Colorado Made ‘Intelligent Decisions’ on Rollout of Legal Marijuana Market

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It may be too early to declare whether Colorado’s ongoing legal experiment with legalized recreational marijuana has been successful from a policy standpoint, but a new study from the Brookings Institution finds that the state’s implementation of the regulatory and taxing structure for legal weed has been largely a success.

Brookings’ John Hudak spent a week in Denver to interview various elected officials, regulators, industry officials and others involved in the rollout of Colorado’s legalized marijuana market since voters approved a November 2012 constitutional amendment authorizing legalization.

According to Hudak’s introduction:

At its heart, this report is about good government and takes no position on whether the legalization of retail marijuana was the correct decision. Instead, it takes for granted that Amendment 64 and its progeny are the law and should be implemented successfully, per voters’ wishes. The report examines what the state has done well and what it has not. It delves into why, and how, regulatory and administrative changes were made. Finally, it offers an evaluation of how effective the implementation has been.

Overall, the initial implementation of the state’s retail marijuana market has been effective in part because of the state “made intelligent decisions about regulatory needs, the structure of distribution, prevention of illegal diversion, and other vital aspects of its new market. It has made those decisions in concert with a wide variety of stakeholders in the state,” Hudak writes.

Leadership on the issue from state officials, cooperative work by task forces and working groups, adaptive regulations and “changes in culture in state and local government, among interest groups, and among the public” were cited as successes.

But strong government leadership was cited as a particularly important factor:

State leaders—from the governor to agency heads to legislators, as well as a variety of actors throughout the system—did something nearly unheard-of in an era of policy gridlock and political polarization. They set aside their personal views and coalesced around the idea that Colorado wanted legalized marijuana and it was their duty to make that a reality.

As for the “nuts and bolts” of Colorado’s regulatory structure, Hudak points to six important aspects of the successful implementation:

  • A seed-to-sale tracking system.
  • A vertically-integrated structure for the marijuana market.
  • The creation of barriers to entry for new marijuana businesses and relying on existing producers from the state’s medical marijuana community.
  • Limits of quantities that can be purchased.
  • Video surveillance requirements.
  • The distribution of marijuana tax revenues to enforcement, plus education, prevention and public safety.

More problematic areas of implementation were outlined in the study, as well. Hudak noted that the edible marijuana market opens the door to overindulgence—with marijuana tourists being particularly vulnerable—and the constitutionally protected right to grow marijuana at home allows the potential for some users to bypass the regulated recreational market. Also, the study found that Colorado’s existing medical marijuana system creates a “gray market” that can continue to be used by people without a medical need and skirt the higher taxes of the regular recreational marijuana market.

And what if the experiment goes awry down the road? “With its emphasis on flexibility, Colorado is taking out an insurance policy against unintended consequences,” Hudak writes. “Regulators, legislators, and other officials see implementation of marijuana policy as a fluid process in which early efforts must be continually reassessed and, if need be, revised to ensure effectiveness.”

Read the full report here.

(Image via Doug Shutter/Shutterstock.com)

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