Experts discuss issues, opportunities as state preps for legal weed
As marijuana prohibition crumbles in California, the impact of recreational pot sales will be widely felt
In a little more than a month, adults over 21 will be able to purchase recreational marijuana at many California dispensaries, following the passage of Proposition 64 in November 2016. Medical pot has been legal since 1996 and policymakers have carefully watched other states undergo this process, so it’s unlikely that come Jan. 1 the state will go up in smoke. However, California has its own unique web of state and local regulations to contend with and could experience growing pains, according to recent news reports. San Francisco State University experts weigh in on how this budding industry will impact different sectors.
Antoaneta Petkova, Professor of Management
There won’t be a flood of new businesses once recreational marijuana is legal, said Antoaneta Petkova. “I see this more as an expansion of existing businesses,” she said. Petkova studied what happened to the marijuana industry in Colorado once the state legalized the substance for recreational use and she suspects the same things will happen in California. Many dispensaries opened up second or third locations just for recreational sales.
Current marijuana sales in California total $2.76 billion, and that’s expected to increase to $3.8 billion in 2018 and $6.6 billion in 2025, according to CNN.
For entrepreneurs looking to go green, there is help, Petkova said. The Arcview Group is an investor network based in the Bay Area that supports fledgling companies. It’s a place where people can pitch ideas and also receive coaching, she added. “It’s small businesses starting up and developing one single product, like a new vapor pen or a hydroponic system,” she said.
Liz Brown, Director of the School of Public Affairs and Civic Engagement (PACE)
In California, there aren’t a lot of people who get arrested for low-level drug crimes; however, the ones that are are usually black and Latino, said Liz Brown. From a social justice perspective, legalizing marijuana removes the ability of law enforcement to arrest people for marijuana crimes — one of the biggest ways racial disproportionality enters the system, she added.
“People don’t get prosecuted for these crimes in California, but they will get arrested and that’s a disruption to their lives. Legalization may not change the hyper-policing of certain populations, but it will take away one tool that’s been used to police them,” Brown said. “The hope is that all people are treated equally by the justice system. Right now, white people don’t really get arrested for marijuana, but they are the predominant users.”
Jim Dudley, Lecturer of Criminal Justice
Jim Dudley, a veteran San Francisco police officer, said Oakland’s marijuana Equity Permit Program, which some have referred to as reparations for the war on drugs, concerns him. The program gives people who have been jailed for pot in the last 10 years preferential treatment when applying for recreational marijuana permits. The program is designed to fix racial inequality in the cannabis industry.
This policy could put the public at risk, he said. “You’re going to have people with felony drug convictions running operations at dispensaries,” he said. According to a Human Rights Watch report, 97 percent of all federal drug convictions resulted in guilty pleas. “In some cases, violent criminals could have taken the pleas of non-violent, drug-related crimes as opposed to the other collateral crimes they committed in the drug trade,” Dudley said. “Vetting of individuals is going to be important.”
Other areas of concern for Dudley are the lack of an established level of impairment for marijuana intoxication and the possibility that the availability of marijuana could drive some sellers to the black market. “Some cities like Oakland and San Francisco see this as a boon in tax revenue, but if you over-tax products they end up on the black market,” he said. “In San Francisco, there’s the employee health tax, there’s overhead and the high price of real estate, so I don’t see the black market going away.”
Sheldon Gen, Associate Professor of PACE
California could rake in billions from taxes on recreational marijuana, according to projections from the California Legislative Analyst’s Office. There’s a 15 percent state excise tax on the sale of recreational marijuana, according to the legislation, and that money will be placed in the California Marijuana Tax Fund. Revenue will be distributed to a number of state departments, with 60 percent slated for youth programs.
Local governments can also tack on additional business-specific taxes with voter approval, said Sheldon Gen. He and a team of graduate students have been researching how cities could use the additional revenue to fund children’s services. “It’s money on the table — truly a rare opportunity to fund critical services that have been neglected,” he said.