UCLA public policy professor Mark Kleiman was hired to help design Washington state’s new recreational weed policies, but he says the law didn’t turn out exactly the way he intended.
Kleiman — who founded the crime and drug policy think tank BOTEC Analysis Corp. — told Business Insider he fears the new policies won’t create the tax windfall the state was expecting. The law is also designed in a way that could encourage overconsumption of the drug, he said.
“I wanted high taxes or high prices [for marijuana]. I wanted tight limits on marketing and aggressive consumer information from a health perspective,” Kleiman told me over the phone.
Kleiman isn’t getting those things.
Dubbed the “pot czar of Washington” by many in the media, Kleiman has been one of the most well-known analysts of drug policy over the last 30 years. He was selected specifically by the Washington State Liquor Control Board to help it design the regulated and taxed legal marijuana system going into effect this year.
As part of that contract, BOTEC presented the Liquor Control Board with research papers with different approaches to regulating the new pot market. While the Board is using some of his policy suggestions, it ignored some crucial ones — including having state-owned stores, tight restrictions on marketing, progressive taxation that adapts to changes in the market, home-delivery, and purchase limits set by users themselves.
In his recent interview with Business Insider, primarily about the demise of the medical marijuana industry, Kleiman talked about why he’s not sure legal pot will be a success in Washington.
Here’s what he had to say about the expected tax revenue:
After the first harvest, the price [of marijuana] is going to crash and never come back. Marijuana is dirt cheap to grow. …
A lot of money is going to be lost selling marijuana in Washington. The price is going to collapse. Yes, I think there will be large businesses, but the notion that they are going to create brand names and make a lot of money? Good luck. I don’t see it … I’m telling people I’ve got a surefire way of doubling your money in the marijuana business [in Washington]. Fold it over and put it back in your pocket … I find it hard to believe that there is going to be tons of money in this. …
[High tax revenue] is certainly what the voters were promised. What I was urging in Washington was that revenue should be the last priority. It’s not going to be an important revenue source.
Kleiman believes that because the price of marijuana is going to crash, money generated by taxation will crash accordingly and never net the $600 million annually in taxes the state said it would.
Kleiman also takes issue with the state’s decision to set up a system that mimics the liquor industry, with privatized stores, few restrictions on advertising, and aggressive pricing. He thinks it’s a recipe designed to create tons of stoners:
It makes perfect sense to go to some form of [legal] availability of limited use of cannabis for adults, but we have to try to create a system that doesn’t reproduce the failures of the liquor industry. We have an industry based on alcoholics.
I wanted high taxes or high prices [for marijuana]. I wanted tight limits on marketing and aggressive consumer information from a health perspective and my favourite, require everyone that wants to become a buyer to register and set a personal quota so people can decide at the beginning how much cannabis they want to use…
The politics of marijuana is that the opponents of legalization tell you its the “devil’s weed” and the proponents will tell you it’s benign. Both of those are lies. The advocates will keep insisting on the benignity and then we won’t have appropriate regulation for what is, after all, a drug that, while not as dangerous as alcohol, is plenty dangerous enough to worry about.
We are on track for an industry that, like the liquor industry, is based around creating heavy users, according to Kleiman:
Merely making [marijuana] legal won’t increase the number of users very much, but I think if you get aggressive marketing and low prices that will have a bigger impact. That would be my number one worry.
I don’t think we should care how many people smoke pot … I think we should care how many kids use pot and how many grownups get in trouble. I think it is very likely that those numbers will go up and go up a lot. If we get away with only doubling the heavy cannabis user population [in Washington], we’ll be doing pretty well.
That is assuming aggressive marketing and low prices, which is what we are on track for. It’s going to be a market. Capitalism is good at providing consumers with what they want for cheap. The only way to make money at it is going to be to sell to people that use a lot of it. They are going to cater to people that use a lot.
The industry will look like tobacco or alcohol. In the case of tobacco or alcohol, people make a lot of money by owning the brand name, but take look at the wine business. Yeah, Gallo makes some money but once you move up from the jug wine level, the bottle wine business is ferociously competitive.
If I had to guess about the future of marijuana, the future is two-buck chuck.
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