Two more states legalize – Update on marijuana regulation #10

The grand natural experiment in regulation of a new industry continues. Oregon, Alaska, and D.C. legalized recreational marijuana on Tuesday.

For concepts such as whether excessive regulation strangles business or not, it would be great to run a huge experiment: let one state our metro area run with heavy regs and another run with light regs; watch for a few years; measure results; then repeal both laws while you study the result.

Doing so would be terribly disruptive, likely illegal, and actually cruel to whichever group suffered poor results.

So what to do? Watch what happens in a locality, region, or state when a new policy is implemented.

That’s what we have in Washington, Colorado, and now Oregon and Alaska. There is a huge natural experiment to see what happens when heavy regulation is imposed on the newly legal industry of providing recreational marijuana.

I have been and will continue to monitor these natural experiments.

Full disclosure: I am skeptical of reporters and columnists who cover issues but don’t let on to their perspective. So you know where I’m coming from and can filter my comments accordingly, it is my hypothesis that the heavy regulation in Colorado and Washington state will severely restrain the new businesses. My perspective is that excessive and burdensome regulation is a heavy-handed weight on the economy. Recreational pot provides a natural experiment to check that hypothesis.

This will also be a natural experiment for those libertarians who advocate legalization on principle. I’m not in that category.

11/4 – Reason – Oregon Becomes Third State to Legalize Marijuana

Preliminary info on Measure 91, legalization in Oregon – The law will allow personal possession of up to one ounce by adults 21 or older. Personal transfer of up to an ounce on what the article says is a “nonprofit transfer” is legal.

Of most interest to me is the taxation approach. Instead of a percentage tax on the dollar amount at each point in the manufacturing, distribution, and retail levels as in Colorado and Washington, the Oregon law imposes per unit taxes. It will

impose taxes on cannabusinesses based on weight: $35 per ounce of buds and $10 per ounce of leaves, plus $5 per immature plant.

(How’s that for a new turn of phrase – cannabusinesses?)

I’m not going to dive into the detail to learn whether that is annual, quarterly, per transfer, or per plant. The way it is phrased doesn’t make that clear.

Home cultivation is allowed, with up to 4 plants and 8 ounces of “usable” marijuana. I wonder if we will eventually see any research on how that affects retail sales and tax collection.

11/5 – Reason – Alaska Becomes Fourth State to Legalize Marijuana – Measure 2 passes 52% with 94% of precincts reporting.

Article says adults 21 or older can posses up to an ounce, grow six plants at home, and transfer up to an ounce to another person “without remuneration.”

Taxation plan is set at $50 per ounce, with the tax levied on the grower.

I have no clue on how that compares to the multi-level percentage tax in Colorado. That will be another part of the grand natural experiment to keep an eye on: which tax approach raises more money while constraining activity less.

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