By Bob Young
The Seattle Times
SEATTLE –– The tax windfall predicted by some for legal marijuana hasn’t materialized in the first year of sales. Nor have horrors imagined by opponents. But some data warrants a closer look as Washington charts a course for legalization in other states.
Before Washington voters could decide on legal marijuana, finance whizzes in state government had to project its tax bounty.
The forecasters looked into their spreadsheets and shrugged.
The state’s take, they said, from pot taxes in the first year of sales could be nothing — or could be as much as $249 million. That was the uncertain future facing an untested state-regulated system operating in defiance of the federal ban on all marijuana.
A year since legal sales began, the maximum windfall, touted by Initiative 502 campaigners, hasn’t yet materialized, but neither have the horrors predicted by legalization opponents.
Year One of legal pot business was more frustrating than giddy at the beginning. Stores were slow to open and supply was scarce. But the year ended with prices dropping and sales climbing in June to a daily average of $1.5 million.
The bigger story is that Washington’s system, with its underage-buyer stings and evolving regulations, passed muster with the Obama administration. The feds have let Washington and Colorado carry on their experiments, charting a course for Oregon, Alaska and Washington, D.C., where voters legalized marijuana last year. Five more states, including California, are likely to vote on legal pot next year.
Step back for a moment, said Mark Cooke, campaign policy director at the American Civil Liberties Union of Washington, which supported legalization. “We’ve already seen other jurisdictions follow suit, and we hope Washington’s example of a public-health approach to legalization will spark change at the federal and international level,” Cooke said.
The march into other states suggests that legal marijuana’s effect on public health, driving and other concerns has not been drastic — or even detectable. Use by young people in Washington, for example, did not increase in 2014, according to a survey of more than 25,000 students. Nor did the number of young people involved in fatal car crashes. But it wouldn’t be wise to draw conclusions from those numbers yet.
Data on the impacts of legal pot is inconclusive. The Washington State Institute for Public Policy is required to provide periodic cost-benefit studies of legal marijuana. The first is due to state lawmakers in September. They shouldn’t expect headlines, said Adam Darnell, senior research associate at the institute. “I don’t think there’s enough information for the kind of cause-and-effect relationships we’re looking for,” he said. That’s a recurring theme in interviews with the state toxicologist, traffic-safety research director and Washington State Patrol DUI expert.
First-year sales, through June, totaled $260 million, and dedicated pot-tax revenue hit $65 million — about one-quarter of the maximum predicted by state analysts.
What happened?
The state forecast was full of caveats. Federal prohibition and the unreliability of data made their task “extremely difficult,” wrote analysts at the state Office of Financial Management (OFM).
Their “fiscal impact statement” also made questionable assumptions. Analysts assumed all marijuana sales in the state would be made through the legal recreational system, despite the illicit and medical markets. They also assumed that every time someone in the state used pot they would consume two grams (enough for three big joints).
“I wouldn’t put any validity to those numbers at all,” said Randy Simmons, state marijuana project director. Those figures, though, were in the state Voters’ Guide.
Meanwhile, the state has licensed only roughly half of the stores scheduled sto open. Bans on pot business in cities such as Kent, Lakewood and Yakima haven’t helped. Lack of supply and high prices kept some customers away at first.
With retail prices now averaging about $12 per gram, once-skeptical shoppers seem to be flocking to stores now offering more variety, Simmons said. June 2015 included the first $2 million day in state pot sales. Daily sales topped $2 million twice more in the month.
Competition from new medical-marijuana storefronts has been another problem, Simmons said. There was just one dispensary within walking distance of his Olympia office last year. There are four now, he said. Some owners opened dispensaries, he believes, in the hope that when the state combines the medical and recreational systems, starting later this year, dispensary owners would get retail licenses.
As for campaign statements that pot-tax revenues could produce over a “half-billion dollars annually in new revenue,” the ACLU’s Cooke said that may still pan out. “In 10 or 15 years down the road that may be accurate.”
Seattle City Attorney Pete Holmes, a legalization supporter, remains bullish. Washington’s recreational system collected $21 million more in pot taxes than Colorado did in its first year, he noted. And that’s with Washington’s recreational system capturing just 9 to 10 percent of the overall pot market, in Simmons’ estimation.
“When we get to full capacity and displace the illegal market, imagine what revenues will be if we’re hitting $11 million in June,” Holmes said.
And, he noted, Washington doesn’t have neighboring states suing it, which Colorado does, because it legalized marijuana. He credits that to tight regulations.
Some statistics about pot-impaired drivers look concerning. Fatal crashes involving drivers with marijuana in their systems increased to 86 last year, from 55 in 2013.
But that data comes with “major limitations,” said Staci Hoff, research director for the state Traffic Safety Commission.
THC, the main psychoactive chemical in pot, is commonly detected in two forms. It can be the active kind (delta-9-tetrahydrocannabinol), which has an intoxicating effect and dissipates quickly. Or it can be the inactive kind (carboxy-THC), which remains in your system for days, even weeks, but isn’t intoxicating at that point.
Data on fatal crashes doesn’t now indicate whether the THC was active or inactive — in other words, if the driver was stoned or not.
Did the number of fatal crashes involving pot-impaired drivers increase? “I don’t believe we can answer that question yet at all, no one of us,” said State Toxicologist Dr. Fiona Couper.
The state Traffic Safety Commission hopes to have a report out in a month or so that digs deeper into crash details. Hoff said it should reveal how many drivers in fatal crashes had active THC in their blood and whether the amount exceeded the 5 nanogram per milliliter of blood standard for marijuana DUI.
Related data is similarly contextual. The number of drivers who tested positive for active THC last year, according to Couper, increased 29 percent. But the number and percentage of those drivers who were over the five nanogram limit decreased from 2013, from 720 to 703 drivers; and from 53 to 40 percent.
Why?
One theory is that more people were indeed driving after consuming pot. But by the time a police officer assessed a driver’s condition, called in a so-called “drug recognition expert,” sought a warrant from a judge, and took the driver to a hospital for a blood draw — all of which can take about two hours, said Lt. Rob Sharpe of the State Patrol — the amount of THC in the driver dissipated to a point below the DUI standard.
Another possibility, Couper said, is that more people are driving buzzed, but they’re waiting longer to get behind the wheel or consuming amounts that don’t leave them over the 5 nanogram limit.
Or, it may be that officers are being more vigilant about testing pot-impaired drivers.
“Maybe,” said Sharpe of the State Patrol. “We’ve seen a slight uptick. A lot of factors come into play. Beyond that I don’t have any elaboration.”
The ACLU tends to focus on one number above all: adults arrested for possessing small amounts (an ounce or less) of pot.
In 2012, 5,531 low-level pot cases were filed in state courts — meaning they went beyond arrests to prosecution.
Embedded in the data was a disturbing trend. Though blacks and whites consume pot at roughly the same rates, blacks were three times as likely to have cases filed against them for misdemeanor possession, according to ACLU data.
In 2013, the number of misdemeanor possession cases dropped to just 120. Those cases were for possessing more than the 28 grams allowed by state law but less than the 40 grams that warrant felony charges, Cooke said. (Filings showed that the number of felony cases for large-scale possession and dealing stayed constant.)
The ACLU doesn’t see why the numbers would have changed much last year and hasn’t yet analyzed 2014 court filings. The decline in low-level pot cases should be freeing up law enforcement for other priorities, Cooke said, another goal of legalization.
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