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Refracting Green

Policy and Practice from the Front Lines of Marijuana's Political Economy

Marijuana Legalization–Part 1, The Bill is Here

December 9th, 2013

State Senator Floyd Prozanski has a legalization bill ready for introduction at the February 2014 legislative session.  The bill–you can get your copy here–is entitled “Control, Regulation, and Taxation of Marijuana and Industrial Hemp Act”.  The legislature has been interested in passing a thought-out legalization bill before a less articulate version is passed by Oregon voters (and public opinion polls suggest that will occur in November 2014):  this just might be “the one”.

I’ll say from the outset that I think this is a tremendous piece of public policy.  It’s well-thought out, responsible, and, in most cases, informed by the best science available.  This bill makes Washington and Colorado’s legalization bills look rudimentary (which it should–thanks to them, we have the advantage of hindsight).  That said, there are a number of items that need to be addressed for this bill to work:  I’ll go into the details in subsequent posts.  I really don’t like having marijuana placed under the regulatory scope of the Oregon Liquor Control Commission.

Legalization is a complex topic when you get into implementation;”back of the envelope calculations” often fail to consider the structure of the existing marijuana market and, in so doing, can mire the formalization process with unnecessary impediments.  Marijuana at the store can’t be significantly more expensive than its black market counterpart.  The greatest mistake of the early proposals are high tax rates applied at various stages of the marijuana production process.  This is inappropriate for a number of reasons, but, most importantly, simply because the brunt of tax revenue will be generated through income tax collection, not marijuana-specific taxes.  In fact, at the early stages of legalization more revenue is likely to be generated by having no tax at all on marijuana itself.  I’ll get into more details on this particular point in a future post.

Here’s an overview of the analysis I’ll provide on this bill:  part 2 will detail the small issues that need to be remedied in the bill; in part 3, I’ll tackle the “drugged driving” section of the bill and apply the most recent scientific evidence to offer some recommendations on how to handle this particular issue; part 4 will get into the nuts-and-bolts of appropriate tax structures by demonstrating the unity between formal and informal markets.  I will have these sections up in the next couple weeks (way before the legislative session begins on January 27th).

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