What you need to know about le­gal recre­ational mar­i­juana in Cal­i­for­nia

Chattanooga Times Free Press - - MUTUAL FUNDS/BUSINESS - BY MICHAEL R. BLOOD

LOS AN­GE­LES — Cal­i­for­nia on Mon­day be­comes the na­tion’s largest state to of­fer le­gal recre­ational mar­i­juana sales. Here’s a snap­shot of how the mar­ket will work and how the state will reg­u­late a pot econ­omy es­ti­mated to be worth $7 bil­lion:


Cal­i­for­nia voted to le­gal­ize in 2016. The goal is to tighten reg­u­la­tion of the state’s long-run­ning med­i­cal pot sales while en­cour­ag­ing op­er­a­tors in the vast black mar­ket to en­ter the le­gal system.

In gen­eral, Cal­i­for­nia will treat cannabis like al­co­hol, al­low­ing peo­ple 21 and older to pos­sess up to an ounce of pot and grow six mar­i­juana plants at home. The state in December be­gan li­cens­ing busi­nesses for the new econ­omy, in­clud­ing re­tail­ers who will sell it and dis­trib­u­tors who will move it from fields to store­fronts.


The avail­abil­ity of le­gal weed will come down to this: lo­ca­tion. What’s emerged so far is a patch­work of lo­cal rules un­der which some cities will have le­gal cannabis Jan. 1, but oth­ers will not.

Los An­ge­les has de­layed ac­cept­ing ap­pli­ca­tions for le­gal sales un­til Jan. 3, and it will be weeks be­fore any shops open. Kern County is among the places that have banned all com­mer­cial cannabis ac­tiv­ity. Other cities have post­poned tak­ing ac­tion, wait­ing to see how the new mar­ket rolls out. Santa Cruz, San Diego, Shasta Lake, San Jose and West Hol­ly­wood have au­tho­rized busi­nesses for recre­ational sales.


Le­gal weed comes with a lot of restric­tions, in­clud­ing where it can be smoked. First, there is no smok­ing in pub­lic, and state law has spe­cific rules for­bid­ding any­one from light­ing up within 1,000 feet of a school or a day­care cen­ter when kids are around, or from smok­ing while driv­ing.

An­other gen­eral rule: Don’t smoke any­where where tobacco is pro­hib­ited. Lo­cal gov­ern­ments are free to set rules for smok­ing at sales shops, what some call cannabis cafes or lounges, but that will vary city to city.


The state will im­pose a 15 per­cent ex­cise tax on re­tail pur­chases of all cannabis and cannabis prod­ucts, in­clud­ing medic­i­nal cannabis. Cul­ti­va­tors will pay taxes on buds and leaves they sell, which is ex­pected to be passed on to con­sumers at re­tail coun­ters, too. Lo­cal gov­ern­ments can slap on additional taxes.

In Los An­ge­les, for ex­am­ple, new taxes and fees could push up the re­tail cost for a small bag of mar­i­juana by as much as 70 per­cent. Op­er­a­tors fear hefty new taxes will drive con­sumers into the black mar­ket. The state ex­pects to bring in $684 mil­lion in pot taxes next year, with that num­ber in­creas­ing to $1 bil­lion in sev­eral years. Los An­ge­les has pre­dicted it could pull in $50 mil­lion next year.


Cal­i­for­ni­ans have grad­u­ally taken a more per­mis­sive at­ti­tude to­ward pot. Back in 1913, the state banned “lo­coweed,” ac­cord­ing to a his­tory by a ma­jor pro­le­gal­iza­tion group, the National Or­ga­ni­za­tion for the Re­form of Mar­i­juana Laws. In the 1970s, felony pos­ses­sion of less than an ounce was down­graded to a mis­de­meanor, then state vot­ers ap­proved mar­i­juana for medic­i­nal pur­poses in 1996.

The rea­son the state is mov­ing into le­gal cannabis is vot­ers wanted it, over­whelm­ingly. Propo­si­tion 64, which le­gal­ized the sale and cul­ti­va­tion of recre­ational pot for adults, passed in Novem­ber 2016 with 57 per­cent of the vote. There are other states with le­gal weed, in­clud­ing Washington and Colorado, but Cal­i­for­nia will be the big­gest by far. It is home to one in eight Amer­i­cans.


Pot will be le­gal in Cal­i­for­nia in Jan­uary, but it re­mains il­le­gal at the fed­eral level.

While Washington has kept its dis­tance from medic­i­nal pot in states where it is le­gal, Congress has yet to re­new a lit­tle-no­ticed rule that shields state med­i­cal mar­i­juana pro­grams from fed­eral in­ter­ven­tion. And At­tor­ney Gen­eral Jeff Ses­sions, an out­spo­ken op­po­nent of cannabis, has hinted at a pos­si­ble crack­down. The state’s black mar­ket is vast: An es­ti­mated 15,000 il­le­gal cul­ti­va­tion sites ex­ist in Hum­boldt County alone, a prized grow­ing area in North­ern Cal­i­for­nia’s so-called Emer­ald Tri­an­gle.


Not re­ally. Medic­i­nal sales are ex­pected to shrink, but not go away. In Los An­ge­les, medic­i­nal buy­ers will pay a lower city tax rate, which could be an in­duce­ment to stay in that mar­ket. Oth­ers are likely to stick with medic­i­nal prod­ucts they know, such as for sleep prob­lems or pain.

One age group caught in a gap be­tween med­i­cal and recre­ational mar­i­juana are those 18 to 20 years old. You have to be at least 21 to buy recre­ational pot, but medic­i­nal is le­gal for any­one 18 and older. Some in that age range are likely to con­tinue seek­ing medic­i­nal pur­chases.


Mar­i­juana plants are dis­played in Septem­ber at the Green Goat Fam­ily Farms stand at “The State of Cannabis,” a Cal­i­for­nia in­dus­try group meet­ing in Long Beach, Calif.

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