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© 2011 Americans For Safe Access Washington
The booming medical-marijuana industry in Washington is struggling to gain business legitimacy. Already on shaky legal footing because of the conflict between state and federal law, dispensaries are bogged down by troubles with banking and federal taxes.
ALAN BERNER / THE SEATTLE TIMES
Trek Hollnagel, left, and Nate Chrysler of Conscious Care Cooperative were rejected by several banks.
Marijuana law: where it stands
Current law: State law approved by voters in 1998 allows medical professionals to recommend marijuana for patients with conditions including cancer and intractable pain.
What’s next: Initiative 502, on the November ballot, would legalize, regulate and tax recreational use of marijuana. Separately, Gov. Chris Gregoire has asked federal regulators to reclassify marijuana so it can be prescribed and sold in pharmacies.
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Conscious Care Cooperative has a solid footing in a growing industry, with three storefronts in Seattle and a loyal customer base. But for much of the last two years, the nonprofit medical-marijuana provider has lacked one business basic: steady access to a bank.
The cooperative has bounced among five financial institutions, and four others rejected the cooperative outright, said CCC’s president, Nate Chrysler. In one case, a bank closed the account without notice.
“They froze our funds, and we didn’t know it until the checks started bouncing,” Chrysler said.
The medical-marijuana industry in Washington, after two years of wild growth, is struggling to move out of the gray market and into business legitimacy. Already on shaky legal footing because of conflict between state and federal law, dispensaries are now bogged down by troubles with banking and federal taxes.
In some cases, dispensaries — unable to find a willing bank — are operating solely with cash. That complicates everything from payroll to tax preparation while heightening the risk of robbery.
Some dispensary owners say they’ve resorted to euphemisms — such as a “holistic healing center” — when trying to open a bank account.
That’s in part because federal authorities have warned banks that handling receipts from marijuana sales remains illegal under federal law and could violate money-laundering laws.
The conflict is not isolated to Washington, one of 16 states — plus the District of Columbia — to allow therapeutic use of marijuana for certain patients.
Aaron Smith, executive director of the Washington, D.C.-based National Cannabis Industry Association, estimates that half of dispensaries nationwide lack a bank account, which he blames on pressure from federal banking regulators.
“It is a widespread problem that threatens the entire industry,” he said.
Advocacy groups are lobbying Congress for changes to banking law and the IRS code that acknowledge the legitimacy of an industry estimated at $1.7 billion.
Despite President Obama’s indication during his campaign that he would be more laissez-faire, his administration has been more aggressive in targeting the booming industry than previous administrations. In an interview with Rolling Stone published last week, Obama reiterated that his administration would not prosecute patients, but gave no assurance to businesses.
“I never made a commitment that somehow we were going to give carte blanche to large-scale producers and operators of marijuana — and the reason is because it’s against federal law,” Obama said. “I can’t nullify congressional law.”
Dispensaries as
“collective gardens”
Washington voters approved medical marijuana in 1998, but it has developed into an industry — from storefront dispensaries to mobile THC testing labs to cannabis-infused sodas — only in recent years.
Industry advocates failed in the past two years in Olympia to get clear protection for dispensaries.
Instead, most dispensaries operate under a broad — some prosecutors would say mistaken — interpretation of state law that allows groups of up to 10 patients to grow 45 plants in a “collective garden,” and to share the costs. Dispensaries run those gardens, and patients join just long enough to obtain marijuana.
The state does not license or regulate dispensaries — leaving that to cities — but does want them to pay taxes. The Department of Revenue collected $755,764 in sales and business taxes in 2011 from 50 dispensaries.
With an estimated 135 or more dispensaries statewide, many medical-marijuana providers aren’t paying. Seattle, the state’s marijuana mothership, has issued 79 business licenses to medical-marijuana organizations, according to a Seattle Times analysis of city data.
The state has begun taking a closer look, auditing two dispensaries, said Revenue spokesman Mike Gowrylow.
Banks avoiding
“unknown risk”
Green Hope, a nonprofit patient network in Shoreline, has been without a bank account since last fall, when Walla Walla-based Banner Bank dropped them, said co-founder Laura Healy.
She now pays employees in cash, and uses cashier’s checks or prepaid Visa cards to purchase supplies. She said she’s tried “every bank in town” since then, but all refuse to open an account when she describes Green Hope. Other cash-only dispensaries opt to put ATMs in the lobby.
“I have a business license and federal tax ID number, but not a bank account,” Healy said. “They on one hand treat me like a normal businesses, then on the other hand treat me like a criminal.”
Of the five banks contacted for this story, only BECU answered questions about medical-marijuana accounts. Banner Bank, which dispensaries once saw as welcoming, did not respond to repeated inquiries.
BECU spokesman Todd Pietzsch said those accounts often involve large cash deposits, which require heightened scrutiny and reporting under federal banking and money-laundering laws.
“We took a look and found there’s a lot of unknown risk and uncertainty in this business,” he said. “At this point in time, it’s probably not in the best interests of our membership” to bank with medical-marijuana businesses.
Money-laundering violation?
Federal bank regulations do not specifically prohibit doing business with the medical-marijuana industry, and Attorney General Eric Holder told Congress in December that the Justice Department would not make it a priority to go after bankers who did.
But in June, Holder deputy James Cole issued a memo warning that “those who engage in transactions involving the proceeds” of marijuana sales “may be in violation of federal money-laundering statutes and other financial laws.”
The U.S. Attorney’s Office in Seattle has not contacted banks regarding medical-marijuana accounts, said Emily Langlie, spokeswoman for Seattle-based U.S. Attorney Jenny Durkan.
The Cole memo sent a chill through the banking industry, said Sam Kamin, a University of Denver law professor who has written about marijuana regulation. “It’s a great threat because it allows the federal government to do what it wants without using scarce resources.”
Months after the Cole memo, Colorado Springs State Bank, which marketed itself to Colorado’s huge medical-marijuana industry, closed an estimated 300 accounts.
Lance Ott, executive director of Guardian Data Systems, a Vancouver-based financial consulting firm, said he knows of no financial institution in Washington that openly banks the industry. Most of the major credit-card processors, as well as PayPal, also refuse medical-marijuana accounts.
“That doesn’t mean there aren’t people who don’t have a friend willing to work with them. A lot of it is behind the scenes,” said Ott. “The banks need to show liquidity on the balance sheets.”
Doing taxes with
“room full of attorneys”
Squeezed between federal regulators, reluctant banks and an ambitious industry, some medical-marijuana operators have looked into forming their own bank. Chrysler, of Conscious Care Cooperative, said he and business partner Trek Hollnagel investigated starting a credit union last year, but opted not to.
Colorado lawmakers this year debated launching a credit union as well, but the plan died, in part out of fear of a federal backlash.
In Congress, several lawmakers, including Rep. Barney Frank, D-Mass., introduced bills to ease banking access and to amend an IRS provision that restricts business deductions for medical-marijuana operations.
A campaign to change the tax law, run in part out of Seattle, started when an Oakland, Calif., dispensary, Harborside Health Services, was hit with a $2.5 million bill in October for back taxes. That bill hinged on an interpretation of IRS section 280e, which prohibits business deductions for drug traffickers.
The Harborside audit has reverberated through the industry. The director of one Seattle dispensary, speaking anonymously for fear of drawing federal attention, said he prepared his 2012 taxes with “a room full of attorneys.”
“They’re really making it very difficult to try to do business,” said Oscar Velasco-Schmitz, an ex-Microsoft software engineer who runs medical-marijuana Dockside Cooperative in Fremont. “It’s trying to run a business with a handicap, a government-imposed handicap. These are growing pains.”
He, like Chrysler, declined to name their current bank. After going through five bank accounts, Chrysler said, “Best not to say.”
Jonathan Martin: 206-464-2605 or jmartin@seattletimes.com.
GREEN SOCIETY GROUP NOW OPEN
Owner Describes Business As an Access Point for Medical Marijuana Patients
Let the legal wrangling over medical marijuana begin.
A new business called Green Society Group opened up in Maple Valley on April 20, run by Chris Schoonover and his business partner, Jon Hofer.
A dispute has arisen between the city of Maple Valley and Schoonover as to whether or not Green Society Group is violating the city’s moratorium on medical marijuana.
Schoonover described his business as specializing in “palliative care and networking solutions,” which includes medical marijuana collective gardens.
GSG, located at 22210 S.E. 272nd Street in Frontier Square, is designed with a more welcoming environment than most business dealing with medical marijuana, according to Schoonover. The main room resembles a medical office with a security door through which someone with an authenticated medical marijuana prescriptions can enter.
Beyond the door is an “informative table,” which Schoonover said is part of his plan to maintain strong communication with the city and remove any skepticism about the nature of his business.
He stated he intends to have the business open to the public once a month in order for people to come in with any questions they have.
According to Schoonover’s attorney, Jay Berneberg, the business manages collective gardens, yet does not act as a dispensary or a collective garden, and therefore does not violate the city’s moratorium or state law on medical marijuana.
According to state law, up to 10 people can grow a collective garden together. A person is also allowed to individually possess up to a 60 days worth of medical marijuana, which is defined as up to 24 ounces or 15 plants.
Berneberg stated in a telephone interview that businesses such as GSG manage the collective gardens for the medical patients, something which the state doesn’t regulate. He also said that only those who are documented members of a collective garden managed by GSG are given access to the medical marijuana. GSG, he stated, keeps documentation on members who enter or leave the collective garden, as well as store the medical marijuana.
“They’re ( GSG ) hired by the collective garden to do it,” Berneberg said. “We have a management company in Maple Valley and that’s where people can go and access their medicine. They come there, they obtain the medicine and they leave. Nobody’s using the medicine there. People come up like they’re going to the pharmacy. There’s not any partying going on. They don’t have a vapor room.”
LEGAL LOOPHOLE
Confusion due to the ambiguity in state law, as well as the exact intentions of GSG, has left the city at a loss of what actions to take, said City Manager David Johnston in a telephone interview.
“They’re ( GSG ) saying that they don’t fall under the moratorium,” he said. “We know what our moratorium states and through the discussions it says we believe it falls under the moratorium. We’ll do what we have to do to enforce any action that may have to happen. It’s unfortunate that there is no clarity in this issue. You still have the federal, state law issue. It’s not clear. Some of these actions can be illegal under federal law but it’s allowed under state law. So I think our hope would be the state would clear up any ambiguity, but they got caught in their budget issues.”
Johnston added that this dispute was “not a matter of if but when.”
The moratorium was passed by the City Council in July 2011. At its Feb. 21 meeting the City Council voted to support a letter signed by Gov. Chris Gregoire asking the DEA to consider reassigning medical marijuana from a Schedule I to a Schedule II drug, which would make it legal for medicinal purposes.
Meanwhile, Schoonover said, he has no intention of letting the business get shut down.
“I won’t quit,” he said. “As long as I’m breathing air I’m going to fight this fight.”
Due to the dispute between the city, Berneberg advised Schoonover not to sell any medical marijuana until the issue has been cleared up. Even though he ultimately chose not to have any medical marijuana in the business during its grand opening, Schoonover said, he was determined to open on April 20.
“I made a promise that they would be able to speak to me,” he said of clients. “I was very adamant about that. Being the guys we are, this was an opportunity to prove that I am who I say am.”
It is unlikely at this time, however, that any action will be taken by the city against GSG, according to Johnston, who said at the Maple Valley City Council’s meeting on Monday that the King County prosecutor’s office will dismiss any charges the city may bring. He also discussed a meeting he had had with Berneberg earlier that day.
“What we are in is an assessment process because first of all, the thing came as a shock to the city staff,” Johnston said. “We’re going to take our time. So, we’re looking at all our legal review on the situation that we have. We’re dealing with some interesting interpretation of current state law. We’re trying to figure out if they’re valid or not. When we have more information to talk about, we will. We have to digest that. It’s an unfortunate, ambiguous situation that we face because of what happened with the governor’s line item veto last year.”
Johnston said, “they are being very open and they have a desire to be follow the rules and regulations and the laws.”
REMOVING THE ‘BLACK EYE’
Schoonover said he did not intend to open up his business in Maple Valley originally, but, changed his mind after the lease at Frontier Square became available.
“Quite honestly my path stumbled in here,” he said. “I didn’t want to open here. I’m a firm believer in fate and destiny, so when the door’s wide open you’d be foolish not to at least try it.”
One of his intentions, he said, is to improve the reputation of businesses that deal with medical marijuana.
“Certain individuals in this industry have done things incorrectly,” Schoonover said. “They have given us this black eye. We’ve tried to take the grey area out and take the black eye away. But we have to have a symbolic relationship with the community. You’ve got to.”
Schoonover stated he opposes Initiative 502, which if passed, would legalize small amounts of recreational marijuana.
Although he believes GSG does not violate the moratorium, Berneberg stated a moratorium on collective gardens and dispensaries is still the incorrect way to deal with the issue.
“Whether anyone wants to admit it or not there are already quite a few collective gardens in Maple Valley,” he said. “It goes on all over the place because it’s allowed under state law. They can put their head in a deep dark place. They can say it’s not happening because they’re got a moratorium. Prohibition is a terrible way to regulate medical marijuana. They lose revenue. They lose knowledge. They wash their hands of it and actually have the complete opposite effect of what it was intended to do. It says, ‘As long as you can keep it out of sight that’s OK.’ It’s a way for city to avoid responsibility.”
A medical marijuana dispensary, Covington Holistic Medicine, has remained open due to Covington’s moratorium being passed after it was in operation.
Last year, several medical marijuana dispensaries in Kent were shut down in July and then reopened several weeks later, which Berneberg said is proof that the law is on their side.
“It was like a gang came in and trashed the place,” he said. “It was an ugly show of force. So they send it over to the King County prosecutor and he says they’re not violating state law.”
Former U.S. Attorney John McKay debates Pat Slack, commander of the Snohomish County Regional Drug Task Force, over Initiative 502, which McKay filed and which would regulate and tax marijuana like liquor.
If there’s one thing that brings people together, it’s this: Marijuana regulation is a mess.
But the granular details about how to fix it divided a panel of law-enforcement and public-health experts convened Thursday night to debate Initiative 502, a landmark proposal to regulate and tax marijuana like liquor that is on the November ballot.
John McKay, who filed the initiative after witnessing the “complete failure” of marijuana prohibition as the U.S. Attorney in Seattle for six years, said legalization was a “simple solution.”
“If it’s a failure, does that mean we need to try something new?” asked McKay. “There’s millions of dollars in marijuana produced out there, but it’s all going to cartels, it’s going to gangs. The change should be to bring legal business in, and grow it legally.”
The state estimates that I-502, the first marijuana initiative on the ballot since voters authorized medical cannabis in 1998, would raise $560 million a year via state-licensed marijuana grow farms and retail stores. If passed, it would be the nation’s most radical change in marijuana law in generations.
But Pat Slack, commander of the Snohomish County Regional Drug Task Force, scoffed at McKay’s core argument, that heavily taxed marijuana would end the black market.
“You will open a black market where you can sell this product for cheaper than what the government is selling,” he said.
The debate, at Mukilteo City Hall, is part of a series of forums kicking off the nationally watched campaign. I-502 would decriminalize possession of 1 ounce of marijuana, and legalize and heavily tax sales from newly created, state-licensed marijuana stores, with the state Liquor Control Board setting regulations by December, 2013.
Colorado is the only other state with marijuana legalization on its November ballot.
I-502′s supporters include another former U.S. Attorney, a retired FBI supervisor, several judges, public-health officials, a drug researcher, the King County Labor Council, the state Democratic Party, as well as Seattle’s mayor, city attorney and entire City Council.
“We’ve been at this 42 years. We have never seen an amalgam of prominent local politicians still in good standing come out in favor of a reform measure as bold as this,” Allen St. Pierre, executive director of NORML, a leading marijuana-legalization group, said in an interview.
But law-enforcement groups and medical-marijuana patients have lined up against I-502, for very different reasons. Police, including Slack, say it is a gateway to greater marijuana acceptance, especially among youth.
Patients fear a new driving-while-stoned threshold in I-502 would effectively prevent them from legally driving. A strong contingent of them watched the debate, peppering McKay and another supporter, University of Washington marijuana researcher Roger Roffman, with questions.
Roffman defended those provisions as a political necessity.
“The public would not consider a sea change of this nature were it not to take into account public safety,” he said.
A Gallup Poll in October found nationwide support for legalizing marijuana was above 50 percent for the first time in the 42 years since Gallup started asking the question. In Washington, a poll in November on I-502′s specific approach found 57 percent support.
I-502 doesn’t amend the state medical-marijuana law, and Slack said adding a new set of laws would complicate police officers’ already difficulty task of sifting legal from illegal cannabis. The driving-under-the-influence provisions, for example, could require time-consuming blood draws to detect active THC content in drivers.
“My goal is not to arrest everyone in this room,” Slack said. “My goal is to help you stay within the lines of the law. But right now, the lines of the law are pretty damn confusing for us.”
If passed, the state Office of Financial Management estimates that at least 363,000 customers would buy at least 93.5 tons of marijuana, each year. But the marijuana tax-revenue projections — at least $130 million more than the state garnered under the old state liquor — are guesses, because no state has done what I-502 proposes.
About 10,000 people are arrested for marijuana possession each year, although not all are prosecuted. When the debate panel struggled, in response to a question from the audience, to explain why marijuana was classified along with PCP and methamphetamine, McKay paused.
“It’s interesting that we can’t articulate why,” he said. “I think most people know in their experience that it is ludicrous.”
When Massachusetts voters head to the polls this November, marijuana legalization will be high on the agenda. As long as advocates collect enough signatures by July — which looks likely — Bay Staters will be able to vote on whether pot can be used for medical purposes.
If the cannabis reform ballot succeeds, one man will be able to take much of the credit: Peter Lewis, the billionaire behind insurance giant Progressive, who’s put forward almost every penny being spent on pro-legalization lobbying.
In January the group behind the Mass. bill, the Committee for Compassionate Medicine, reported raising $526,000. Of that, $525,000 came from Peter Lewis.
This isn’t the first time Lewis has effectively bankrolled a state’s entire pot legalization movement, usually to the tune of at least six digits.
The National Organization for the Reform of Marijuana Laws estimates that Lewis has spent between $40 million and $60 million funding the cause since the 1980s.
This year, as well as the Mass. vote, he’s backing movements to get marijuana reform on the 2012 ballot in his home state Ohio as well as Colorado andWashington State.
When I interviewed Lewis for last fall’s Forbes 400, he said he’d fund research and lobbying in any state where pot legalization looked likely to get to the voting stage.
You might wonder why a super-rich insurance exec is concerning himself with the controversial politics of drug reform. Well, medical marijuana is personal, not just a pet cause: after chronic health problems, Lewis had part of his left leg amputated in 1998.
Lewis never hid his pro-pot stance, but it took anarrest for drug possession in New Zealand in 2000 for his efforts to gain widespread attention (even the newspaper at his alma mater, Princeton, reported the crime). The lawyer representing him during his New Zealand possession case told the court that he smoked marijuana for pain relief, following his doctor’s advice.
Since then, he’s put his money where his pipe is, taking an active role within the pro-marijuana lobby and planning to funnel his fortune into ensuring no-one else has to break the law to cure their pain.
Luckily, a younger generation of super-rich drug reformers is following Lewis’ lead: in 2010, Facebook billionaires Sean Parker and Dustin Moskovitz gave $100,000 and $70,000 respectively towards California’s Prop 19 legalization bill, which eventually failed. Not to be outdone, Lewis kicked in more than $200,000.
Read the full Forbes 400 story of Peter Lewis’ war on drug laws, in his own words, here.
Follow me on Facebook and Twitter.
***
See also:
What The People Want: Abolishment of the TSA and Marijuana Legalization
Obama Administration Shatters Campaign Promise, Escalates Crackdown on Medical Marijuana
Mike Riggs | April 16, 2012
Members of the medical marijuana industry have come out against ballot initiatives in two states that would allow consumers over the age of 21 to legally purchase and consume small quantities of marijuana for recreational use.
Washington State’s Initiative 502 and Colorado’s Amendment 64 would regulate pot similarly to alcohol and tobacco, according to their backers. In Washington, even home growers producing for personal use would have to seek a license from the state liquor board, and consumers would be allowed to possess only an ounce at a time. Colorado’s initiative would have the same possession limit, and would allow home growers to have up to six plants.
The bills, in other words, don’t treat pot exactly like alcohol, of which a consumer can own as much as he likes and brew at home without a license, but they’re being sold by their proponents as better than the status quo. For some medical marijuana activists, better than the status quo is not good enough.
Here’s what Washington’s I-502 would do, in the words of Seattle City Attorney Pete Holmes and former U.S. Attorney (and drug warrior) John McKay, who are the initiative’s most well-known proponents:
This measure would remove state-law prohibitions against producing, processing, and selling marijuana, subject to licensing and regulation by the liquor control board; allow limited possession of marijuana by persons aged twenty-one and over; and impose 25% excise taxes on wholesale and retail sales of marijuana, earmarking revenue for purposes that include substance-abuse prevention, research, education, and healthcare. Laws prohibiting driving under the influence would be amended to include maximum thresholds for THC blood concentration.
Gil Mobley, a Washington physician who owns a medical marijuana clinic, created Patients Against I-502 to oppose the initiative. The name has since been changed to No on I-502. It sums up its opposition to the bill simply: “I-502 is not legalization.”
It simply creates a legal exception for possession of an ounce and a few other minor cannabis related crimes. Under this initiative it would still be illegal for individuals to grow any amount. In addition, hemp would still not be explicitly legal, passing a joint would still be felony distribution, and a new form of prohibition will be introduced that will cause cannabis consumers to be wrongfully convicted and imprisoned (the per se DUID mandate). People under 21 have the potential to be convicted of a DUID simply for being in the presence of cannabis smoke for an extended period of time. Beyond this, the entire distribution system will be federally preempted (rendered invalid in court) due to the fact that it creates a positive conflict with our federal Controlled Substances Act (you can’t force a state to accept taxes from a federally illegal substance).
Mobley and his allies received a drubbing last week when The Stranger’s Dominic Holden criticized No on I-502 in a New York Times op-ed, writing, “I haven’t found a single scientific study showing that even the heaviest of pot users would exceed the five-nanogram [DUI] cutoff after 24 hours. And the civil liberties attacks are simply dishonest. The rules would remain the same as they currently are for medical marijuana—no registration requirements and no database.”
Holden went on to say that “it’s more than a little strange to defend the status quo, in which nearly 10,000 people are arrested in Washington for possession each year, on civil liberties grounds. And it’s not as if voters would accept a law that didn’t include restrictions on smoking and driving.” His op-ed also featured an appearance by the National Organization for the Reform of Marijuana Laws’ Allen St. Pierre, who said, “The medical marijuana industry is driven by profit…It’s not driven by compassion anymore. It is driven by the need to make money.”
(St. Pierre expressed a similar sentiment earlier this year when he wrote that “Cannabis consumers…want good, affordable cannabis products without having to go through the insult and expense of ‘qualifying’ as a ‘medical’ patient by paying physicians and/or the state for some kind of get-out-of-jail-free card. How intellectually honest is all of this?”)
I reached out to a Washington-based marijuana activist about opposition to the bill. He was at odds with both St. Pierre and No on I-502:
Of course there are some bad apples that only care about profit, but they are usually weeded out (no pun intended) by patients themselves and market forces. Others are able to turn a tidy profit while still providing a valuable service to their patients. This is America. What is wrong with wanting your business to make money? As long as no one is being exploited, particularly patients, who is getting hurt? This is the only industry that is being punished by the federal government for being too successful.
When people lump all members of the industry together, it makes it that much easier for prohibitionists to dismiss calls for policy change and gives the feds carte blanche to shut them all down because they are just ‘greedy drug dealers’.
In terms of politics, I would have to say that when it comes to the opponents of I-502 within the marijuana industry, there are certainly some that are looking out for their own financial interests, while others don’t necessarily understand the initiative. Still others simply don’t care about full legalization and are convinced that they will lose their driving privileges, or think that this initiative is too restrictive in one way or another.
It is unfortunate that some within the industry do not realize that the best way to ensure safe and affordable medical access for patients is to remove criminal penalties for all adults, or that they will continue to be able to make a living under a taxed and regulated legal framework. That does not make the whole industry a sham.
In Colorado, medical marijuana dispensaries opposed to Amendment 64 are less organized, and less concerned with how the bill will affect users who drive. Here’s a sample complaint voiced last month:
Although he supports adult recreational marijuana use, Rocky Mountain Remedies co-owner Kevin Fisher said legalizing pot for all Colorado adults could jeopardize the business model he and other state dispensary owners have worked hard to create. Specifically, Fisher said he’s concerned approval of a system that permits recreational marijuana use would lead to increased federal intervention in Colorado.
“While we support adult access to cannabis in any form, we’re not sure supporting this initiative is right at this time,” Fisher said last week.
Fisher said the state’s medical marijuana industry has come a long way in a short time. He didn’t want anything to jeopardize his business, which now employs 40 people.
“We still have plenty of growing pains on the medical side on the local, state and federal levels,” he said. “Moving forward with the retail model for recreational use, I’m not sure where we sit. I don’t want to go to federal prison.”
The sense I get from some activists is that internecine fighting over the best way to make marijuana fully legal at the state level is a) limited to big-time activists and players in the medi-mari industry, not medical or recreational users; and b) bad for the movement.
And yet it seems as if the reform movement can’t progress until it addresses opposition from protectionists in the medical marijuana community, as well as people who want better protections for recreational users and home growers. A failure to address that first concern led growers in Trinity, Humboldt, and Mendocino counties to vote against California’s Prop 19 in 2010, and the inability of I-502 advocates to thoroughly address No on I-502′s complaints—the DUI aspect, the penalties for sharing marijuana—may seal the initiative’s fate long before November.
“Every recent poll except one has shown most Washington voters are now ready to pass the initiative,” Holden writes in his op-ed. “But support has slipped since last fall, down to only 51 percent, according to SurveyUSA. The flagging enthusiasm correlates with the escalating effort to stop the initiative.”
by Allen St. Pierre, NORML Executive DirectorApril 11, 2012
From the International Association for Cannabinoid Medicines
IACM-Bulletin of 8 April 2012
World: Increasing numbers of patients use cannabis for medicinal purposes
An increasing number of patients in the world are using cannabis for therapeutic reasons, with available data from countries, which have installed programs for their citizens. Good data are available for Israel, Canada, the Netherlands and many states of the US with medicinal cannabis laws and registries. In several more countries only a few patients are allowed to use cannabis for medicinal purposes, including Germany, Norway, Finland and Italy. In many other countries such as Spain and some states of the US without a registry such as California the number of medicinal users is estimated to be high, but no detailed data are available.
The numbers in California with hundreds of cannabis dispensaries and clinics that issue medical cannabis recommendations are unclear, since the state does not require residents to register as patients (see below**)
Most of the 16 states that allow the medicinal use of cannabis require a registration. Recently the press agency Associated Press published data on registered patients in different states of the USA based on state agencies responsible for maintaining patient registries:
State: Number of registered patients (per 1,000 of the whole population) –
Colorado: 82,089 (16.3)
Oregon: 57,386 (15.0)
Montana: 14,364 (14.5)
Michigan: 131,483 (13.3)
Hawaii: 11,695 (8.6)
Rhode Island: 4,466 (4.2)
Arizona: 22,037 (3.5)
New Mexico: 4,310 (2.1)
Maine: 2,708 (2.0)
Nevada: 3,388 (1.3)
Vermont: 505 (0.8)
Alaska: 538 (0.8)
Patient registration is mandatory in Delaware, New Jersey and the District of Columbia (Washington D.C.), but their registries are not yet up and running. Washington State has neither voluntary nor mandatory registration.
Data from Israel show that in August 2011 6,000 patients got medicinal cannabis (0.8 patients in 1,000). It is estimated that the number increases to 40,000 in 2016 (5.2 patients in 1,000 citizens).
In Canada 12,116 patients were allowed to use cannabis on 30 September 2011 (0.35 patients in 1,000 citizens).
Numbers of patients using cannabis from the pharmacies in the Netherlands were estimated to be 1,300 in 2010 (0.08 patients in 1,000 citizens). However, many patients in the Netherlands use cannabis from the coffee shops or grow their own.
In Germany about 60 patients are currently allowed to use cannabis for medicinal purposes.
(Sources: Associated Press of 24 March 2012, website of the Israeli Prime Minister of 7 August 2011, UPI of 31 October 2011, Pharmaceutisch Weekblad No. 20, 2011)
**[Editor's note: CA NORML published a white paper last May estimating that California has 750,000 - 1,125,000 citizens who possess a physician's recommendation to use cannabis medicinally.]
Attorney General Rob McKenna, accepting a police lobby’s gubernatorial endorsement, on Tuesday took pot shots at Initiative 502, a measure to legalize the sale and growing of marijuana in the state of Washington.
McKenna
“I oppose it and think it’s going to fail at the ballot,” Republican McKenna told a Seattle news conference.
Backers of McKenna’s Democratic opponent, Rep. Jay Inslee, have predicted that statewide votes on marijuana legalization and same-sex marriage will encourage younger liberal voters to cast ballots in the November election. McKenna has said he will vote against same-sex marriage if a referendum makes the ballot.
I-502 has garnered support from two former U.S. attorneys, the retired head of the FBI’s Seattle office, Seattle City Attorney Pete Holmes,and leaders of the legal and medical professions.
But McKenna argued that the measure is a “recipe for disaster if it passes.” He predicted that legalization would harm those who now obtain cannabis for medicinal purposes.
“Once we open the door to all kinds of marijuana, with use by all kinds of people, medical marijuana users will be swept up,” McKenna warned.
The attorney general added that federal penalties against marijuana possession would remain in force, regardless of what state voters decide to do. McKenna noted warnings from the state’s two current U.S. attorneys that they are “under orders to enforce federal law.”
“If this passes, we would be the only state to pass such a sweeping law,” McKenna added.
The attorney general predicted that voters “will be hearing a great deal” from law enforcement organizations in opposition to I-502.
I-502 has qualified for the November ballot. The initiative would have the state regulate and tax marijuana, with revenue divided between drug education and prevention and funding health plans. Cannabis would be sold at state stores, under auspices of the Washington Liquor Control Board.
BY JONATHAN MARTIN
SEATTLE, Wash. — A marijuana-legalization initiative on the November ballot could raise at least $560 million a year in new taxes — well more than double what the Initiative 502 campaign itself had predicted.
That estimate, produced this week by the state Office of Financial Management (OFM), suggests that a legalized marijuana system would raise at least $130 million more a year in taxes than the current state liquor monopoly.
But I-502′s fiscal impact also appears to be based on guesses, because no state has legalized and regulated marijuana for recreational use. The state analysis, a fiscal note for lawmakers, is the first independent attempt to pin down the numbers since I-502 qualified for the ballot.
It briefly addresses one unanswered question should I-502 pass: What would the federal government do? The analysis said revenues would be “adversely impacted” if federal authorities cracked down, as they threatened to do when California voters were mulling legalization in 2010. Marijuana is illegal under federal law.
The initiative, the first marijuana-legalization measure on a statewide Washington ballot, has drawn national attention because of a roster of supporters that includes two former U.S. attorneys, an FBI supervisor, judges and public health experts.
It would legalize and heavily tax 1 ounce sales of marijuana to people 21 and over from state-licensed stores. Most of the revenue — at least $433 million the first full year — would come from the 25 percent surcharge at each step from grower to retailer, the OFM estimated. Business and sales taxes would raise an estimated $130 million more.
The analysis doesn’t yet estimate revenue from newly legalized hemp production or cost savings from decriminalization of small amounts of marijuana. A fuller analysis is under way.
But this analysis provides a guesstimate of what a legal marijuana industry might look like. It estimates 100 state-licensed growers supplying more than 300 marijuana stores that — based on federal drug-use surveys — would sell 187,666 pounds to at least 363,000 customers.
But the state analysis includes a second scenario, with 10 percent higher consumption. In that case, the total tax revenue would be $606 million. By fiscal year 2017, the revenue could be near two-thirds of a billion dollars.
Regardless, the state estimates are far higher than the $215 million that I-502′s campaign estimated would be raised from the excise taxes. Campaign director Alison Holcomb said those estimates were based on a previous legislative proposal, which predicted lower consumption rates.
“The campaign has always wanted to be conservative in the estimates on the revenue because we honestly don’t know what a legal marijuana market will look like,” said Holcomb, previously the drug-policy coordinator for ACLU of Washington.
The analysis was prepared by Gov. Chris Gregoire’s budget staff, but Gregoire does not support I-502, said spokeswoman Karina Shagren.
“This doesn’t resolve the conflict with federal law,” said Shagren.
Gregoire instead has petitioned to reclassify marijuana from a federal Schedule I drug to Schedule II, allowing it to be prescribed and sold in pharmacies for medical use.
Thus far, opposition to I-502 is led by a group of medical-marijuana patients who say the initiative’s proposed driving-under-the-influence provisions would make it impossible for many patients to legally drive. That group, No on 502, had raised no money as of late February.
I-502 has raised $1.2 million since last May, but spent nearly $760,000 on paid signature gathering to qualify for the ballot, according to public-disclosure reports.
Jonathan Martin: 206-464-2605 or jmartin@seattletimes.com. On Twitter @jmartin206.
Posted by Jonathan Martin
The marijuana legalization initiative headed for the November ballot picked up another high-profile endorsement over the weekend: former New Mexico Republican Gov. Gary Johnson.
Johnson, running for president under the Libertarian Party, called Initiative 502 “fiscally responsible and socially pragmatic” in a statement sent out by the initiative campaign.
“We should regulate and tax it like alcohol and tobacco instead of propping up black market
profiteers,” Johnson explained. He also expressed concern about the thousands of marijuana
arrests that occur every year. “We have better uses for our police, courts, and jails.”
Johnson is a longstanding advocate for legalizing marijuana, so his endorsement of I-502, the first marijuana legalization initiative to make the ballot in Washington, isn’t as surprising as that of other backers, including two former U.S. Attorneys, a retired lead FBI agent, judges and public health officials. But Johnson’s endorsement adds a national voice to the activist-vs-activist battle over I-502.
An anti-502 campaign – led by medical marijuana patients and their providers – spotlights the initiative’s “driving-while-stoned” provisions, which they say would effectively criminalize driving for regular medical marijuana users. Last month, NORML called I-502′s impaired driving threshold “arbitrary, unnecessary, and unscientific,” but then endorsed the initiative because it was “an historic opportunity to end marijuana prohibition.”
I-502 would legalize sale of small amounts of marijuana to adults 21 and over from stand-alone, state-licensed stores, and impose a 25 percent tariff at each link in a regulated cannabis supply and distribution chain. The estimated $215 million in new tax revenue would be buttered across public health and substance-abuse prevention programs.
How much the internecine war affects the initiative’s odds in November is unclear; the most recent poll show lots of voters are undecided about I-502. But its support is coming from folks other than the usual suspects. Last month, Judy Pigott, heir to the Paccar fortune, kicked in $5,000.
OLYMPIA – Marijuana activists say 2012 is the year they have been waiting for.
Citing growing national support for marijuana legalization, activists appear confident that young voters, their key demographic, will turn out to support a reform measure — or measures.
The potential problem: activists continue to dispute how laws for recreational and medical use should be changed. So far, several competing initiative campaigns have emerged.
One measure is already headed for the November ballot. Initiative 502 has gathered enough signatures.
The initiative would make Washington the first state to legalize the recreational use of marijuana for adults 21 and older. The caveat: any use of the drug would still be considered illegal under federal law.
Under the initiative, adults 21 and older could possess no more than an ounce of dried marijuana, 72 ounces of liquids containing marijuana, or 1 pound of a solid product infused with marijuana, such as brownies or cookies.
The measure would not change Washington’s medical marijuana law, which allows doctors to recommend but not prescribe the drug to treat intense chronic pain and complications related to cancer and a number of other diseases. But proponents say the initiative would create new arrest protections for patients seeking medical marijuana.
A private chain of supply regulated by the state would be set up under the initiative. It would create a license system for growers, processors and retailers who would pay a 25 percent excise tax on their sales to raise revenue for substance-abuse prevention, research, health care and education. The Liquor Control Board would be in charge of regulation and licensing.
“I-502 would be a more comprehensive response to our state’s marijuana laws,” said Campaign Director Alison Holcomb, comparing the initiative to other marijuana measures.
Holcomb’s initiative rivals disagree. An alternative measure called the “Cannabis Child Protection Act” was recently filed with the Secretary of State’s Office. Proponents call the measure a more reasonable alternative to I-502.
“It doesn’t harm the public in the way that I-502 would,” said campaign spokesman Don Skakie.
Skakie sees a number of shortcomings for marijuana users under the I-502 plan.
Perhaps the most glaring problem, Skakie said, is the limit I-502 would impose on the concentration of THC — the drug’s active chemical substance — in a driver’s bloodstream. That limit would be 5 nanograms of THC per milliliter of blood.
Heavier users have a higher tolerance and can drive just fine under levels beyond the limit established in I-502, he said. In contrast, Skakie said the initiative he backs would not establish a limit for THC levels in a driver’s bloodstream.
“There’s no per-se limit because there’s no science to back it,” he said.
The “Cannabis Child Protection Act” would allow adults 21 or older to grow or possess marijuana at home for medical or recreational use. Anyone younger than that would be barred from access to the drug except for medical or spiritual use with the approval of the person’s parent or guardian.
“There’s no age limit on health,” Skakie said.
Modeling marijuana policy after laws regarding alcohol possession, the initiative imposes no limitations on how much marijuana a person 21 or older could possess.
It also creates a series of graduated misdemeanor penalties for minors in unlawful possession of marijuana. Holcomb said she suspects this would find hard opposition from voters.
“Philosophically, I don’t think anyone should be treated as a criminal for using marijuana,” she said. But she added that voters would be concerned that the graduated system would open the door for greater risk of marijuana use among youth.
Going in a different direction, Mimi Meiwes, a former registered nurse, also recently filed a counter-initiative to I-502 called the “Safe Cannabis Act.”
Meiwes’s initiative focuses only on medical marijuana by decriminalizing the drug for patients, providing them and health care providers with arrest protections related to the use of medical marijuana.
“People’s health should come first,” she said.
Meiwes suffers from chronic nausea and vomiting as a complication of focal segmental glomerulosclerosis (FSGS), a disease that causes kidney failure. Medical marijuana settles her system enough to let her eat. However, being on the drug prevents her from getting the critical kidney transplant she needs to survive, she said.
“Basically, I’m going to die because I’m a cannabis patient,” Meiwes said.
But the initiative could be a life saver for people like her, Meiwes said. In addition, it would also create a legal separation between marijuana and hemp to redefine hemp as an agricultural product.
Another initiative called the “Medical Cannabis Reform and Control Act” was recently filed by former Seattle Weekly contributor Philip Dawdy, a co-author of the initiative.
His measure would create a state-licensed system of private medical marijuana growers and cooperatives to sell medical cannabis. Dawdy said the initiative is not meant to compete with I-502.
State laws on medical marijuana access and arrest protection for medical marijuana patients are unclear, Dawdy said. The initiative will clarify the laws to ensure that the federal government will see that medical cannabis users in the state are following state law, he said. However, the ultimate solution is for the federal government to reclassify marijuana as a drug with accepted medical use.
These last three initiatives are still early in the process, but signature gathering should begin soon.
Dawdy said he is unsure whether his will pick up enough support to go on the ballot. If it does, he has some concerns about how successful it would be if juxtaposed with one or more other marijuana initiatives.
“Traditionally, when you have two loosely related initiatives on the ballot at once, they tend to pull each other down,” Dawdy said.
If more than one of the initiatives goes on the ballot and passes in November, the final decision on which one would become law would be settled in court or in the Legislature by a two-thirds vote of support for one of the measures, said David Ammons, the communications director for the Secretary of State’s office.
To get their initiatives on the ballot, sponsors need to submit at least 241,153 signatures from registered voters by July 6.
– Justin Runquist
