The Future of Marijuana Policy: MJNN’s Exclusive Q&A With BOTEC’s Mark Kleiman

.  If Democrats get both houses and the presidency, federal prohibition isn’t long for this world. Otherwise, state-by-state will continue.

By David Rheins

It’s time for marijuana policy, and marijuana policymakers  in this country to get serious.  Over the past twenty years medical marijuana has grown wild and wide, with a patchwork of 24 different state policies, no two alike.  Adult-use marijuana has been legalized in four states, plus DC, and here too each local market has its own set of regulation, and levels of taxation.

Legal marijuana accounted for some $5.4 Billion in 2015, and current tax revenues in Colorado, Washington and Oregon are being measured in the hundreds of millions.  Voters in some 14 additional states, including California, Arizona and Nevada, are considering legalization of pot in 2016, and in this presidential election year, rescheduling or de-scheduling of cannabis has gained support among savvy politicians who seed the tide of prohibition has finally turned.

That marijuana prohibition is ending is widely accepted. How best to unwind it, is a subject for debate.  To consider the best way forward, some of the top policy minds in legal cannabis — scientists, journalists, academics, lawyers and industry leaders – will gather in New York for the Cannabis Science and Policy Summit, April 17-18. The meeting will serve as an ideal opportunity for the industry’s stakeholders to take stock, evaluating what the past two years of legal recreational marijuana has looked like, and charting a path forward.

MJNewsNetwork had the opportunity to ask Mark Kleiman, BOTEC’s chairman and event chair of the Cannabis Science and Policy Summit, to give his perspective on the state of the state of legal cannabis. Here is our exclusive Q&A:

It’s been nearly 2 years since Washington State opened its first recreational marijuana market, how well have your market estimates held up? 

That depends on what you mean by our market estimate.  In terms of market share, our prediction of a roughly even split between commercial, medical, and illicit markets seems to be holding true.  In terms of price, we predicted a significant drop, which has occurred at the production level but hasn’t occurred at the retail level.  In terms of overall size, no one was sure what would happen, so our very broad prediction of between $0 and $2 billion has held true with the latest figures from the WSLCB putting I-502 revenue at roughly $460 million last year.

What new insights have you had about the legal cannabis market since you first issued your report?

I’ve been surprised at the strong movement towards edibles and concentrates in the recreational market.  The interaction between alcohol and cannabis (or to be more accurate, the lack of interaction) was also surprising.  I expected more that users would substitute cannabis for alcohol, and thus we would see alcohol consumption drop, which hasn’t been the case.

Who is the typical recreational cannabis consumer? How much do they consume?

There is no “typical” recreational cannabis consumer.

The typical consumer (in sense of median consumer) uses cannabis about once a month and as such really consumes a negligible amount of it.  The average consumer, on the other hand, consumes about $1,000 dollars of cannabis a year.  If you ask users how much they spend, you find that there are actually very few people spending $1,000 per year.  Instead, you find lots of people who spend a negligible amount on and a few people who spend well over $1,000 per year, which is what pulls the mean up.

Interestingly, we have no idea if this use pattern holds true for consumers of recreational cannabis, as there has yet to be a study of only users of legalized recreational cannabis.

Washington’s marijuana excise tax is 37% Colorado’s is 25% and Oregon is 17%; why such a wide disparity between the legal recreational states?  What should the right level of taxation be?

These differences stem from the fact that cannabis legalization has been a piecemeal process that heavily relied upon horse-trading to reach enough votes to become law.  Thus, the tax rates we see are the results of political negotiation, not rigorous analysis.  What they ought to be, however, is the same everywhere and based on the THC content, not a percentage of price.

What are the greatest challenges to the legal cannabis industry?

The single biggest challenge is dealing with the incoming price collapse.  Everyone involved in the cannabis industry have based their financial projections on being able to continue selling a licit product at illicit prices, which can’t continue forever.  This is a challenge that both industry and government have to worry about, as falling prices mean reduce profits and increased problematic use patterns, which is a public health issue.


 

The single biggest challenge is dealing with the incoming price collapse.  Everyone involved in the cannabis industry have based their financial projections on being able to continue selling a licit product at illicit prices, which can’t continue forever.  This is a challenge that both industry and government have to worry about, as falling prices mean reduce profits and increased problematic use patterns, which is a public health issue.


 

What is the future of legal cannabis in the US? Will we continue to see legalization happen one state at a time, or do you envision an end to Federal prohibition in the not too distant future?

First, cannabis is here to stay.  Second, whether we see state-by-state or an end to federal prohibition depends on this election.  If Democrats get both houses and the presidency, federal prohibition isn’t long for this world. Otherwise, state-by-state will continue.

This being said, California is really the place we should be watching.  California accounts for about an eighth of the U.S. population and much more than that in terms of cannabis consumption and production.  If California legalizes, all the other dominoes start falling too.


 

Mark A.R. Kleiman, MPP, PhD, is the chairman of BOTEC Analysis and a world-renowned expert in crime reduction, justice, and drug policy. In addition to his work with BOTEC, Dr. Kleiman is a Professor of Public Policy and the Director of the Crime Reduction & Justice Initiative at New York University’s the Marron Institute, a member of the Committee on Law and Justice of the United States National Research Council, and co-editor of the Journal of Drug Policy Analysis.

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