That’s why the Amendment 64 task force ultimately recommended—and the Colorado legislature eventually passed in a 136-page set of rules—a regulatory model for pot that requires a vertically integrated supply chain. For at least the first nine months of 2014, Colorado pot stores will have to grow at least 70 percent of what they sell, while the rest can come from other producers. Similarly, Colorado marijuana producers will have to retail 70 percent of what they grow; the rest can be sold to other retailers. Under such a closed-loop system—retailers have to grow and vice versa—there is less concern that producers will grow as much as they can and then sell to any buyer they can find, lawfully or unlawfully. Plus, the high cost of vertical integration—leasing, equipping, staffing, and licensing both a grow facility and a retail store doesn’t come cheap—means the number of market participants will likely be limited, at least at the outset. Finally, Colorado would accomplish all of this without federally problematic state control.
But the vertical integration model is far from perfect. The system discourages competition and creates barriers to entry, which means less consumer choice and higher prices. Imagine if your local liquor store sold primarily Budweiser, with only a handful of other beers, as opposed to all the brands shoppers actually wanted. This is why Washington state’s marijuana program is going the opposite route, forbidding vertical integration. And it’s why since the end of Prohibition, the government has outlawed alcohol monopolies.
Still, vertical integration had one other important thing going for it in Colorado: The system was already in place. In 2010, Colorado had taken steps to rein in a booming medical marijuana industry that was largely unregulated. There was little control over who was growing pot, where it was being sold, and who was buying it. In response, the legislature passed extensive new medical marijuana rules that required dispensaries to grow 70 percent of their own product. All across the state, dispensaries and grow operations were forced to merge. Some of these shotgun weddings panned out, and some didn’t, leading to a more consolidated and stable medical marijuana scene. Suddenly, Colorado had the most robust regulatory regime in the country, allowing it to skirt federal busts that crippled medical marijuana operations elsewhere.
That’s why for the first nine months of 2014, the only Colorado businesses that will be selling recreational pot are those that were previously vertically integrated medical marijuana operations. (The city of Denver has extended its moratorium on new pot-shop licensees through February 2016). In other words, the state’s new pot regime will look much like the old one: the same people selling it, the same rules for how it’s produced, the same Department of Revenue regulators overseeing it all. The state policymakers ultimately decided if the system isn’t broke, perhaps it doesn’t need fixing.
But even with Colorado’s regulatory system nailed down, there are still plenty of wrinkles to be ironed. Among the more perplexing conundrums:
Consider the marijuana lollipop, part of the smorgasbord of pot-infused candies, granola bars, and even sodas currently sold at Colorado marijuana dispensaries. How do you distinguish these pops from a run-of the-mill sucker? While a pot lollipop’s THC content isn’t going to cause anyone serious harm, no one wants the headlines that would come with a bunch of kids getting marijuana highs along with their sugar rush. That’s why, along with other labeling requirements such as usage instructions, ingredient lists, pesticides and chemicals used, and various warnings, marijuana products will be required to display a marijuana-related “universal symbol” that children who can’t yet read will understand.
But what should that symbol be? While adults the world over recognize the seven-pointed leaf as a symbol for pot, little kids aren’t likely to do so—and the image might even be enticing to them. The now-iconic “Mr. Yuk” poison symbol was created in the 1970s, because children associated the old symbol—a skull and crossbones—with fun stuff like pirates and adventure. So what’s the marijuana version of Mr. Yuk? That has yet to be determined, but the state’s new Marijuana Enforcement Division will need to come up with it soon.
According to Colorado’s new pot rules, marijuana ads can only run in media outlets like periodicals and local television channels where there’s evidence that no more than 30 percent of the audience is under 21 (finally, an upside to print media’s growing unpopularity among young people). Outdoor ads like billboards and taxi decals are also prohibited. It’s a well-meaning idea, and it signals to the federal government that Colorado isn’t planning on becoming a stoner’s paradise. But the regulations likely won’t hold up in court, since less onerous restrictions on alcohol and tobacco ads have previously been overturned for violating the First Amendment. Does that mean Colorado will soon be plastered with pot-leaf billboards? Not necessarily, since it’s in the marijuana industry’s best interest to rein in excessive advertising, just as the tobacco and spirits industries have in the past adopted self-imposed advertising restrictions for public-relations reasons. No marijuana marketing effort, after all, is worth drawing the attention of the Drug Enforcement Agency.
Last summer, Colorado lawmakers passed a marijuana DUI rule, setting the legal THC-blood limit for drivers at 5 nanograms per milliliter. The thing is, everyone involved knew the rule made no sense. Unlike with alcohol, marijuana impairment can vary widely from one person to the next. As even the National Highway Traffic and Safety Administration concedes, “It is difficult to establish a relationship between a person's THC blood or plasma concentration and performance impairing effects. Concentrations of parent drug and metabolite are very dependent on pattern of use as well as dose.” As William Breathes, the venerable pot critic at the Denver alt-weekly Westword, has demonstrated, long-standing marijuana users can refrain from using marijuana for much of a day and still have THC levels several times over the 5-nanogram limit. Plus there’s the fact that there’s little consistency in marijuana dosing—how much THC are you getting from that hand-rolled joint or those two bites of pot brownie? Yes, intoxication is always a bit of a guessing game with alcohol, too—but it’s far more of a guessing game with weed.
Still, with the world and the feds watching, Colorado had to demonstrate it was taking stoned driving seriously; hence the need for the marijuana DUI law. But lawmakers hedged their bets by making it a “permissible inference measure,” meaning it comes with a potential get-out-of-jail-free card. Getting caught driving over the 5-nanogram limit means you’re presumed to be guilty, but you’re allowed to argue in court that you weren’t impaired. (Washington state’s 5-nanogram limit, on the other hand, is a “per-se measure,” meaning you have no defense if you’re busted over the limit.)
Is Colorado’s marijuana DUI rule flawless? Far from it. But as the state’s policymakers have come to realize, the world’s first legal pot rules aren’t going to be perfect. They just have to be good enough. Good enough to keep the feds away, good enough to keep marijuana stakeholders happy, good enough to keep Coloradans from worrying they’ve made a horrible mistake. Is Colorado’s regulated pot system good enough? In the coming weeks, we’re going to find out.
Next up: Who’s watching the pot? How do you keep track of the state’s 677,000 legitimate marijuana plants from seed to sale, to ensure none of it ends up on the black market?
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