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Medicinal marijuana plants in a Colorado grow house.

The State of Marijuana

A conversation with a prominent thinker on the evolving law — and business — of pot.

Mark Kleiman is a professor of public policy at UCLA, specializing in criminal justice and drug policy. In the summer, he will join the faculty of the Marron Institute for Urban Management at New York University. Kleiman is regarded as a sort of creative centrist on the subject of marijuana law. He does not favor making outlaws of people who enjoy a drug that is less injurious than alcohol or tobacco. (“At some point you have to say, a law that people don’t obey is a bad law,” he has said.) But he also believes that marijuana represents a public health problem, and he contends that the best hope of minimizing its harm may be a well-regulated market. The Marshall Project asked him to assess the current state of marijuana policy.

You were an adviser to Washington State in its efforts to design a legal but regulated market for marijuana. Your aim was a market that would allow consumers to enjoy their drug of choice without getting sucked into the criminal justice system, but not turn Washington into a state of stoners. What have we learned so far from the experience of Washington and its partner in legalization, Colorado?

We've learned that it's possible to set up and operate a legal cannabis market. And we're now learning that the cost of producing cannabis under legal conditions is going to be very, very low. As a result, we're going to see after-tax prices in both Washington and Colorado way below illicit-market prices. That's not what you want to see; for adult occasional users, cannabis is already so cheap that there's not much gain from its getting cheaper. But the price is going to matter to minors and to heavy users: two groups you'd like to see using less, not more.

Can't you just tack on a hefty tax? You'd think that would curb heavy use. It might also give other states an incentive to legalize. Colorado now has a year’s worth of data that shows significant tax revenues from legalization and very little negative impact in terms of crime.

The question is, "What's a hefty tax?" Washington taxes cannabis 25 percent at the farmgate, 25 percent at the processor, 25 percent at retail, plus sales tax. That means that about 40 cents of the consumer dollar goes to the state. Sounds pretty hefty, no? And it is, as long as market prices stay high.

But as market prices plunge — shops in Spokane now feature $200 ounces — the taxes plunge right with them. I think we'll see farmgate prices below $2/gram for medium-grade cannabis (compared to about $10/gram on the current illicit market) and retail at perhaps twice that. Suddenly, the tax isn't nearly hefty enough to do what you want it to do: keep prices up and prevent big increases in juvenile use and heavy use. The right way to do it is to tax based on THC content rather than price. For 10 percent-THC cannabis, the right tax level would be $5-7 per gram.

One concern you hear is that Big Tobacco and/or Big Alcohol will decide that marijuana represents a growth opportunity — using their lobbying power to move state and federal policy, and using their advertising power to promote greater consumption. Is there any early sign that these recreational substance industries are likely to move in that direction?

As long as cannabis is illegal at the federal level, the big consumers'-goods outfits are going to stay far away. Even if it were legal, it's very hard to see the tobacco and alcohol companies trying to compete, especially if retailing is through specialty shops, denying them their distribution advantage. Vaporization devices can easily straddle between nicotine and cannabis, but other than that I don't see much crossover unless some state is crazy enough to allow the sale of combination products.

But we don't need Big Tobacco or Big Alcohol to exploit the opportunity to make money from people with cannabis-use disorder: I'm confident that the cannabis industry will be able match alcohol and tobacco for rapacity and lack of scruple, and it will have the political power that comes from money. Just watch the medical-marijuana lobby block reforms in Washington State. The National Cannabis Industries Association has already hired its first full-time Washington lobbyist.

“Just watch the medical-marijuana lobby block reforms in Washington State.” Tell us more about that?

Washington has an essentially unregulated medical-marijuana system. As a result, virtually any adult can get cannabis, either directly from a "dispensary" or from someone else with a medical-marijuana card, and the medical market has largely taken over from the purely illicit market.

Collecting illegal-market prices for something it's more or less legal to grow and sell is a pretty attractive deal, and those industries are now strongly resisting attempts to rein them in: for example, by cracking down on the "kush docs" who issue phony medical-marijuana recommendations to anyone willing to pay for an "office visit." In Washington, the question is how to give the taxed and regulated commercial market a fair chance to compete with the untaxed and unregulated medical market. Last year, a bill to do that was stifled due to opposition from the medical operators. We'll see what happens this year.

As you note, marijuana is still illegal at the federal level. What's the most constructive role the feds can play? Stand back and let the states do their thing? Intervene to protect states that don't want legal pot? And what should we make of cases like the "Kettle Falls Five" — a family that faces prison time for violating federal laws against marijuana-growing in a state (Washington) that has legalized?

The only sane thing for Congress to do is to admit that cannabis prohibition can't be effectively enforced in states that choose to legalize at the state level. Congress should explicitly create some sort of exemption or waiver program that would make state-legal activity also legal at the federal level, as long as the state effectively prevents out-of-state "exports" and big increases in substance abuse and use by minors. But I'm not seeing much sanity on the congressional agenda right now. The executive is doing a reasonable job in dealing with an intolerable legal situation.

Michael Botticelli, the new White House director of national drug control policy, is a recovering addict who opposes both medical and recreational legalization. His main concern, which you share, is the effect on kids. A science question and a policy question: Is the effect of marijuana on juveniles clearly established, or is further research needed? Has the experience of Washington and Colorado taught us anything about the ability to enforce age limits?

I'm not convinced by the science behind the "developing brain" idea: that juveniles risk cell-and-tissue-level brain damage from cannabis use. I haven't seen anything that looks like evidence that occasional use does any harm to anybody. But a 15-year-old who spends most of his life stoned is missing opportunities to learn, both academically and socially, and you don't need any fancy brain-imaging data to figure out that's a bad idea.

Of course, age limits aren't enforceable in the sense that you can't prevent some people old enough to buy from supplying others too young to buy, any more than you can with alcohol. But we also know from the case of alcohol that enforcing the rules against direct sales to minors makes access a little bit harder and has a measurable impact on problem use. Here again, I'd stress the importance of price. Adolescents are, on average, more price-sensitive than adults.

Botticelli also says that legalization, and the marketing that is likely to follow, present a pernicious temptation for Americans with substance abuse problems. "I don't want to be walking down the street and smell marijuana smoke," he has said. Is that a common view in the recovery community? Is it a legitimate factor in making drug policy?

Yes, of course commercial legalization will put an extra strain on people in recovery, and also increase the number of people who need to go into recovery. Is that a good enough reason to criminalize the behavior of 40 million Americans and support a $40-billion-a-year illicit industry? I don't think so. That suggests the value of legalization without commercialization: the DC "grow-and-give" system, or restricting the business to co-ops or non-profits, or a state monopoly. I'd also oppose allowing any sort of retail storefront: require all sales to phone or internet orders consummated by delivery. Then you're not creating the drug-use cues that Michael Botticelli is properly worried about.

You once half-joked that Congress would not remove cannabis from the list of criminal substances "until the second Hillary Clinton administration." Listening to Republican presidential hopefuls (Jeb Bush, Rand Paul, Ted Cruz) expressing openness to state-by-state legalization, are you inclined to revise your timetable?

As Yogi Berra and Werner Heisenberg both said, predictions are dangerous, especially about the future. I think national-level legalization is now more likely than not sometime in the next twenty years, but I don't really have a clue as to when it might happen.

A previous version of this article improperly referenced California several times.