The Legislature should respect voters’ will on Amendment 64 and NOT re-enact failed regulation

By Robert J. Corry Jr.

Editor’s Note: The following message to members of the General Assembly appeared in an ad in the April 5 issue.

“Definition of Insanity: Doing the same thing over and over again and expecting different results. — Albert Einstein

In adding Amendment 64 to our State Constitution by an overwhelming 55%, Colorado voters were asked whether they wished to treat marijuana like alcohol. The campaign in favor of Amendment 64 called itself the “Alcohol Marijuana Equalization Initiative Committee,” and sold itself and the measure to voters as a proposal to regulate marijuana similarly to alcohol.

The recent piece from Michael Elliott, Esq. of the Medical Marijuana Industry Group (MMIG) in this newspaper highlights a fringe effort to repeat the insanity of the past, by foisting the failed Medical Marijuana regulatory model on Colorado’s new Recreational Marijuana market. If endorsed by the Legislature, this proposal would subvert the intent of Amendment 64, empower the untaxed and unregulated Black and Gray Markets, cost Colorado jobs and tax and licensing revenue, and harm the public interest. This proposal looks nothing like current alcohol regulations.

Robert J. Corry, Jr.
Co-author of Amendment 64

MMIG, which does NOT speak for any significant portion of the industry, refuses to divulge its secret membership list, and which did not even support Amendment 64, desires the identical Medical Marijuana regulatory system that the Office of State Auditor recently lambasted in a scathing analysis. Worse, the proposal not only repeats this failed system, but would prohibit any new entry into Colorado’s new Recreational Marijuana industry, by limiting 100% of new Recreational licenses to those already held by Medical Marijuana licensees.

Superimposing the current tired, old Medical Marijuana players on the new Recreational industry would be an economic policy blunder of epic proportions. Colorado’s current Medical Marijuana shops, many of which my law firm represents and who I know quite well, cannot satisfy the current demand from only 108,000 patients on the Colorado Medical Marijuana Registry. Although the owners and employees of these beleaguered shops work hard, for a variety of reasons including crushing and pointless government regulation, they struggle to keep enough marijuana inventory on the shelves for 108,000 patients. Since their entire business structure, size, and plant count, by law, is tied directly to the medical patients who designate each shop as “Provider,” they cannot serve the general Recreational market, which will number in the potential millions; every adult person in Colorado (resident population 5,000,000), plus any tourist over the age of 21. This industry is desperate for new blood and new competitors, having operated under a moratorium since July 2010 on any new players.

The MMIG proposal also includes the economically-illiterate and failed requirement of “Vertical Integration,” or Common Ownership, of producer and retailer. Vertical Integration has permeated this industry with the stench of failure and inability to bring product to shelves. A similar requirement would require grocery stores to own every farm where food is grown and harvested, every ranch where meat is raised, and every factory where processed food is made. A free market economic system cannot function well under such a bizarre mandate. Washington State’s Initiative I-502 legalizing marijuana, banned Vertical Integration because it wanted separation from producer and seller, and did not want market domination by any group of entities. Similarly, Colorado’s alcohol regulations separate producer, wholesaler, and retailer.

The current medical system also includes the arbitrary “70/30” requirement, that shops produce 70% of their own marijuana for retail, and can purchase or sell no more than 30% of it wholesale. The State Audit confirms this requirement is unenforceable. The current proposal includes the continuation of this 70/30 requirement, in addition to the protectionist prohibition on any ownership, investment, or capital from outside of Colorado. This State normally tries to attract business and capital here to create Colorado jobs. This unique barrier on out-of-state involvement disproportionally discriminates against immigrants and other minorities from outside of Colorado who wish to come here to pursue the American Dream of opening a business.

If government jackboots remain on the necks of regulated marijuana shops, then the unregulated and untaxed Black or Gray Markets will naturally and easily satisfy public demand, and undercut the over-regulated entities with better prices and quality. We specifically drafted Amendment 64 with a “safety valve”: the constitutional right of adults to assist each other in growing and distributing marijuana. As Sgt. Jim Gerhardt of the North Metro Drug Task Force confirmed in the Denver Post on November 16, 2012, “There’s nothing that prohibits 100 people from combining each of their six plants in one grow facility… It’s just how many 21-year-olds or older will you have claiming the plants. You do not even have to be a resident of the state or of the U.S.”

So demand will be met: marijuana will be legally grown, distributed, and used. But the harder the government squeezes the regulated market, the more of the marijuana will be unregulated and untaxed. We will all lose out, and Colorado’s effort to regulate marijuana will be a monumental failure.

Instead of attempting to repeal laws of supply and demand, the Legislature should focus on its actual responsibilities in Amendment 64, which specifically gives the Department of Revenue the authority to create the implementing regulations. We drafted Amendment 64 this way specifically because the Department of Revenue already regulates alcohol with a tried-and-true model that works and makes sense, not the failed Medical Marijuana model that failed its audit.

The Legislature need not work around the clock on implementing regulations, but should instead engage in the far easier task of excising from the Colorado Revised Statutes numerous provisions directly in conflict with Amendment 64. The Legislature should give freedom a chance, and resist the temptation to stifle this new industry and kill jobs with crushing regulation and un-American barriers to entry.

Robert J. Corry, Jr. is a Republican and Attorney specializing in Marijuana Law. He co-authored and campaigned for Amendment 64.