Washington One Year Later: A Report

Earlier this month, the Drug Policy Alliance released its report, “Marijuana Legalization in Washington After 1 Year of Retail Sales and 2.5 Years of Legal Possession.” It is essentially a story of what did not happen.

But industry watchers know that quite a lot has happened in Washington State over the last year. Significant lessons about tax structure and the relationship between the medical and recreational sectors were born from the experience. What these lessons will mean for the next wave of states to legalize will be nuanced and will depend very much on local circumstances.

No news is good news

The report suggests that in Washington, as far as legal marijuana is concerned, very little happened.

  • Court filings for low level marijuana offenses by adults 21 years of age and older have dropped by 98% since voters approved Initiative 502. If, as reported, each arrest and prosecution for the possession of marijuana costs the state an estimated $1,000 to $2,000, then millions of dollars were not spent.
  • Since 2012, the violent crime rate has declined and the overall crime rate has remained at a 40-year low.
  • According to the National Highway Traffic Safety Administration, the number of traffic fatalities in Washington dropped after the first year of legal marijuana possession and have remained low.
  • The legalization of marijuana has not led to increased rates of marijuana use for youth in Washington, according to the Washington State Healthy Youth survey.
  • Further, the tide of public opinion has not turned against legalization. A 2015 poll found that more than three-quarters of those surveyed believe the law has had either a positive impact or no effect on their lives.

 

Where the action really was

But while the citizens of Washington apparently yawned through the last year, legislators have overhauled an unregulated medical marijuana scheme to bring it into alignment with adult use laws and have restructured the way in which marijuana is taxed.

The Cannabis Patient Protection Act (SB 5052), signed in to law on April 24, 2015, merges twenty years of medical cannabis with Washington’s Initiative 502. It establishes a medical marijuana endorsement that will allow licensed marijuana retailers to sell medicinal marijuana. The law will largely shut down collective gardens as of July 1, 2016.  It also establishes a state patient registry, which is voluntary, but the only route via which patients may access tax breaks and higher possession limits.

Washington has also replaced its original three-tiered tax structure, 25 percent paid on producer sales to processors, processor sales to retailers, and retail sales to customers with a single 37 percent excise tax at the retailer level. HB 2136 also permits reallocation of some tax revenues from the state’s general fund to localities.

 

The takeaway

In a conversation with MJINews, Amanda Reiman, Manager, Marijuana Law and Policy at the Drug Policy Alliance, identified three main issues that emerge from Washington’s, as well as Colorado’s and Oregon’s, experiences.

“As they approach legalization,” she noted, “states will have to find their own way, rooted in their own history and goals, to deal with the relationship between adult use and medical, find the sweet spot for taxation that neither encourages the illicit market nor deprives the state of needed revenue, and manage public consumption.”

The approach that works in a state with very little medical marijuana regulation, for example, may not be appropriate for a state that is adding recreational legalization into a robustly regulated medical scheme. An approach to taxation in a state like Maryland, which has a sales tax, may not work in Oregon, which has none.

Perhaps the biggest lessons for the future, now that the sky has not fallen, are that the questions with which Washington has grappled in the first year of legal marijuana will be shared, but the answers may be very localized.

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