist Jeffrey Miron said Thursday that Colorado's medical marijuana market was already commercialized when marijuana was legalized. "The medicinal market was so commercial, so visible, that for all practical purposes, it was legal," said Miron. "Economists consider all that matters are the fundamentals: Can you get access to it, are there barriers to it.
"I just don't think you (in Oregon) will see any kind of dramatic change. You're a long way toward a commercial market already."
October 18, 2014 in Medical Marijuana Commentary and Debate, Medical Marijuana State Laws and Reforms, Recreational Marijuana Commentary and Debate, Recreational Marijuana State Laws and Reforms | Permalink | Comments (0)
Wednesday, October 8, 2014
I never tire of the phrase "follow the money," and I generally do not use it as a pejorative complaint about modern politics as much as a useful reminder that capitalism (and capital) explains the realities of American law, policy and reform as much as any other force. With these realities in mind, I found especially interesting this informative lengthy USA Today article headlined "Entrepreneurs eye emerging marijuana markets." Here are some extended excerpts:
When James Howler created his marijuana-infused taffy in 2009, the Colorado entrepreneur had trouble finding an accountant willing to keep the books of a company making legally fuzzy medical marijuana candy. Now, five years later, venture capitalists from New York City want to shower him with money for a stake in his Cheeba Chews and a foothold in a $2.6 billion marijuana industry now operating in nearly half the country.
With medical marijuana legal in 23 states and Washington, D.C., and recreational marijuana legal in Colorado and Washington state, the market for weed is rife with potential, and the people in pinstripes have taken note. As the marijuana companies grow more sophisticated — and profitable — they are attracting the attention of investors and corporations.
Tapping into the green revolution, however, brings unique challenges for entrepreneurs and corporate honchos alike. States may have bucked federal law, which considers marijuana illegal for any purpose, but they have imposed their own complicated, lengthy lists of regulations meant to keep cannabis tightly under control and, in some cases, keep the corporate behemoths out.
But with so much money at stake, industry experts say, it's only a matter of time before corporate giants, already eyeing the market, grab their share, too. "If leaders of these companies are not looking at the cannabis space, then they are not doing their jobs," says Chris Walsh, editor of Marijuana Business Daily, a trade publication based in Denver. "Billions of dollars are here, and no seasoned business executive is going to overlook a billion-dollar industry that they might be positioned to tap."...
If the crowd of 200 executives who jammed the marijuana panel at the Wine & Spirits Summit on June 5 in Denver is any indication, the alcohol industry is paying attention. "Some see it as a threat, and some are interested in being part of the industry," says Emily Pennington, editor of Wine & Spirits Daily, an online trade publication that hosted the summit. "Either way, they are watching it very closely."...
Most major tobacco companies, which explored the possibilities of marijuana in the 1970s, when federal legalization seemed possible, now deny any interest. "Marijuana remains illegal under federal law, and Altria's companies have no plans to sell marijuana-based products," says Brian May, spokesman for Altria, the company that owns tobacco company Philip Morris America....
R.J. Reynolds Tobacco also says it isn't interested in marijuana. "We have no intention to have any involvement when it comes to marijuana," spokesman David Howard says. "We have no interest in that industry."
But tobacco giant Japan Tobacco International entered into a deal in December 2011 with Ploom, the San Francisco-based manufacturer of a pocket-sized smoking device that heats tobacco, vaporizing nicotine and flavor without producing smoke, to commercialize the product outside the United States. Although the company maintains its device is solely for tobacco, the latest version, called Pax, is popular among marijuana users.
At least two pharmaceutical firms, AbbVie and GW Pharmaceuticals, already produce medicines that contain active ingredients from cannabis. GW says it is a traditional pharmaceutical company that won't be dabbling in what it calls the "artisanal" medical marijuana business.The company manufactures Sativex, a cannabinoid medicine for the treatment of spasticity due to multiple sclerosis....
Some states don't allow non-residents to open or have equity investments in marijuana businesses. Colorado, which has more than 1,300 licensed marijuana businesses, requires marijuana investors to have lived in the state for at least two years. The owner, operator and employees must all be residents of the state. Non-state residents can lend money but can't have an equity interest, says Colorado Department of Revenue spokeswoman Natriece Bryant. The state enacted those regulations specifically to keep the giant multinationals out, Bryant says....
Most federally insured banks have opted to stay away from the industry because of legal uncertainty about whether transactions for marijuana businesses could be considered money laundering. That means marijuana businesses have little access to small business loans or even payroll accounts. With banks out of the picture for now, most of the financial backing for growth in the marijuana industry has come from venture capital, angel investors and private loans.
"We've had bankers from New York City asking for a tour of the facilities and wanting to know how they can invest," said Ralph Morgan, chief operating officer of O.penVAPE, which specializes in extraction of purified cannabis oil from marijuana and produces a vape pen that vaporizes the oil to be inhaled. O.penVAPE products are sold in Colorado, California, Washington, Oregon and Arizona. "There are tons of people dumping tons of money into the industry," says Cheeba Chews' Howler. "There is money to be made, and that's why that big money is coming in."...
Ultimately, once corporate America thinks the industry is safe, well-established marijuana companies will be targets for acquisition, says Steve Berg, chief financial officer of O.penVAPE. "By virtue of the success we've had and the powerful brand we've developed, we constantly get inquiries from individuals and companies looking to partner," Berg says. None have come from Big Pharma, Big Tobacco or Big Alcohol, "but we feel like we can feel them out there," he says.
"How could it be otherwise? This is a new industry that is growing very, very rapidly," Berg says. "Any business-development division that has any similarity has to have their eye on this ball."
O.penVAPE's chief operating officer, Ralph Morgan, who worked in medical device sales before he and his wife, intrigued by the medical side of cannabis, decided to open a dispensary in Colorado, says there's nothing mysterious about the marijuana industry. "All the regular business rules apply to the marijuana industry — taxation, regulation, human resources," Morgan says. "It's just a different widget."
Morgan says recreational marijuana businesses are a natural fit for the alcohol industry, which is already accustomed to state-by-state regulation. Marijuana products "could be made and distributed in a similar fashion," Morgan says. "The alcohol industry has done a good job of creating brands."
Trip Keber, who four years ago founded Dixie Elixirs to make marijuana-infused drinks, chocolates and lotions, says he, too, has had inquiries from investment bankers, hedge funds and venture capitalists. And at conferences, he has fielded questions from alcohol industry executives. "Four years ago, I couldn't get anyone to return my calls," Keber says. "Now the tables have turned. We are too big to ignore."
One of the biggest signs that the industry has matured is the influx of top-notch professionals — lawyers, accountants, advertising execs — willing to take jobs at the marijuana companies, Berg says. Full legalization in Colorado and Washington was a watershed event for many business professionals, who could then feel it was safe to join the industry, Berg says. "One of the major themes or trends in the legal cannabis industry is the professionalization of the industry," Berg says. "Professionals are crossing over from the more conventional industries because they see a lot of opportunity and a lot of challenge."...
Changes in societal attitudes toward marijuana caught attorney Barry Peek's attention a few years ago. Peek, a labor and employment lawyer at the 65-lawyer New York firm Meyer, Suozzi, English and Klein, did some reading, attended a few conferences and then gathered a group of three or four attorneys in his firm to study the issues around medical marijuana. He concluded that medical marijuana would turn out to be big business. And if it's a new business, Peek says, people will need legal advice.
When New York Gov. Andrew Cuomo signed the state's medical marijuana law on July 5, Peek's firm was ready. "We are advising clients on how to maneuver through those regulations," Peek says. "We have a full-service law firm, so if there is a company that needs to get into the business, we can handle corporate issues, tax issues, land-use issues, whatever they need."
Interest in New York is widespread, from farmers in Upstate New York who have idle land that could grow marijuana to doctors who want to dispense it, Peek says. "It will be a growing sector in the legal community," Peek says. "And once the smaller companies get a foothold and become profitable, they will get bought out by larger companies."
Tuesday, October 7, 2014
As reported in this local article from Colorado, headlined "Candidates: Marijuana legalization ‘reckless’: Both oppose cannabis; differ on corrections, education," the current Governor of Colorado continues to criticize a law that a significant majority of his state voters supported back in 2012. Here are the basics:
Gov. John Hickenlooper said Monday during a gubernatorial debate with Republican challenger Bob Beauprez that Colorado voters were “reckless” to legalize recreational marijuana in 2012. The Democratic governor’s opposition to marijuana legalization has hardly been a secret. But the statement is his clearest admonishment for 55 percent of the electorate that backed the initiative.
“To a certain extent you could say it was reckless. I’m not saying it was reckless because I get quoted everywhere. But if it was up to me, I wouldn’t have done it. I opposed it from the very beginning. What the hell. I’ll say it was reckless,” Hickenlooper said....
Some thought Hickenlooper might be warming to the cannabis industry after attending a fundraiser in August hosted by some of the biggest marijuana businesses in Colorado. But he made it clear on Monday that he remains committed to presenting a tough hand. “We’re not only the first state to do this, we’re the first country,” Hickenlooper said. “There are serious challenges when you build something from scratch.”
There are few differences between Hickenlooper and Beauprez on the subject of marijuana. Beauprez also strongly opposed legalization. “We have to regulate as tight as the law allows,” Beauprez said.
Also notable were these two comments to the article by readers appearing right after the piece:
Art Jaquez: "This is what is wrong with the two party system, no one represents the people."
Jordan Maynard: "Funny that a Republican is touting the 'tightest allowable regulation' regarding something the people voted in, but when they run for office they proclaim less regulation is best. The Hypocrisy of Politicians never ceases. They hate the laws the people vote for, and suddenly it's good to have heavy handed regulation. If we could have government without politicians things might actually work."
Monday, October 6, 2014
The New York Times has this new editorial headlined "Yes to Marijuana Ballot Measures: Alaska, Oregon and the District of Columbia Should Legalize Pot." Here is how it begins:
The decision by California voters in 1996 to legalize medical marijuana produced a wave of similar initiatives around the country. Less than two decades later, over half the states allow at least limited medical use. Now it looks as though recreational use of the drug may follow the same path.
In 2012, Washington State and Colorado legalized recreational marijuana. This November, voters in Alaska, Oregon and the District of Columbia will decide whether to do the same — effectively disregarding the misguided federal ban on a drug that is far less dangerous than alcohol. Decades of arresting people for buying, selling and using marijuana have hurt more than helped society, and minority communities have been disproportionately affected by the harsh criminal penalties of prohibition.
Since Alaska, Oregon and the District of Columbia already allow medical marijuana, taking the next step makes good sense. There are some differences in their proposed initiatives, but they are all worthy of passage.
Sunday, October 5, 2014
The title of this post is the title of this notable symposium planned for later this month. The event takes place at the University of California Irvine School of Law, and is presented by the Center for Land, Environment, and Natural Resources (CLEANR) and Brown Rudnick LLP, and here is how the event is pitched at this website:
Despite stringent regulation at the federal level, an increasing number of U.S. states have adopted laws legalizing the use of marijuana for medical or recreational purposes. Marijuana production activities are being openly conducted without prosecution, but a suite of land use and environmental laws may nonetheless regulate such conduct, including environmental impacts of farming, consumer product safety, pesticide use, the siting and location of farms and dispensaries, and use of public lands.
Attorneys also face uncertainty as to their ability to advise clients in the marijuana industry about these activities. This symposium explores these many issues, guided by leading practitioners and policymakers deeply involved at the interface of federal and state marijuana use and control.
Alejandro E. Camacho, Professor of Law, Director, Center for Land, Environment, and Natural Resources at UC Irvine School of Law, and Geoffrey K. Willis, Partner, Brown Rudnick LLP, will serve as moderators.
Tuesday, September 30, 2014
Gina S. Warren of Texas A&M School of Law has posted a very interesting looking new article to SSRN: "Regulating Pot to Save the Polar Bear: Energy and Climate Impacts of the Marijuana Industry."
Here is the abstract:
It goes by many names -- cannabis, marijuana, pot, chronic, grass, reefer, weed, Mary Jane. Whatever the name, the trend is clear: the shwag is legal but the herb ain’t green. Nearly half of all U.S. states have enacted -- or have pending -- legislation to legalize, decriminalize, or in some way permit the use and cultivation of marijuana. As a result, marijuana has become a significant topic of conversation in the U.S. -- especially in the areas of social policy and criminal law. One conversation yet to reach fruition, however, is the industry’s projected impacts on energy demand and the climate. As the industry grows, so will its negative externalities. Indoor cannabis cultivation is the most energy-intensive industry in the U.S., requiring electricity to power lamps, to maintain consistent temperature and humidity levels, and to power fans for ventilation, among other things. This energy consumption, unless otherwise mitigated, results in significant greenhouse gas emissions. This article explores the opportunities that legalization brings in addressing the negative impacts on energy usage and climate change. It concludes that simply incorporating the marijuanaindustry into the existing energy regulatory framework will do little to address its negative impacts. It recommends that state and local policymakers take advantage of the unique opportunity to require indoor cultivators to utilize carbon-free electricity as a condition of licensing.