Wednesday, September 25, 2013

Might the medical marijuana industry be a central force in retarding recreational reform?

The question in the title of this post is prompted by this notable recent lengthy news article from Arizona.  It is headlined "Dispensaries wary of fully legalizing marijuana in Arizona: Medical operators fear being undercut by recreational use," and here is how it gets started:

Medical-marijuana dispensary operators are apprehensive about plans by a powerful marijuana-advocacy group to campaign for full legalization of the drug in Arizona. The Marijuana Policy Project, a Washington, D.C.-based organization that advocates marijuana legalization and regulation, is a former ally of the dispensary owners, having played a key financial and public-relations role in passage of the state law that created the burgeoning medical-marijuana program.

Bolstered by the Obama administration’s announcement that it will not challenge such laws, the group intends to pursue full legalization in Arizona through a voter initiative in 2016 and in nine other states over the next two election cycles. The initiative will be modeled on a program in Colorado, which has legalized marijuana for recreational use.

But the group may have a tough time selling their plan to the state’s medical-marijuana dispensary operators, who are capitalizing on the growing market, have invested thousands of dollars to get up and running and say they favor the status quo — a system in which doctors must recommend cannabis for medical purposes. The program allows certain businesses and individuals to grow marijuana in large quantities, but home growers are fading away as dispensaries open across the state.

Uneasiness among some dispensary operators highlights the divide between medical-marijuana advocates and recreational proponents — a split that could complicate any effort to further loosen Arizona’s marijuana laws.

“I’m not so sure that, at this stage, we would be for immediate legalization,” Bill Myer, co-owner of Arizona Organix in Glendale, told The Arizona Republic. “We’ve still got some issues to work through with the laws we currently have. The program is still in it’s infancy. “I think Arizona should probably digest what’s going on here before we move forward with what’s going on in Washington and Colorado. Is it going to be a great program, or is it going to be a problem? We don’t know that.”

Myer and some other dispensary operators said they are concerned about their financial investments and question how legalizing recreational use, which could increase the number of dispensaries, would impact their bottom line. Other operators said they favor increased access to marijuana for adults but are remaining neutral on full legalization until they see initiative language from the Marijuana Policy Project. “There’s significant financial investments involved,” Myer said. “Dispensaries may not be able to recoup before other people are made available to do the same things with very little capital investments. It’s absolutely our concern.”

Medical Marijuana State Laws and Reforms, Recreational Marijuana State Laws and Reforms | Permalink


It’s a classic political economy story, and many other states besides Arizona will no doubt face the same issue. Most suppliers of medical marijuana currently enjoy a privileged position under state law (often by virtue of an exclusive or semi-exclusive state license to distribute). Those suppliers might lose that privileged status and all of the benefits associated with it (monopoly profits, etc.) if a state legalizes marijuana outright and allows more suppliers to enter the market. For example, medical marijuana shops would likely lose some business to new shops that cater to the recreational market – especially if, as many suspect, many current customers are really just using the drug recreationally anyway. After all, they wouldn’t need to jump through hoops (like obtaining a physician’s recommendation) to buy from the recreational shop.
But this just means that states will probably have to offer medical marijuana suppliers some concessions to get them to support broader legalization. Colorado did this with Amendment 64, offering medical marijuana shops (among other things) preferred status in applying for licenses to distribution recreational marijuana. Some of these concessions may be “bad” for the state – they might be inefficient, or unfair wealth transfers – so it raises the question whether a state would be better off going straight to recreational legalization, without first creating a medical marijuana market.

Posted by: Rob Mikos | Sep 25, 2013 9:06:52 AM

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