Buying in safely.

How States Can Be Smart About Pot

Joni Balter is a longtime Seattle columnist and writer who contributes to local NPR and PBS affiliates.
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Colorado and Washington state knew they were jumping into the unknown when voters legalized recreational marijuana two years ago. They just didn't know the half of it. But thanks to what we've learned from the two pioneering states, it is now easier for those that follow to separate hype from hemp.

Voters in Oregon, Alaska and Washington, D.C., where legalization plans are on the November ballot, should be skeptical, for example, of promises about the revenue the government will get from pot taxes. Residents might also ask if there will be enough marijuana to sell in the first place and press for more specifics on how edibles will be regulated.

But the cautionary lessons from Colorado and Washington should not discourage other places from taking the legalization plunge. Instead, this experience should help others design a system that works better, a necessary step as the movement spreads (California and Nevada, among others, are likely to follow in a year or two). Here are some missteps to try to avoid.

First, lower those expectations for tax revenue and consider more carefully how competition from medical marijuana might affect recreational sales.

In Washington state, officials were so overwhelmed by the huge demand for licenses to grow, process and sell marijuana -- some from folks not fully prepared to launch a business -- that they didn't give growers a chance to deliver a bountiful crop in time for opening day in July.

Guess what that did to projections of plentiful tax revenue, a big selling point of legalization? It lowered them substantially.

Colorado estimated $33.5 million in tax revenue for the first six months of legal recreational sales. That was a mirage. It is more like $14.7 million, in part because lower-taxed, cheaper medical marijuana remains ridiculously easy to obtain. Though Colorado converted many medical establishments to recreational sales, many heavy users -- those who light up daily and who drive much of the demand -- have lacked the incentive to give up their medical supply.

In the legalization campaign in Washington, the forecasts for tax proceeds ranged from zero to $2 billion over five years -- the equivalent of "we don't have a clue." That didn't stop supporters from predicting revenues of about $500 million a year. Limited supplies and a heavy dose of reason now suggest that the amount will be a fraction of that.

Everybody knew it would take time for recreational sales to compete with illicit and medical marijuana. Washington envisioned that the state legislature would somehow meld medical pot into recreational. Lawmakers punted.

"The medical thing is a big deal -- both states have to deal with it," said Philip Wallach, a Brookings Institution fellow. "You have to figure out ways to get your medical system to only treat people who have real medical needs.''

Another hitch has been when localities want to opt out of allowing retail sales, further complicating calculations on market share.

The Colorado law allows cities and counties to ban retail outlets that sell marijuana. Many have done so. The Washington measure didn't specifically address this question and is now facing a lawsuit.

The No. 1 sleeper issue of recreational pot has turned out to be how to regulate edibles -- pot-infused cookies, candies, snacks and drinks. This caught most everyone by surprise. The lesson is to be very specific: Beware of the snickerdoodle with five or six servings of THC! Both Colorado and Washington enacted additional rules for these products after two edible-related deaths and an increase in emergency-room visits in Colorado.

The states now require better disclosure and suggested limits on amounts of THC -- tetrahydrocannabinol, the main active ingredient in cannabis -- to help people figure out how much is safe to consume. (Answer: not much.)

Then there is the matter of accommodating marijuana tourists. Travelers from all over the world have descended on Colorado and Washington and bought marijuana (officials are loath to say the visits are specifically for that purpose).

But a successful pot tourism industry requires suitable public spaces to ingest it, and neither Washington nor Colorado allows smoking in public, in parks, on sidewalks and so on. Yes, certain parts of Seattle and Denver smell like a rock concert on any given day, but people are sometimes fined for smoking in public. And many if not most rental cars and hotel rooms are smoke-free.

Both states should borrow Amsterdam's "coffee shop" model so adults can purchase small quantities of marijuana for on-site consumption.

"Coffee shops serve the important purpose of establishing social norms for responsible use -- use that facilitates marijuana's enhancement of social interaction rather than use that leaves you 'couch-locked' and noncommunicative," said Alison Holcomb, the chief author of Washington's legalization measure. "They also provide tourists and others who may not have their own private spaces a place to enjoy their marijuana out of the public view."

Seattle City Attorney Pete Holmes advocates so-called vape lounges where consumers inhale via electronic vaporizers. The lounges would be like cigar bars or other private clubs where adults 21 and over can indulge, though users would bring their own bud.

What about secondhand marijuana vapor? Holmes, for one, doesn't believe it is as troublesome as secondhand smoke.

Every state that hops on the legalization train will have its own debates on all these questions and many others, including the issue of where the product is grown, and find its own solutions.

But if you accept the evidence that alcohol is worse than marijuana or that the drug war didn't work or simply that legalization is inevitable, it doesn't take much to see the trend. The public is clamoring for a more up-to-date and realistic approach to recreational pot, and government is figuring it out.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Joni Balter at jcbalter@gmail.com

To contact the editor on this story:
Katy Roberts at kroberts29@bloomberg.net