Reactions to the legalization and opening of stores selling marijuana in Colorado this month has been mixed, with supporters and opponents arguing about the tax impact of legalization, health concerns and meaning for the national drug war.
Keith Humphreys, a professor of psychiatry and behavioral sciences, is part of a commission organized by Lieutenant Governor Gavin Newsom and the American Civil Liberties Union to study marijuana legalization in California. He has also served as a member of the White House Commission on Drug Free Communities and as senior policy advisor at the White House Office of National Drug Control Policy under the Obama administration.
The Daily spoke with Humphreys about Colorado and Washington’s laws allowing for the commercial sale of marijuana and their potential impacts and implications nationwide.
The Stanford Daily (TSD): What are the potential economic consequences that might be seen in Colorado and any future states that decide to follow suit with commercialization of marijuana?
KH: First off, there’s different ways of setting up taxation. So Colorado and Washington don’t do the same thing. Colorado is a pretty lightly taxed regime. They exempt anyone who has a medical card, and about a fourth of users have a medical card, so they won’t pay any tax. And the tax in the state is pretty low. They’re also allowing vertical integration, in fact mandating vertical integration…That makes prices lower.
As prices drop, any taxes based on a percentage of price brings in less revenue. Ad valorem prices–you know, 10 percent, 20 percent–versus an excise tax are really dependent on price. Most people think that marijuana’s price could drop very dramatically under legalization, maybe as much as 90 percent. So if prices drop that fast, the taxes will drop right along with it because they’re based on the price of the marijuana. That probably means that a lot of the tax revenue projections that have been made are too optimistic.
TSD: Proponents say legalization will bring underground money into the formal economy through taxation.
KH: Marijuana’s a funny market. A huge amount of it is just ordinary people sharing, and there’s really no transaction, so part of it is mythological. But…there’s got to be several billion dollars going to growers in the United States and Canada but also heavily into Mexico which would not go there anymore, at least, if the whole country legalized. Even if that money never ends up in the public coffers, the fact that it isn’t going to be put toward trying to destabilize the Mexican state is a benefit.
TSD: What other potential effects of marijuana legalization is the [commission] monitoring?
KH: One of the problems we have with tobacco is when you have a large industry that sells an addictive product, they’re often very good at influencing the political process and making the regulatory structure weak. Will that be reproduced? Will you have, for example, a marijuana industry and a tobacco industry fighting side by side to get rid of antismoking laws?
The second thing is about young people’s views. The human brain is the most plastic when people are adolescents, and I think with some exceptions, most people…would still not necessarily want their own children to be using the drug. So if the price falls as much as is expected, it seems likely that youth use will go up…People will definitely be watching for that, and especially for very heavy use, dependent use.
TSD: Do you see any public health standpoint negatives?
KH: It depends how you consume it. As a general rule, inhaling hot gas full of chemicals is not good for us. So you could have a rise in common respiratory ailments, for example, or chronic illness of the nasal passages…there are lots of things being developed, though: Vape-Pens, filtering devices, vaporizers. They help reduce that risk.
Another thing that is happening with the reduced enforcement are these very high butane ash oil products where you can zing up the tetrahydrocannabinol (THC)…We could get incredible ramping up in the levels of THC. What happens to people who consume that high a level of THC? Nobody knows. Marijuana 20 years ago was four-, five-, six-percent THC and now it’s 11-12 percent. If, under legalization, it goes up to 18-, 20- [or] 25-percent, then we’ve got a new experiment that we may be sorry [about] the effects of in terms of people using more and more potent drugs…as far as I know, neither regime [in Colorado or Washington] keeps a cap on the amount of THC.
TSD: Are states going about legalization too hastily?
KH: There are a number of groups and states including California, Oregon and Alaska who right now are trying to get something on the 2014 ballot. I think that’s a mistake…even if you decide as a result, that okay, you want to do this, you might learn a better way to do it because of something [other states] did that they sorely regret.
Contact Victor Xu at vxu ‘at’ stanford.edu.