Regulating Marijuana in California

Raanan Kagan

Director, Health Policy Research

Carnevale Associates, LLC

Authors: Patrick Murphy and John Carnevale

April 17, 2016

With research support from Talib Jabbar

IF California decides to legalize recreational

marijuana use, it should:

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Begin with a relatively tight regulatory strategy to create a

single market.

Build into legislation and regulations a capacity to

change.

Require reporting and data collection to guide future

policy decisions.

Overview

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Background & history

Regulatory framework; multiple goals

– Cultivation, production and processing

– Sales and consumption

– Taxes and finance

– Public health and safety

– Governance and oversight

Conclusions

Nationwide trend of relaxing marijuana

prohibitions

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Medical

Proposition 215 (1996) California passes medical marijuana

Currently 24 states and the District of Columbia permit medical use;

represents almost one-half of the population

Recreational

Four states and DC have legalized recreational use, representing

5.6% of the population

California and as many as 11 other states could have 2016 ballot

initiatives

By the End of 2016

58% of the population could reside in a jurisdiction that permits

medical use, recreational use, or both.

California takes different approach to marijuana

compared to existing Federal law

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Federal Controlled Substances Act classifies marijuana

as a Schedule I drug (1970)

CA legislature: 1 oz. possession misdemeanor (1975)

CA Proposition 215 medical marijuana passes (1996)

CA SB 1449, 1 oz. possession citation/fine (2010)

CA legislature regulates medical marijuana dispensaries

(2015)

Current federal position remains unclear

A regulatory framework

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Regulatory area Goals Example

Cultivation, production,

processing

Manage cultivation; limit

supply and diversion;

environmental protection

Licensure; production

limits; tracking

Sales, consumption, and

possession

Limit access by youth;

reduce arrests; limit

diversion

Age restrictions; size of

sale limits; home grow

restrictions

Taxes and finance Limit access by youth;

raise revenue

Excise taxes; licensure

fees

Public health and safety Prevent impaired

driving; limit abuse and

addiction

Drugged driving

thresholds; prevention

and treatment programs

Governance Oversee and ensure

compliance

Assign authority; provide

enforcement resources

Elements of a tightly regulated marijuana

market

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Regulatory area Recommendations

Cultivation and production Limited number of licenses and size of

cultivations; seed-to-sale tracking; strict

environmental and water use requirements.

Sales, use, and consumption Sales limited to individuals 21 and older;

retail outlets restricted to marijuana-only

stores; home grows prohibited.

Taxes and finance A sales and/or excise tax as a percentage of

selling price.

Public health and safety Aggressive prevention/education campaign

aimed at youth; funded research to develop

an impairment standard; substance abuse

treatment for the uninsured.

Governance A single regulatory system that requires

reporting and data collection across many

indicators; built in reporting and impact

assessment.

Cultivation, production, and processing

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Goals: Reduce illegal market; limit diversion;

environmental protection; reduce criminalization

How did other states approach the problem?

Restrict the number of licenses

– CO allows ownership in both production and retail

– WA does not

Both CO and WA require strict product tracking and

reporting (seed to sale)

Neither state included environmental provisions

What a tightly regulated production and

cultivation market would look like

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Limited number of licenses

Limited size of cultivation

Seed-to-sale tracking

Strict environmental and water use requirements

Trade-off: A tighter market will mean more production will

remain illegal and unregulated.

Public health and safety

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Goals: Limit abuse and dependence; protect public

safety; prevent impaired driving

How did other states approach the problem?

– Both WA and CO established impairment standard (5

ng/mL)

– Both have supported development of prevention and

education efforts

– Both have seen increases in number of drivers testing

positive

Oversight and accountability: Minimum data set

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Seed to Sale

Business Licenses; business characteristics such as location, size, number of employees; major business cost categories; reports from tracking systems

Use/Consumption

•Incidence and prevalence estimates; attitudes and perceived risk; marijuana use in combination with other (scheduled) drugs; drug prices; drug purities at point of sale; types and sales of marijuana infused products

Taxes and Finance

Revenues projected and realized by revenue source (various tax types, license fees, fines, penalties, etc.); direct regulatory expenditures

Health & Safety

•Treatment admissions; drug court admissions; emergency room admissions; inpatient hospital admissions and discharges; ME reports; overdoses; calls to poison control; suicide hotline calls; workplace absenteeism; drugged driving arrests/crashes; fatal crashes; school drop out rates; unexcused school absences; school expulsions; school graduation rates; marijuana arrests; crime; marijuana tickets issued

Accountability

•Regulatory inspections conducted and completed; environmental violations; laboratory tests; regulatory workforce size; research/data budget; periodic process and outcome studies; state level economic impact studies; public satisfaction surveys

Questions & Notes on the use of these slides

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These slides were created to accompany a presentation. They do not include full documentation of sources, data samples, methods, and interpretations. To avoid misinterpretations, please contact:

Patrick Murphy (murphy@ppic.org; 415-291-4455)

Full paper available at:

Http://www.ppic.org/main/publication.asp?i=1189

Raanan Kagan (Raanan@carnevaleassociates.com)