We are first and foremost a nation of consumers, and marijuana — which begins its fitful journey into recreational legality in Oregon on July 1 — might be the ultimate consumer product. Like opium and sugar in the early history of this country, marijuana is an addictive, renewable and flexible resource whose uses seem endlessly adaptable to the contingencies of capitalism, where the trick is not to sell the product to the consumer but the consumer to the product.
Slowly but surely, the idea of legal weed is being sold to the American public. But legalization is not decriminalization — not by a long shot. Decriminalizing weed would put it on the same status as potatoes, of which you can grow and eat and trade as many as you like without anyone really batting an eye.
Legalization, on the other hand, cuts the proverbial Gordian knot, opening up an endless subset of economic, legal and ethical questions that spirals into every aspect of our society. As recreational pot enters the Oregon market in all its guises — edible, drinkable, spreadable, combustible — it faces an array of complications whose regulatory solutions remain, as yet, half-baked.
What, for instance, will happen to Eugene’s thriving black market? Will weed dealers now come in from the cold, and if so, will they be welcomed? Who will get all the money, and where will it go? How will consumers be protected from weed contaminated by pesticides? Who will create industry standards, and what will they look like?
Adam Jacques, co-owner of the Eugene medical marijuana dispensary Oregon Microgrowers Guild, says that although he supports our right to enjoy recreational pot, the process of legalization itself raises a slew of unresolved issues.
“Legalization in its purest form would be one thing,” Jacques says. “It sounds so freeing. The fact is, legalization comes with a ton of legislation and new laws. While I feel that legalization is the only smart move to make, care must be taken in how they lay out these laws.”
Nonetheless, Jacques says that ultimately it makes “common sense” to legalize recreational marijuana. It’s not going to cause the sky to fall, he says, and moreover, “people are going to use cannabis if it is legal or not. The failed prohibition makes that very clear. So why not regulate and tax the hell out of it?”
I come, then, neither to praise nor bury legal weed, but to complicate its advent. As Jacques said when I asked him about the issues facing us at the dawn of ending prohibition: “There is going to be a metric ton of kinks to work out … I wish I could pinpoint one and go down the rabbit hole with you.”
A Brief History of Capitalism
My friend the weed dealer, with whom I have spent hours discussing the arrival of legal pot in Oregon, is neither celebratory nor overly cynical about the so-called end of prohibition in Oregon. He tends to take the long view on things. “Illegal, now legal? Not so easy,” he says about that moment Oregon’s Measure 91 kicks in July 1, when anyone over the age of 21 can, within certain limitations, possess (8 ounces) and grow marijuana (up to four plants) for personal use.
“It’s like witches standing around a cauldron stirring their magic pot of stew,” my friend — let’s call him Kermit — says about the forces of legalization. “Stirring the pot makes all the sediment that’s been hiding at the bottom rise to the top. That’s all that underground money. That’s all the criminals, cartels and wise guys who assume (with legalization) they’re just going to launder some money.”
Kermit, who is a producer of licensed medical marijuana but also admits to the “criminal” activity of selling his surplus on the street, says that Eugene’s black market of individual growers and dealers functions according to its own rules and standards, and has been doing so for decades. Sure, he says, there are douchebags out there slinging shit and acting gangsta, but for the most part it’s a smooth, albeit highly secretive, system of supply and demand.
The only real enemy of capitalism is when the money stops moving. And whether that’s in the black market or above board doesn’t really matter.
“Ten years ago you could get paid up to $4,800 a pound,” Kermit says of dealing weed on the black market. “Now, in the world of legalization, where there’s an exorbitant amount of growers, the price of weed has gone down to around $1,400 a pound. The consumers are still paying the same amount. The middleman is getting all the money.”
In other words, it wasn’t the wet, dirty dudes out panning the rivers every day who struck it rich during the Gold Rush; it was the wily guys selling the picks and shovels and whores and booze who made a killing. The story of this country is the story of such middlemen, who erect entire industries around the wellsprings of our deepest desires, and whether those desires run to the gold or the green doesn’t matter.
Splitting the Pot
Many street dealers, Kermit says, are already manipulating a shadowy legality in order to protect their black-market operations. For instance, he calls the Oregon Medical Marijuana Program merely “a cloak of protection for the producer,” behind which growers are selling a significant surplus of weed on the street.
“If you show me a [OMMP] grower that is strictly growing and providing all the cannabis for themselves or their patient, I would like to meet them,” he says. “As an example, I provide my patients with 2 ounces of weed per month, while my overall production is about 10 pounds, equaling about $20,000 a month.”
Similar to many people with whom I’ve spoken, Kermit says he doesn’t believe the black market will go away with legalization, though it may evolve and morph into something slightly different. Because of all the bureaucratic red tape involved in going legit — the costs of getting your weed lab tested and approved, state licensing fees, the loss in revenues of selling wholesale to dispensaries — he says a lot of current dealers will opt to reject the new status quo.
“There’s going to be a closet revolution when that happens — basically, black market growers that will be growing a better, cheaper product than is sold at a dispensary,” he says. “And therein lies the problem of suppressing the black market.”
Confronted with coming out of the underground, Kermit — who some might call more a pre-legal pioneer than a degenerate pot dealer — says he’s ambivalent about going mainstream because, for him, along with legality comes a lot of open palms and bureaucratic expenses.
“Let’s face it,” he says, “the most corrupt and crooked gangs out there are the ones with authority. This world of above-board business is far more corrupt than growing a few pot plants in my basement for patients.”
In this scenario, then, legal and illegal are merely bureaucratic distinctions. There is nothing right or wrong but legislation makes it such. Drugs are inert and valueless in and of themselves, completely neutral in the philosophical sense.
In the eyes of legislators and law enforcement, pot has been largely a pretense — a means of flushing undesirable people and unregulated money out of the underground, all in the name of public safety.
For cops and politicians, the War on Drugs has been big business. Under the guise of reefer madness, officials have pulled billions in funding for expanded enforcement and all the expensive high-tech gadgetry that goes along with it, including infrared spy gear and all those black helicopters.
But, really, you can no more wage war on drugs than you can battle a jelly bean. You can, however, wage war on people.
The legalization of recreational marijuana in Oregon calls an armistice on that particular arena of the war, and now the territories will be redrawn, as pot becomes the stuff of political theater. Marijuana, in this regard, is not so much an idea whose time has come as it is a new opportunity for exploitation. The feds didn’t wrest Las Vegas from the mafia because too many bodies were piling up in the desert. Once the pot gets big enough, it’s time to divide the pot and open up a new game.
Same as the Old Boss?
Of the several pot people I’ve spoken with, not a one of them believes the black market for marijuana will be significantly curtailed by legalization, though Kermit suspects that home grows may cut into the business of the gangs and cartels (who may, as a response, up their influx of meth and heroin, he says).
“Eugene has a thriving medical and black-market cannabis industry,” Jacques says. “I do not think you will see the majority of those people utilizing the retail market. I think you will, however, see a new group of people who are not connected in the black or medical market.”
This has borne out in Colorado, where carpetbagging businessmen from out of state arrived on the scene to pass Bill 1284, which set up barriers to entering the industry — tight controls tracking “seed-to-sale” pot, the barring of convicted felons, prohibitive five-figure licensing fees — that effectively turned legal bud into a boutique industry run by suits, driving a lot of the industry back underground.
The Oregon Liquor Control Commission (OLCC), for its part, has been scrambling to get a grip on the legal and regulatory issues swirling around prohibition’s thaw, hosting several town-hall type meetings around the state —including a packed meeting at Eugene’s Wheeler Pavilion on Jan. 2 of this year.
Already, the OLCC has asked for an expansion of its regulatory capacity, including the creation of an enforcement division with the capacity to seize the weed of anyone exceeding the legal limits.
So here come the guns. Again.
Where There’s Smoke
Just listen to Anthony Johnson, executive director of New Approach Oregon and chief petitioner for Measure 91, when I ask him about legalization versus decriminalization:
“Legalization is necessary to create jobs, generate revenue and to establish rules and regulations for public safety. Decriminalization is a great first step, but doesn’t put in place any regulations for the use of pesticides, testing, packaging, marketing, environmental regulations, etc.”
What Johnson is talking about here is pot as a spanking-new (legal) commodity, and by all accounts that commodity will be a powerfully lucrative one, creating jobs in the retail sector as well as among producers, growers, distributors and administrators. Projections of legal weed’s impact on the economy are impressive.
According to ArcView, an investor group that looks at the marijuana industry, the national market for legal marijuana will be worth $10.2 billion in five years, and Oregon and Alaska — which, along with Washington and Colorado, are the first four states to go recreational — are expected to generate $275 million in the first year of legalization alone.
Johnson goes on: “Consumers will feel safe and secure knowing that they are acquiring cannabis that has been properly tested and that their hard-earned dollars are going back into their local schools and other public programs.”
Here Johnson seems to fall into some of the magical thinking that has levitated the legalization movement thus far. Safe and secure? That’s a matter of perspective and circumstance.
At the Jan. 2 meeting, OLCC officials identified consumer safety as the most important issue confronting the recreational pot market — namely, testing. Retail weed must be lab tested for potency, and it needs to register below a certain threshold for pesticides and molds before it hits the shelves.
The big problem here is that, among the several labs springing up around the state, no regulated industry standard pertains, meaning there can be vast collective discrepancies in testing results. Growers that fail a test due to high pesticide count might get passing grades at another lab, leaving consumers vulnerable to carcinogens and other toxins.
Bethany Sherman at OG Analytical, a lab that provides consumer safety and product development testing services to Eugene’s burgeoning cannabis industry, says a lack of industry controls and standards is a major hurdle facing legalization.
“Industry standards haven’t really been established for cannabis yet,” Sherman says, noting that “when the state implemented a legal requirement for all cannabis products to be consumer safety tested, and didn’t follow up with audit controls for labs, it opened up a huge window of opportunity for fledgling labs to enter the market.”
The problems that stem from this lack of overarching industry standards are manifold, according to Sherman. For one, competition among labs has driven prices down to such a level that testing businesses, instead of keeping pace with quality infrastructure and personnel, are forced to scramble and cut corners, compromising scientific integrity.
“With no one holding labs accountable for the data they report,” Sherman continues, “we’re seeing huge discrepancies that introduce critical consumer safety issues. OG Analytical consistently finds toxic levels of pesticide contamination in products that have been given a clean bill of health from other labs.”
Such circumstances leave dispensaries vulnerable to litigation, Sherman says, as well as creating an environment where growers and producers “can shop around to find a lab that gives them the results that have the most economic value.”
Sherman points out that a number of groups are working to bolster industry standards during the next legislative session, including the Cannabis Safety Institute, of which she is director and co-founder.
Green on Green
Jacques at Oregon Microgrowers Guild says in no uncertain terms that banking regulations will present a major obstacle for any business dealing in legal pot, because, at the federal level, marijuana is still considered a controlled substance whose possession, trafficking and use is a felony offense.
In February of last year, the Obama administration sent out guidelines for banks doing business with legit marijuana outfits, offering reassurance from both the Treasury and Justice departments that prosecutors would be directed to give priority to instances “only where financial institutions have failed to adhere to the guidance,” as reported in The New York Times.
Reassurances, however, are not legislative fact, and the so-called Valentine’s Day letter does not grant immunity from prosecution under federal law. A new administration — led perhaps by Jeb Bush or Chris Christie, who says he categorically opposes any form of legalized marijuana — could decide to crack down on banks in states where pot has gone legit.
Technically, what this means is that anyone banking pot money could be convicted, under the Racketeer Influenced and Corrupt Organizations (RICO) Act, of money laundering and conspiracy, a potential that is scaring off most banks from dealing with “potpreneurs.” According to a recent special edition of Newsweek, many so-called legal weed businesses in Colorado and Washington have been forced to lie about the nature of their enterprise, claiming to banks that they operate other cash-heavy operations like bars and nightclubs.
“This is a problem at the federal level, but Oregon needs to take some responsibility and help these businesses in that regard,” Jacques says. “Ignoring and allowing these establishments to function as cash-only businesses, or having to use non-insured banking, is unsafe for everyone.”
Johnson seconds this concern. “Federal laws that hurt licensed businesses’ access to banking, insurance and standard IRS deductions are the biggest issues that will hinder the Oregon legalization system for the near future,” he points out. “There have been positive developments recently and we can expect federal laws to improve, but it could certainly take several years.”
This banking issue reveals a greater conundrum at the heart of legalization, as recreational pot enters into a kind of twilight zone of legal illegality, or vice versa, where officials play peek-a-boo with a Catch-22 that raises questions faster than solutions can be formulated.
For instance, when Eugene residents of legal age are allowed, on July 1, to possess up to 8 ounces of marijuana for personal consumption and grow up to four pot plants, where do officials suppose they’ll buy that weed or seed? The OLCC, tasked with administering and enforcing Measure 91, won’t be taking retail license applications until Jan. 4, 2016.
A Brief History of Capitalism,
Let’s follow the money for a minute.
Prohibition gives rise to a criminal underclass that positions itself to meet a demand which refuses to go away despite the law, such as our craving for alcohol or gambling or prostitution.
Prohibition judges certain activities to be dangerous, and it labels those who perpetrate or advance those activities to be criminals. As a moral stance, prohibition is authoritarian, paternalistic, patronizing and convenient to power.
Crime, on the other hand, is opportunistic and optimistic, willing to accept significant risks in order to operate at a profit.
Our government loves to meddle with vice. And when the grass looks greener on the other side of the legal fence, it makes the leap, giving crimes of opportunity the stamp of state approval. Hence the Oregon Lottery, which paints itself as a boon to education but, more than that, funds a whole new class of bureaucratic administrators reaping the benefits of other people’s misfortune.
A drug dealer will keep selling to you until you either run out of money or die. The pimps of vice have a captive audience. You think the state keeps jacking up taxes on cigarettes because officials want you to quit? It’s more like they know you can’t or won’t, and so your habit provides a steady source of revenue in the form of a “sin” tax that routinely gets tapped for more.
Sure, 57 percent of the lottery “goes to education,” but that is after the state takes its cut; of the $1.05 billion in total operating revenues for the 2014 Oregon lottery, more than $500 million of that went to operating expenses such as salaries and wages, advertising and market research, and retailer commissions.
Anybody sitting at Shari’s Restaurant on 11th Avenue watching tweakers and retirees slink into the video poker parlor can see just what a cultural bonus our state lottery has been. And now here comes legal weed, a taxable commodity whose revenues will go, in part, to fund schools and health services and state police — along with the new enforcement division and expanded reach of the Oregon Liquor Control Commission.
Philanthropy, Mark Twain said, is a sure sign of wickedness.
Already, local jurisdictions around Oregon are lining up to override Measure 91’s one-time excise tax, which hits growers to the tune of $35 for an ounce of flowers, $10 for an ounce of leaves and $5 for an immature plant. The League of Oregon Cities, for instance, has introduced a bill in the state Legislature (SB 542) that would give cities and counties the right to levy additional taxes on recreational weed. The bill, ironically enough, would also grant cities the right to ban retail sales altogether.
My friend Kermit says that, beyond mere tax revenues, government regulation of recreational weed in Oregon will be a boon to all sorts of industries set to capitalize on the green rush, including such big-ticket concerns as home security and surveillance systems, real estate (land and warehouse space will be at a premium), banking and insurance — not to mention all the companies providing agricultural products geared toward home growing with glitzy, stoner-friendly fertilizers like “Bud Candy,” “Kushie Kush” and “Overdrive.”
Here’s how Kermit puts it: “So ultimately, here in 2015, it makes sense for lawmakers to control methodology in order to push industry. That’s what they’re doing. They’re going to control the methods of how we grow in order to get us to spend more money as growers. Tax is nothing. It’s the plastic on the fertilizer bottle you buy. It’s the plastic that goes around the bag of soil you buy. It’s the workman’s compensation and insurance policy that have to be in place to run those types of businesses.”
This Bud’s For You
Perhaps the best that can be said right now about the consequences of legalizing recreational weed is that the cops and courts will stop arresting, prosecuting and imprisoning nonviolent criminals for possession.
Johnson is clear on this point. “The costs and consequences of marijuana prohibition are just nonsensical to a majority of American voters when looking at the big picture,” he says. “Our state and nation incarcerate too many people and unnecessarily ruin too many lives as we spend more money on prisons than we do our schools.”
Although hardly sanguine about the idea of legalizing pot, my weed-dealing friend Kermit admits that, on this point at least, he empathizes with the folks who voted in favor of Measure 91. “No human should suffer the repercussions of trafficking marijuana or possessing it. It’s a victimless crime, and there should be no consequence. End of story.”