Next Tuesday, nearly 19 million registered California voters will decide whether cannabis should be recreationally legal for adults 21 years of age and older. This would be a major step forward for cannabis legalization, especially since California’s economy would be the ultimate hurdle for a legitimate cannabis industry.
However, there are plenty of reasons to oppose Prop 64 that must be addressed as well. The purpose of this article is to examine the many angles of a cannabis argument that has very little precedent for comparison.
Proposition 64 will bring about changes to the way society interacts with cannabis, and the implications behind these changes are driving arguments for and against Prop 64. However, no one knows exactly what will happen to cannabis if Prop 64 passes. The future of cannabis is unclear, and the results of Prop 64 will not be clear in five days, five weeks, or even five months from now.
To bluntly summarize the situation, those in favor of Prop 64 are encouraged by the added consumer protections as well as the reduction of arrests for victimless crimes. Those opposed to Prop 64 generally fall into one of two camps: people concerned with negative social impacts like youth exposure, and small businesses in the cannabis industry that feel the changes brought about by Prop 64 would eliminate their opportunities to succeed in the legal cannabis industry.
Diving Into an Unclear Future
As it currently stands, very few groups have objections to the concept of legalizing cannabis to reduce arrests of minorities and other groups that have been disproportionately affected by the War on Drugs. Only law enforcement agencies stand to see budget cuts if cannabis no longer requires such a high level of policing.
Prop 64 attempts to address the variety of impacts that would manifest if Prop 64 passes. Still, it is quite difficult to appease the many positions on cannabis legalization, so it is up to voters to weight the benefits of social, industrial, and consumer impacts.
From a social perspective, Prop 64 is positive and necessary. Regulating cannabis in a similar fashion to alcohol would very likely drive consumers to a legal market which would reduce black market activity. The reduction in the illicit market is anticipated to occur at both the macro-level (cartels, distribution rings) and on street corners. Regulating cannabis would also, in theory, reduce accessibility and exposure for youth populations, who would have a much harder time purchasing cannabis products.
Additionally, the number of arrests for personal cannabis activity would plummet, and allow law enforcement agencies to focus their attention on truly damaging crimes. The prison industry would see a slight dip in “customers,” which is why they typically oppose forward-thinking cannabis laws.
Consumer protections are also a positive social benefit that Prop 64 would introduce. Regulating safety in cannabis products and distribution is a fantastic idea on paper, but is also one of the major points of contention for small business owners. Again, very few people argue against the need to monitor cultivation for banned pesticides, and make sure that potentially dangerous extraction methods are being conducted by knowledgeable agents in appropriate industrial locations. Capabilities of product recalls are also important for consumer safety.
The other side of the consumer safety argument is that actions like driving a vehicle after consuming cannabis cannot currently be measured accurately, meaning there could be a substantial flux of Driving Under the Influence of Drug arrests.
Regulation Through Licensing
Requiring registration from all cannabis business operators will also drastically reduce the negative environmental impacts that have plagued the cannabis industry for decades. Illegal grading of land, diversion of water flow and draining of estuaries, along with the massive amounts of trash would be drastically reduced with the institution of Prop 64.
But of course, there are two sides to the cannabis coin. From the perspective of a small business owner, even though all of the positive aspects of Prop 64 sound fantastic, the expense and risk would fall on the industry for the most part.
First of all, cannabis is only just emerging from the shadows of prohibition, and the majority of people who have been cultivating and producing cannabis products have done so with limited exposure. Cannabis is still illegal on the federal level, and announcing that you operate a cannabis business is very intimidating for industry actors that have seen friends arrested and livelihoods confiscated.
Secondly, the current regulations proposed by Prop 64 are not cheap for small business owners. The costs of tracking and tracing all of your products through a complicated and heavily-monitored supply chain add up quickly. The few technology companies building traceability software for cannabis are not shy about suggesting that the workload to maintain compliance will likely require at least one full-time employee, and potentially more depending on the scope of the business. The work is also quite complex, and will demand businesses to find and compensate very talented and experienced data scientists. People with these talents rarely, if ever, work near the minimum wage salary.
The costs of regulation add up quickly, and are very much separate from the taxation costs that Prop 64 would introduce. Taxation of cannabis products produces a ripple effect across the cannabis economy. Cultivators and producers must pay taxes on the raw products and materials that are produced, and retailers have to cope with a 15 percent sales tax across the board. While there is no written mandate as to who will absorb these costs, it is more than likely that prices will go up and consumers will foot the bill.
It is important to note here that despite popular belief, very few people are getting rich in the cannabis industry. Margins are very slim, and oftentimes, any and all profit is pumped back into the company to keep the lights on. If a business is unable to meet the compliance standards under Prop 64, they may have to shutter their doors as they try to fulfill the state’s requirements. Many small business owners see a one month halt of operations as a death sentence in this fledgling industry. On top of everything, cannabis businesses across the nation are still unable to write off normal business expense on their federal taxes under IRC 280E.
Money is everything when it comes to Prop 64. It cost millions of dollars to gather the required signatures to get it on the ballot, and it goes as far as to promise hundreds of millions (if not billions) in tax revenues for California. So far, incomes from cannabis taxation have been allocated to a fund that intends to improve social protections and cannabis education and awareness. As it is with any massive tax grab, many people question if this taxation program will actually pump money into the appropriate government resources.
The Big Scares: Rumor or Reality?
Recent polls show likely California voters to pass Prop 64 at roughly 60 percent in support of the law. Clearly, Californians are sick and tired of the negative social impacts our current cannabis laws dole out, but those opposed to Prop 64 are not wrong to see red flags raised on many points. However, there are some pretty crazy rumors that have hit headlines, and these are important to address.
You may have heard that Monsanto is behind Prop 64 and hopes to monopolize all of the cultivation in California, and eventually the world. The issue with this rumor is that the largest cannabis cultivation licenses are conditional. They will not be considered until five years after Prop 64 goes into effect, and only if there is a massive gap between the supply that licensed cultivators can grow and the demand generated by consumers. It is more likely than not that this level of licensed cultivation will not be necessary.
You also may have heard that Big Pharma is behind legalization in order to gain a pharmaceutical monopoly. California has had legal medical cannabis for two decades, and this issue has always been passed around with little evidence of nefarious intentions. Actually, it totally makes sense for pharmaceutical companies to oppose legalization, since cannabis is an incredibly effective and safer alternative than the money-making opioids they produce. Pharmaceutical companies are very likely to enter the cannabis industry to maintain market share on medicinal products, but it will be nearly impossible for them to produce a cannabis product that meets their standards of medical consistency.
The other scare is, of course, Big Tobacco. Despite repeated claims from the big players in the tobacco industry that cannabis is not on their radar, it most certainly is something discussed at board meetings. Both alcohol and tobacco companies could see plummeting sales if cannabis were widely available. Alcohol companies are one of the main groups funding anti-marijuna campaigns, but Big Tobacco is staying mum. In fact, just this year, Phillip Morris invested $20 million in a Israeli companies medical vaporizer. Big Tobacco is already in the cannabis industry, whether this is readily apparent or not.
The final important piece of information to carry with you as you enter your polling station is that simply getting a cannabis law on the ballot costs millions of dollars. While the intentions of Sean Parker (Napster, Facebook) are still not entirely clear (which is worrisome for many), it is unlikely that these “investors” would be willing to cough up so much money the next time around. For a lot of people, Prop 64 is the best chance at making cannabis for adult use a reality in California.