Straight out of the gate in 2015, states with adult use marijuana laws on the books are now asking whether they still need their original medical marijuana laws and industries. Both Colorado and Washington are questioning the necessity of a medical marijuana system now that their regulated recreational marketplaces are in full force. Even Oregon, which legalized marijuana only a few months ago is hearing rumblings on this question.
When a medical marijuana state legalizes recreational marijuana under a regulated regime it ultimately will face the question of whether the two parallel industries (medical and recreational) should both continue to exist. This question becomes even more serious when the state’s medical marijuana industry is unregulated and uncontrolled. In those situations, the recreational businesses which are highly regulated and taxed do not think it fair to have to compete with their un-regulated medical marijuana counterparts. At that point, they usually start lobbying their state by pointing out that if the state wants to maximize its tax revenues from marijuana sales and ensure public health and safety, it should shut down the unregulated medical businesses entirely.
Unsurprisingly, competition between the illegal, the medical, and the recreational markets is pretty fierce at this point. Taxes on recreational marijuana alone are causing a good number of customers to access the existing illegal and medical markets. According to the Associated Press:
In Washington, the black market has exploded since voters legalized marijuana in 2012, with scores of legally dubious medical dispensaries opening and some pot delivery services brazenly advertising that they sell outside the legal system.
And the number of patients on Colorado’s medical marijuana registry went up, not down, since 2012, meaning more marijuana users there can avoid paying the higher taxes that recreational pot carries.
Both the Washington and Colorado governments are getting considerable heat from recreational marijuana businesses (and others) about their illegal and medical markets, and they are both looking at how they can rein in their medical systems and fix the big tax differential between medical and recreational marijuana without harming patients. But therein lies the rub. How can states equalize the tax structures between medical and recreational without negatively impacting legitimate patients who oftentimes lack the funds to purchase high-priced cannabis?
Various “fix” measures are on the table in each state; Washington’s Liquor Control Board is talking about increasing the number of licensed storefronts statewide and lawmakers are looking at massively updating the state’s existing medical laws. Colorado is planning to crack down on providers that give medical marijuana to those who should not qualify for it.
Alcohol once went through a very similar medical versus recreational dichotomy. During alcohol prohibition, one of the exceptions to the national ban on alcohol was its medicinal use as prescribed by a physician. One critical difference, however, is that the medicinal claims for alcohol were generally bogus, whereas there is little doubt that marijuana can be quite effective for certain medical conditions.
One thing is certain: no one state has legalization completely figured out and there is no “gold standard” that works for both adult use and medical patrons. Only time will tell for the fate of each of these marketplaces.