What and whither post-prohibition cannabis politics after 2016?

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The outgoing president as a young man. Photo credit unknown.

by Dominic Corva, Social Science Research Director

The national landscape for post-prohibition cannabis laws changed substantially in November as eight states delivered change: four out of five legalization and four out of four medical voter initiatives. California, Maine, Nevada, and Massachusetts passed taxe-and-regulate recreational laws; and Arkansas, Florida, North Dakota and Montana passed medical cannabis initiatives. Only Arizona failed at the ballot box this year, and to understand why one would have to dig into my home state’s strange brew of right-libertarian-Mormon politics. Briefly, however, it’s important to remember that Arizona voters passed the most radical drug reform initiative in the US back in 1998, as it included other schedule I substances besides cannabis, but implementation was blocked by various state elements. It also has an extremely liberal authorization policy — I know Humboldt growers that use an online Arizona doctor who apparently has prescription authority in both States.

This analysis, however, is about how to make sense of cannabis politics in a national context after the Big Whale, California, has embarked upon its own tax-and-regulate journey. This comes tightly on the heels of a substantive update to its 1998 medical law, 2015’s Medical Cannabis Regulation and Safety Act (MCRSA). MCRSA actually is a year into developing and implementing regulatory rules that will “absorb” Prop 215’s tax and regulate provisions, so California already has a running start on the materialization of its legal landscape.

There are at least three aspects to cannabis politics I want to address. I want to use this space to open up questions and define terms, each of which can be developed further. I will introduce three here, and elaborate on one. This is because I started this essay intending to address all three, but the first one filled out into a post of its own.

First, now that the simplifying and “black and white” political discourse of election season is behind us, what are post-prohibition cannabis politics, beyond getting either tax-and-regulate or medical initiatives passed? The election season brought into sharp relief major differences amongst proponents of cannabis legalization.

Second, how do the surprising national election results, which bring a different political party with a very, very different administrative cadre to power affect how legalization landscapes play out at the State level? Whither the Cole memo, is the fundamental question.

And third, where do we go from here with respect to “medical” and “legal” discourses for post-prohibition politics? Can they be complementary, or will the polarizing election trend in which proponents of one have to discredit the other continue to divide whatever it is we call cannabis culture?

The first one: What are post-prohibition cannabis politics?

Post-prohibition cannabis politics refer to any approach for replacing the Federal/Global ban on cannabis as a Schedule I controlled substance. These include at least: rescheduling, descheduling, taxing, regulating, prescribing, recommending, authorizing, growing, distributing, banking, profiting from, losing money on, researching, and consuming cannabis sativa (hemp varieties included). This array of formalized stakeholders do not share a common interest, other than operating in a legal and policy environment associated with State-experimental “laboratories of democracy.”

The ecology of prohibition politics is much simpler and cohesive than the array of post-prohibition possibilities, but for the latter the main obstacles remain the Controlled Substances Act of 1971 and the 1961 UN Single Convention on Narcotics and Controlled Substances, which was updated in 1973 to complement the US turn to medical prohibition rather than the 1937 Marijuana Tax Act, struck down in 1969 by the Supreme Court in Leary v. United States.

Post-prohibition stakeholder interests diverge considerably. The benefits of State-legal cannabis experiments are popularly promoted as social, on the one hand; and financial, on the other.

“Grass-tops” funding for State initiatives from organizations like the Drug Policy Alliance, the ACLU, and the Marijuana Policy Project have shared an explicitly social political logic beyond “cannabis shouldn’t be prohibited”: criminal justice reform, usually with primarily racial justice benefits associated with mass incarceration.

Financial benefits to State experiments have two, maybe three, distinct and not always complementary logics. First, direct revenues go to both the public sector, through taxes, and to the private sector, through “profits.” The third is consumers. Indirect revenues accrue primarily to real estate, finance, and ancillary services.

In 2016, across the country, public sector coffers are empty. This is why arguments for “sin tax” rates resonate with policy makers. In Washington State, this discourse has primarily driven legislative changes from targeted social policy budgets (schools, research, and so forth) to the general fund, because Washington has been sued by the Federal government for not fulfilling its basic public education mandate.

In 2016, across the country, private sector profits accrue to “industry” at large but within “industry,” revenues are captured by retailers and distributors rather than producers of commodities. The US farm sector is an anomaly, given its vast subsidies that primarily benefit industrial domestic agriculture, at the expense of small farmers home and abroad. Even then, the basic story of our postwar economy is one in which huge retailers dominate commodity producers, seeking the lowest wholesale cost in order compete by providing the lowest possible prices to consumers. For the rest of the economy, this has happened by outsourcing production to places where labor is cheapest. This is called the “race to the bottom” by critics, and it certainly applies to cannabis as well, given the prohibition risk differential between cost of production and wholesale prices.

In 2016, across the country, consumers have consistently rewarded retailers who master the race to the bottom. However, the conscious consumer movement has gained substantial market share over the last decade or so: this refers to consumers who are willing to pay more for items that can be branded as, for example, “fair trade” or “equal exchange.” This is most obvious for coffee. Consumers have also rewarded “craft” or “boutique” commodities. This is most obvious in the Pacific Northwest with respect to craft beer and microbreweries.

The reason I say “maybe” to consumers as a class that directly benefits financially from legal cannabis lies between the “race to the bottom” and the conscious consumer movement. Anyone with experience in cannabis retail, of any sort, has to recognize that cannabis consumers include low-price seekers, on the one hand; and cannabis culture-oriented consumption.

This may be uncomfortable news to many in the cannabis culture, but the evidence doesn’t lie. Most of the market seems to be totally normal, American-as-apple-pie-at-WalMart, low price seekers. Oaksterdam founder Richard Lee broke the news way back in 2010’s Prop 19 initiative campaign. Lee, the primary funder of that initiative, told me the month before its fate was decided that the market looked a lot like the beer market, in which Coors and Bud take in the vast majority of the revenues. That hypothesis has been confirmed in Washington State, where controversial retailer Uncle Ike’s proudly embraces and extolls the virtues of a race to the bottom, high-volume, low-price approach that helps them lead the market. One could even hypothesize that this is what kept the Mexican exporters dominant until about 10-15 years ago, despite the subpar, mass-produced brickweed it made widely available. Consumers may want high quality cannabis, but they certainly want cheap cannabis.

So a class of cannabis consumers who constitute a majority of the market –let’s call them “commodity consumers” may benefit, but only if legal prices fall below gray- and black-market prices. That’s not a given, certainly not initially. This is for at least two reasons: State taxes, and diverse, non-flower product availability.

State taxes that are set too high create a heavy inertia to legal cannabis prices. It’s not that a 37% tax, a la Washington, can’t be accompanied by a $3 gram. But wholesale prices have to really plummet before that tax is adding only $1.11 to the gram instead of, say, $3.70 to a $10 gram. And the lower the price goes, at some as yet undetermined elasticity factor, the less State revenue becomes. And State legislators want to maximize their revenue.

Second, we use flower and flower prices as a proxy for what is by now a much more diverse cannabis product market, especially on the West Coast. Approximately 40% of medical cannabis revenue derived from concentrates and edibles. And concentrates and edibles have much more complex and expensive basic testing requirements — so much so in Oregon that small processors who can’t do larger lots or win the volume revenue race are in danger of outright extinction. On the plus side, legal cannabis processors in a mature system benefit from MUCH lower raw material costs than informal markets.

Finally, what’s good for low-price industrial consumers is not necessarily what’s good for consumption, in general. Cheap, mass produced food is not actually healthy relative to organic, small-scale production. If, as seems to be the case, legality is consolidating industrial approaches to production and consumption, then consumers are not better off just because they have cheaper weed. As always, though, the access question should be considered. Post-prohibition Cannabis won’t just be cheaper: it will be more accessible (Washington’s unnecessary medium-term retail bottleneck notwithstanding) , and that may be a social benefit.

I’m not sure, or rather, I’m sure it’s a mixed bag. Many, many people will now get the chance to develop a peaceful and healthy relationship with the plant that did not before. However, many, many people will now get the chance to develop a negative relationship with the plant because they pull a Maureen Dowd and freak out on edibles. I’m not one of those people that thinks cannabis works well with or for everyone. I’ve seen many otherwise positively disposed people get very anxious with even the slightest puff.

So, what are the post-prohibition politics of the plant?

They are the competitive and complementary negotiations of all the above reasons for and results of legalizing cannabis. Most concretely, of course, they are the power effects of the different stakeholder groups angling to maximize the financial benefits of a successful criminal justice reform movement. Cannabis culture, for which the exchange value of the plant is just one piece of the value puzzle, seems so far to have minimal input or effect on the formal politics of cannabis legalization. But the cultural politics are there, and they include what remain values heretical to modernity: herbal medicine, syncretic spirituality, whole earth consumption.

This is the depressing dynamic that makes me reluctant to engage in a public conversation that can only be about things that do not matter (much) to me: private sector ideologies of industrial production and consumption. This includes industrial-pharmaceutical approaches to cannabis as medicine. But even if it is ideologically depressing to me, it is of immense social value to understand how formal sector politics and markets encounter and transform a plant that isn’t just banned anymore.

I will turn to assess the other two significant contemporary questions for 2017 before leaving for the Emerald Cup in Santa Rosa next week. By way of transition, let me say that the complex ecology of politics and markets addressed here as “post-prohibition” isn’t terribly complex when it encounters the ongoing continuation of Federal prohibition, so how Federal prohibition changes is pretty important for everyone. And the new administration is likely to be at least a little bit discontinuous with the previous one.

So that’s next, the Federal prohibition landscape. After that, I will address how the relationship between medical and legal cannabis politics is changing, and plead for a “whole plant” politics in which they are not at odds.

 

The Endgame is Local

California Board of Equalization (BOE) crew, featuring Fiona Ma, at the end of the Light Dep tunnel on a Spring 2015 BOE tour.
California Board of Equalization (BOE) crew, featuring Fiona Ma, at the end of the Light Dep tunnel on a Spring 2015 BOE tour.

by Dominic Corva, Social Science Research Director

The mission of our nonprofit research organization is to “learn lessons from legalizing landscapes.” Endorsing or not endorsing legalization initiatives is not part of what we do, but given what I am about to say, it seems important to highlight my personal opinion — not the endorsement of this 501(c)(3) organization — that I am positively disposed towards the passage of all 9 legalization initiatives, plus all the medical ones, on ballots this election season.

That said, state-level legalization is one significant part of ending the war on drug plants as we know it. As lifelong cannabis grower, activist, and organizer John Sajo of Douglas County, Oregon keeps telling people, the endgame is local. Right now the Umpqua Cannabis Association is fighting a ban on legal cannabis cultivation in Oregon, a situation that illustrates the limits of state-level legalization and highlights how the endgame of ending cannabis prohibition is local. Let’s review why that is the case before critically examining intra-cannabis discourses for and against legalization.

It’s pretty simple. As long as Federal prohibition stands, and maybe even after, localities will be allowed to opt out of state-legal rules and regulations that permit cannabis cultivation, processing and sharing (not so much with consumption except with respect to where one can consume, interestingly).

This is fundamentally because local jurisdictions have the right to zone, period. They also have the trump card of suing States in Federal courts for their right to ban, outright, but even if they don’t do that, they can zone cannabis businesses out of the landscape.

Legal cannabis business owners will have to change or consolidate local political buy-in to realize the possibility (not the promise!) of actually operating a taxed and regulated business. There are at least two aspects to the endgames of local politics.

The first aspect to local politics is that formal zoning decisions are made by City and County councils. And those councils are responsive to the political constituencies that elect them; and stakeholder institutions with which they are already enmeshed. Law enforcement is probably the most significant stakeholder institution that has to buy in to the rules, zoning and otherwise, that affect the possibility of local cannabis legalization, because local law enforcement enforces local rules (as well as State and Federal ones, though discretion is fundamental to practices of enforcement and discretion is shaped by local enforcement culture as well as local political pressure to enforce or not enforce. Humboldt County, California is a great example of this. Law enforcement could pick and choose, on any day of the week, where and who to police, without ever running out of people to police. And that’s exactly what happens.

The second aspect to local politics is cultural. Local Councils are elected, and they respond to the organized expression of voters who elect them. They don’t respond, by the way, to unorganized expressions of voter interest. There are ways to be heard and engaged with; and there are ways to be heard and then marginalized as the result of how voters express themselves and to whom they seem to belong (desirables and undesirables, basically). Local voters organize around a variety of cultural values.

The variety of cultural values include basic opposition to cannabis because of stigma: “cannabis is bad.” It’s a form of bio-racism, really, and I mean that both literally and symbolically as many voters hate the perceived race of those who are associated with it, culturally.

But it’s not just the irrational bio-racist that stimulates the continuation of local prohibition. It’s the rational bio-racist voter, the one who voted for legalization, just not in their back yard. It’s the one whose local agricultural industry is impacted by rising real estate prices and competition for inputs, or even local industrial economic power. It’s the one who thinks that having cannabis businesses nearby drives down their home values. It’s the one who keeps reading about edible overdoses. And yes, it’s the one who is sickened by industrial greed, which has always been with us because greed has always been with us, but who is finally able to see it nakedly flying the flag of legal cannabis. It’s the voter that does not understand the relationship between cannabis prohibition and the institutionalization of racialized mass incarceration in this country. And it’s the voter who thinks that they are protecting the children — at least, their children, because they don’t understand how cannabis prohibition is incredibly bad for children and families who are already politically and economically invisible in this country: the poor, and people of color.

So, what are cannabis stakeholders getting angry at each other about? Not much of the above, and very little about what’s still to be done after legalization. Here are some observations about that:

  1. Voter initiatives are unlikely to fail or succeed based on how cannabis people, pro or con, decide to vote. That applies to growers especially, who represent such a miniscule percentage of the voting population as to be pointless. Yes, Humboldt County will vote no. Humboldt County also voted something like 80% for Bernie Sanders in the primary.
  2. Cannabis consumers are estimated to represent about 10% of the population. Latino voters represent 12% of the population, much greater in California — especially in Southern California, where they are predominantly against cannabis, period. This is cultural-religious, and goes wayyyyy back, since Mexico actually prohibited cannabis before the US did, and Latin American countries — despite what you might think — have prohibited cannabis and other drug plants for their own analogous reasons (hint: they have racial and class politics, too).
  3. The vast majority of the yes/no votes for legalization will come from normal political demographics: Baby Boomers (who gave us the drug war!), religious groups, women, people of color. These are the people to focus one’s energy on, not other cannabis people who disagree with each other.
  4. The Prop 64 organizers are definitely focusing on swaying non-cannabis voters; as well as doing a little hysterical stigmatization of totally insignificant cannabis voter blocs, like growers and medical cannabis retailers. These are two very different groups usually at industrial odds, with retailers having captured significant margins for the last 10 years as the wholesale price per lb dropped significantly while the retail price per gram barely budged.
  5. Eyes on the prize, yes or no on Prop 64-ers. Mudslinging contests make the endgame of local political work — which has years if not decades in front of it — much, much harder. Here’s a couple of ways:
  6. Yes on 64 people, when you stigmatize and paint everyone who opposes you with the same broad brush, you are cutting off your nose to spite your face. Greedy industry, onerous tax burdens, pesticide problems, corruption, problematic real estate, local bans and moratoria await you on the other side of State-legalization. In fact, most of the really greedy people from pre-legalization have enough capital to get into State-legal schemes. The people who won’t be able to be a part of it are the ones who have not been greedy. In fact, get working on barriers to entry to build bridges for historically marginalized groups because legality isn’t going to change that and probably will make it worse.
  7. No on 64 people, when you stigmatize and paint everyone who opposes you with the same broad brush, you are cutting off your nose to spite your face. This is the wildly successful outcome of your effort to Overgrow the State. You are the ones who domesticated cannabis agriculture — you are the ones who defeated external producers often associated with violent organized crime. You are the ones who kept the plant alive and available enough to make what’s happening now possible. You are the ones who risked life and limb every step of the way to do so. You may not have planned to end the war on drug plants (many of you actually did plan for that) and take away a key tool for unjust, racial, and genocidal State incarceration and punishment, but you made it possible.  This is your opportunity not only to own what you’ve done politically, but to finally bring Economic Justice to the Public Conversation in an age where all such organizing seems to fail for lack of funds.

I’ve tried to avoid calling anyone in particular out, and to avoid promoting anyone’s point of view in particular other than John Sajo, whose life and work embody the best politics of the plant to which I aspire, and I hope inspire others to listen with extreme non-prejudice. This is the moral ground on which I stand, but it’s also the strategically political ground on which I hope others can too. There’s a whole lot of behavior going on in the public discourse around cannabis legalization this electoral season, but implying that anyone who disagrees with you is evil or representative of broad positions only stigmatizes the people of the plant and postpones the endgame of the war on drug plants, which goes way beyond cannabis and towards a more ecologically healthy society.

 

 

 

The Salience of Dangerous Classes: a Prelude

Seattle Hempfest 2016  Hemposium panel moderated by Dr. Corva.
Seattle Hempfest 2016 Hemposium panel moderated by Dr. Corva (front). From Left to right: Karl Keich, Jeanne Kohl-Welles, Dr. Jim MacRae, Allison Bigelow, John Novak.

by Dominic Corva, Social Science Research Director

This post is an exercise in returning to themes initiated for the summer, just in time for the fall. My writing process has always been difficult and spastic, coming in torrents of prose or long dry stretches where for any number of reasons I just can’t complete a focused few paragraphs. The reasons themselves don’t matter, but there are strategies to shift states of incompletion and it’s time to deploy them. So today we’ll start with a little of where we left off, a little of where we are, and maybe we’ll get to a little of where we are going.

Where we left off:

The book project has evolved from one that centered the experience of “medical transitioners” to one that should centers the persistence of prohibition culture in shaping policy and market outcomes related to Phase I of Legal Cannabis in Washington. The biggest reason for this is that so many of my medical transitioners did not, in fact, transition — certainly not by July 1, and for several not at all.

The assumption that the stories would logically inflect on July 1, 2016, turned out to be unstable and problematic. The main way this was problematic was that it focused too much on ownership as an indicator of transition, when so many people who lost their livelihoods as relatively autonomous and entrepreneurial actors — owners included — have adjusted by finding a place in the legal market as waged workers, managers, and sales people.

Or, many have started to find a place. There are quite a few false starts in those stories, as people who once cultivated very autonomous or independent livelihoods find it pretty difficult to function in rigid, relatively poorly paid positions in the formal economy. Some are thriving, of course, but it has been surprising to me how many experienced, knowledgable medical/informal market budtenders have struggled to land a basic budtending job in the legal system.

Or, maybe it’s not surprising. Maybe I’ve been using the wrong tools to understand the cultural dynamics of transformation. Maybe it’s not about, or only partially about knowledge and experience. If it’s not, then we might need to think outside the toolbox at hand. We might need to think structurally, rather than individually, about the cultural politics of transition and transformation.

To do that, we are going to need to think about the politics of social exclusion in a way that decenters cannabis itself. After all, if dynamics of inclusion in the new market were about “normalizing” cannabis, as I keep hearing from self-identified activists, then we should see some sort of demand for people who really know and have experience with cannabis in the new legal market. We should see policy that caters to them, in deference to the vast ignorance about the plant present in “normal” society.

The fact that we don’t — that we have seen the absolute opposite — highlights a fundamental contradiction that shapes weird policy and market dynamics in a field that’s supposed to be characterized by “normalization.” The State clearly wants to normalize cannabis commerce, because normalization means taxation and therefore revenue capture in a cash-starved public sector. I 502 market actors — increasingly defined by investor-owners — want to normalize cannabis commerce, because normalization means income or return on investment (ROI).

There are a few clearly defined limits on “normalization” shared by the State and investors: normalization means “responsible adult (21+) consumption.” Normalization means at least the appearance of regulation, although it’s pretty clear that the promise of regulation is a work in progress. The former is probably the single greatest inhibitor of the latter, as I have pointed out many times that the “black market” is significantly under-21 consumption and has been since the 1960s.

This contradiction between youth culture as the driving force of cannabis market creation and the impossibility of its normalization under a “like alcohol” approach to policy begins to point us in the direction of another toolbox, other tools for understanding dynamics of exclusion under evolving conditions of cultural prohibition. It decenters cannabis by shifting our analytic optic towards culture and society at large: what about the children becomes what about the cultural economy, in which intergenerational conflict plays such a significant role.

The question resolves into less blurry focus when that question shifts, for me, into the following: why must cannabis people be legally treated like children? Children aren’t allowed to make their own decisions, they aren’t responsible, they must learn discipline, they must be watched over and controlled because there’s something about them you just can’t trust, because they haven’t grown up yet, because they aren’t responsible.

The problem here is not the children, or in this case the culture that gets treated like children: it’s the social consensus about what’s responsible or not — what does normalized responsibility look like? Who bears the burden of that cultural adjustment? Is it as simple as translating alcohol responsibility and alcohol culture to cannabis responsibility and cannabis culture? Is it about “law and order,” when legal cannabis policy poses such an existential threat to the foundation of drug war policy — which is demonstrably racist, exclusionary, authoritarian, and genocidal?

What would it mean to turn policy discourses of responsibility and normalization on their cultural heads — to think about the children as having been right, all along?

We are a very long way from doing any such radical, revolutionary thing, of course. But it would mean re-centering the radical purpose of I 502 legalization, which was about ending the authoritarianism and harms of the drug war itself, rather than excluding the people whose “irresponsible” behavior provided the cannon fodder that brought us to the possibility of social peace. Of course, it’s not so simple — excluded people are welcome in the new legal landscape, as long as they can clean up their acts, behave responsibly, be a normal wage worker, and so forth. So what’s the big deal?

The big deal is that it’s not about the normalization of cannabis, not about the exclusion of cannabis experience from policy and market leadership. It’s about something much bigger and broader — the development and production of socioeconomic exclusion itself, in society at large.

And that’s where we are going with this, readers. We have to engage social theories of the underclass, the lumpen, the dangerous classes, the precariat. We have to think about this in the broader context of social change. Where the heck in the world are we, after all? What is the world coming to? How can we make a difference that matters to more than just cannabis owners and consumers? Because if we aren’t doing that, we aren’t doing cannabis and social policy, that’s for sure.

 

Phase II of Legalization Begins at the End of Accessibility

Map of relative medical to I 502 storefronts as of January 2015, by Dr. Richard Morrill, Professor Emeritus of Geography, University of Washington. This map was made for Senator Jeanne Kohl-Welles during the SB 5052 legislative session. It was unsuccessful then, but the basic point remains.

by Dominic Corva, Social Science Research Director

Today is June 30, 2016, the last day of two eras. It’s the last day of Medical Cannabis as a tolerated parallel cannabis access system in Washington State, and the last day of Phase I of Legal Cannabis in Washington State. Let’s review what’s changing with respect to “Access,” a topic I was asked to address on Sunday, June 26, at the “22 too many” Veterans for Medical Cannabis fundraiser in Olympia.

  1. Storefront access. In the fall of 2015, BOTEC found 404 medical cannabis access points across the state, according to information provided in a public information request. 73 of those were “not verified” although they were listed because their sources, including the City of Seattle, were found to be fairly credible. This number is probably below peak, given that access points began to close starting in July 2015, when SB 5052 went into effect. As of last week’s WSLCB numbers, 179 I 502 retailers accounted for 98% of the previous three month’s statewide revenue. A large percentage of these applied for “medical endorsements,” but let’s just conclude that the state went from 404 access points to less than 179 on the day that the latter was supposed to provide uninterrupted access to the State’s medical patients.
  2. There is a geographic dimension to this access reduction, which we are working on by mapping those 179 stores relative to those 404 stores. Those maps will be in the forthcoming book, but are not made yet.
  3. Of those “less than 179” I 502 retail stores that are open and doing substantive business, a very small percentage were actually transitioned from medical cannabis. In Seattle, a recent study found that 3 of the 21 “second wave” retail stores went to existing access points at the locations they used to operate. We found that about 6 more were existing access points that relocated. 9 out of 21 is still an “F” for “Failure to meet the intention of SB 5052 to create a second window for existing medical access points to transition into I 502.” Lawsuits are ongoing. But if the WSLCB Failed in Seattle, where access points had perhaps the most favorable circumstances, we can hypothesize with some confidence that they Failed in the rest of the State. We are adapting the methodology of the CBE report to test that hypothesis, and those results will be published in our forthcoming book.
  4. If there were at least 400 storefronts a year ago, there are thousands of individual patient grows that are affected. The State may not have liked medical storefronts, but it has never understood the decentralized market that supplied and supplemented it. Home grow access with an affirmative defense has changed dramatically. The upper limit of patient or collective garden home grows was 15 per patient, up 60 plants with 4 or more medical authorizations. Maximum allowable plants (this includes seedlings and clones!) is now 4 or 6 if one registers with the WSLCB. A registered “cooperative garden” can have up to 24 plants, but not only do they have to register they have to master Biotrack, a feat that’s barely been accomplished by I 502 businesses. I have been asking, but to this date I am not aware of a single cooperative garden that has registered with the WSLCB. If you know of one, please let us know.
  5. Access to authorizations became much more difficult once SB 5052 passed, which intimidated existing doctors who had the expertise and willingness to authorize cannabis for patients. Now, “primary care physicians” have to be involved — and there’s no State requirement that primary care physicians be trained in basic cannabinoid science nor that they be willing to authorize either way. It’s also a class thing: who has primary care physicians in a country when so many have no health care at all, and usually use the health care system only in an emergency?

One could argue that these access concerns are significant only for a small minority of former access point patrons. That’s like arguing that since only a few people have physical disabilities, we don’t need handicap parking or ramps or any of the other ways our infrastructure for the many accommodates the needs of a few. Whether you believe, as our policymakers do, that 90% of medical cannabis patients are “fakers,” or that all cannabis use is medical, the wholesale destruction of access for even that 10% is unconscionable.

It’s unconscionable because it wasn’t necessary, on the one hand, and even if one believes it was necessary, the I 502 system is still too immature and underdeveloped to do it now. The WSLCB proclaims that over 300 retail stores have been approved and we are on our way to 550, but the numbers on the ground say that only 179 retail stores were actually doing business at the beginning of Phase II of Washington State legalization. The State managed to open less than half of its original 335 store allotment over three years, and that includes quite a few “Second wave” retail stores that have been opened in the last 6 months.

Today is a tragedy for common sense and evidence-based policy. You don’t have to like medical cannabis to understand that this is at the very least an extremely premature step, at the very least. SB 5052, the “Patient Protection Act,” has dismantled patient protections without guaranteeing continued patient access, which was just as much a mandate in the law as shutting down storefronts. It’s a bit of a catch-22 for the WSLCB, which was charged with this impossible task (and yes, let’s say the Board and those it answers to supported the general thrust of SB 5052).

What’s going to happen next? A hard legal line has been drawn down the middle of a 20-year social and political phenomenon. In some places, like Seattle, that hard line will be enforced only upon complaint, and it’s likely that civil charges will be preferred to criminal ones. But in many other jurisdictions, those complaints will be aggressive and it will look like prohibition did 20 years ago. It’s also likely, according to former legislator Chris Hurst’s presentation to the Alliance a couple of weeks ago, that complaints will mostly be coming from I 502 retail shops looking to eliminate competition.

There’s no going back, absent some unexpected lawsuit outcomes whose day in court may eventually come. I 502 will grow to maturity over the next few years — I’d say at least 4 before they begin to allocate retail right.

The challenge for those who wield the politics of access is simple. You have to convince the legislature to pass a “home grow” provision, and it doesn’t want to do that for at least 2 years. If patients and patient advocates can unite around this single issue and push the legislature to do something that legislators have clearly stated they don’t want to do, yet, many of the basic issues related to medical cannabis access can be resolved almost entirely. Washington State will eventually have a home grow provision, as all the other legal states do and as California will under AUMA (or legislative action if AUMA doesn’t pass). In the meantime, thousands of previously protected people will in all likelihood live their lives in fear and stress because the law has changed, even if few will get arrested and prosecuted.

It’s that simple. What’s done is done: access for patients has been disrupted against the letter of SB 5052. The politics of access must consolidate around a sane homegrow provision in 2017. There are six months to organize. Go.

 

Imagining Cannabis Communities

BenedictAnderson

by Dominic Corva, Social Science Research Director

Today’s post examines the meaning of “community” as it intersects with both “culture” and “cannabis.” Let’s start with anthropologist Benedict Anderson’s concept of “imagined communities” (the title of his 1983 publication). Anderson’s big contribution to social theory reconstructs the meaning of community as a signifier of common identity, especially as it applies to the emergence of national identities. Really he was taking part in a social theory turn that was about how social identities are constructed and performed, rather than biological or natural. A good example of this is the concept of “race,” which before the 20th century was a term applied to ethnic and national identities rather than common skin tones: the Irish race this, the Italian race that, and so forth. It was all about the process of defining Selves and Others, and usually had a territorial as well as biological connotation. A community is a group of people who are imagined to be like each other, and nations are “imagined communities” in the sense that all their differences get subsumed under a few common identity markers, one of which is having a place of origin or belonging in common.

But having a place of origin or belonging in common, and having that marker of identity mobilized, can often mean that a great deal of internal difference is being erased, often violently. Okies from Muskogee can only be Okies from Muskogee if they don’t smoke marijuana or take LSD, according to Merle Haggard, but Dr. Sunil Aggarwal has often contested that assertion. If it’s true, then he doesn’t get to belong to the place he grew up. Hence nationalism — and all other imagined community identities — are political: who gets the final word depends on power in social relations, not who’s technically right. The power to define community is the power to include or exclude.

So what’s the cannabis community, exactly. I experience a lot of positive and a lot of negative meanings associated with that post-ethnic identity marker, which can be and sometimes is framed in terms of nationalism. Some mourn the loss of community as cannabis becomes commercialized and inserted into the formal capitalist economy. Some celebrate the opening of cannabis community membership into the ecology of legally sanctioned communities subsumed under national, State, and local identities. What’s the Washington cannabis community like, and so forth.

The challenge for this post isn’t to define what “the cannabis community” is or might be, though I have a few strong feelings about it. The challenge for this post is to identify community formation as an ongoing and vital part of social survival. Communities are always being lost, broken, made, healed: they are created by performing common ground, and they have to be constantly re-created and renewed to gain political and economic purchase on the ecology of community formations in society that aren’t punished for existing.

I must admit I’m pretty ambivalent about “cannabis community” as a singular concept, sweeping up difference under the rug of community. I find that when it’s singularly deployed it tends to be either deployed as a brand, on the one hand, for getting people to buy things; and as a stigmatized group that isn’t allowed to participate in “modern” legal cannabis markets, events, or even spaces outside one’s own home on another end. I find it more useful as a term of aspiration or auto-critique, usually associated with efforts to be together on something or an acknowledgement that the failure to renew community and mobilize it in a productive fashion has created missed opportunities for the cannabis peace movement from which we should learn.

That’s not terribly specific, I know, but this is not a space for dictating how folks who’ve found cannabis therapeutic in their lives should shape their identities. I’m specifically anti-identity in many ways: I’m less interested in what we have in common than how we can peacefully coexist despite our differences, because we are interdependent at the very least in the spaces we share.  But the practice of calling a community together can help considerably in the search for peaceful coexistence.

The way we are organizing for peaceful coexistence involves the production of popular education events. Our Terpestival is a whole plant conference: the focus on Terpenes helps decenter approaches to centralize the meaning of cannabis, and therefore what cannabis communities can be. That problem of centralized meaning is not just a negative power function — “dangerous drug”, signifier of “Bad Actor,” and so forth — but a positive power function with negative effects. The focus on low cost THC production for prohibition markets has dramatically limited non-cannabis communities’ willingness to step away from stigma and let the plant be a plant.

That model, interestingly, is now being perpetuated in Washington’s legal system for public and private reasons. The State wants revenue, and it gets the most revenue when retailers copy the prohibition market’s tendencies toward highest THC and lowest prices. At the same time its onerous regulations make THC information on the label the most reliable information available to consumers (and budtenders) who aren’t allowed to smell the flowers or sample the product. Combine that with the McDonald’s fast-food high volume business model and it’s no wonder cannabis is becoming just another commodity here. And communities based on commodities have a name: industry. Not much room for cultural difference and community formation there, except as ways to brand, market and sell things.

Which is, I suppose, the proverbial American way. It’s the familiar same-old centralized national identity subsuming all of the differences that constitute our social ecologies under the generic flag of consumer identity. It works, for a lot of people in the cannabis industry — especially the new ones, intent on producing a tornado of creative destruction out of which they build their empires of exclusive wealth and individual glory. I’m just not into it.

But it’s not enough to be “just not into it.” If I want cannabis community — and I desire a cannabis community of decentralized differences that peacefully coexist — I have to create spaces where other people can understand what I desire and desire it with me. Also at the same time I have to navigate the social ecology of acceptable and tolerated communities who feel threatened by my cannabis-positive values. I have to understand what they are afraid of, and not get frustrated that their fears are irrelevant even if they aren’t based on evidence. And I have to find and work strategically with people who share my values and are able to act on them.

This last point is crucial. The re-criminalization of medical cannabis in Washington State has meant that for the last year at least, people who share my values — chiefly, that cannabis is a plant with many, many beneficial uses and the problems attributed to it are caused mostly by its prohibition and stigmatization — have been losing their jobs, losing their margins, and transitioning to a new system in which margins are vanishingly small and controlled by people who put profits over social peace. Washington’s model of legalization has certainly made cannabis communities everywhere more afraid of legalization, and that can’t be a good thing.

It’s not a good thing for a lot of reasons, but I’ll point out an especially Big One. Cannabis legalization is first and foremost about getting people out of jail and ending the drug war — both of which affect communities of color disproportionately. It’s not really about cannabis, it’s about the practice of prohibition — which was never about cannabis, but about social control. We need legalization to happen to end the drug war. It’s that simple. But we need models of legalization that care for the hundreds of thousands of people that see themselves part of a community that is under attack. There’s no reason why ending the drug war can’t also promote livelihood continuities and broader spaces of social peace. No reason at all.

But there are no cannabis peace stakeholders at the table, because cannabis communities have always been marginal to society. They aren’t at the table even to write initiatives anymore — that process is clearly being privatized. That marginality is cultural, not just “forced” upon cannabists: cannabis consumption, production and distribution under conditions of prohibition have been carried out largely by people who are culturally disobedient — the counterculture.

This is a fundamental tension that prevents cannabis communities from having a voice in how things are changing. What’s to come is going to depend on how people imagine their communities, and whether those people find a way to act together and actually perform those communities.

 

Cannabis, Capitalism, Creative Destruction

polanyi
Economic Historian Karl Polanyi

by Dominic Corva, Social Science Research Director

In “The Great Transformation” (1944) economic historian Karl Polanyi considered the rise of the international capitalist order out of the historical conditions set in motion by the collapse of the West’s fuedal-theocratic order. Polanyi’s story elaborated a key analytical concept for our times: “creative destruction,” the process whereby growth and global “order” were created by destroying the lives and livelihoods that depended on that order — that political and economic liberalism did not come from nowhere, but built with and upon the remains of social orders everywhere. This was not strictly a moral critique, but an analytical one: that it happened matters far more than what one thinks of the result. It can however guide us in our search for peaceful cannabis policy.

Without getting too “ivory tower,” I want to use this post to consider the concept of creative destruction as it applies to current cannabis markets and social orders. The movement to end prohibition has little to do with the movement of previously informal markets, people, and knowledge into the “normal” routines and practices of capitalism, but it is clear that cannabis market legalization (different from cannabis legalization) involves a radical restructuring of human lives and livelihoods. For every job created in legal cannabis, an “informal sector” livelihood has been destroyed, even if that job is occupied by someone previously operating in the informal market. For every giant, investor-owned warehouse that becomes regulated (in theory, anyway) and taxed, dozens of small producers have been put out of business. This is certainly the case in Washington, but does not have to be the case elsewhere.

The closer a State gets towards bringing informal markets into the system, the less social impact this destruction has on the existing order. As we put thousands of independent owner-operators out of business, it’s important to remember that these folks were previously able to pay their rent, bills, and groceries, and now they can’t. This creates a social problem that the State of Washington is clearly nowhere near being concerned about, but affects our neighborhoods, our churches, our schools, and our stability.

This isn’t just the case for home growers. It’s especially the case for minority-dominant neighborhoods, where white-owned and operated businesses are putting people of color out of work — people who never had a chance, at all, to be part of the new legal markets given the incredibly high barriers to entry and short, closed windows to even apply.

One thing about medical cannabis markets — as ubiquitous and apparently offensive to policymakers as they were — is that even the “bad actor” access points that barely catered at all to patients did everyone a major social service. They got a lot of cannabis off the streets and into an orderly space. The lack of formal regulation made barriers to entry extremely low, and plenty of folks who can barely function in the normal social order were able to get and keep jobs that made them happy. Some of that was the ability to consume cannabis while they worked! That’s also been destroyed by I 502 and its legislative changes, so much so that I 502 businesses have trouble educating their employees and providing samples.

But the destruction of medical cannabis businesses is most certainly creating non-I 502 jobs, too. Black market job creation is happening, possibly as fast as I 502 job creation, and those aren’t the jobs anyone wanted to create, on the one hand, or go back to, on the other. Given the State’s interest in destroying the black market, I’m pretty sure this isn’t an outcome that the State wants either. At the same time, white-owned retailers who are tone-deaf to the experience of gentrification are stoking the fires of neighborhood resentment.

Let’s consider those I 502 jobs as a mixed bag, though, not just the colonial expropriation of skills, time, investment, and lives by Big Money investors and real estate sharks. Informal markets are notoriously volatile, and being an entrepreneur reliant upon handshakes instead of contracts can be incredibly risky and stressful. Those handshakes, when they do work out, are incredible: they replace credit and threats of lawsuits with trust and human, face-to-face, construction of interdependence. And let’s be clear, there would be no informal cannabis markets now — no formal ones either — if those networks of trust and outlaw community didn’t pay off more often than not.

One more extremely socially optimal outcome is associated with I 502’s “creative destruction” should be highlighted, and it’s a doozy as far as I’m concerned. In Washington, we are replacing a mostly indoor, import cannabis market with what will eventually be a mostly outdoor, environmentally friendly and local one. Eastern Washington is experiencing the beginnings of a sustainable agricultural industry that fits very well into its agriculture-dependent social orders. Virtual ghost towns are being revived: the city of North Bonneville has pioneered a public-private cannabis partnership that means a future instead of extinction. The latest numbers I’ve received from trusted sources indicate that we have a ways to go, but considering that Washington State had so little sun-grown, ecologically sustainable cannabis before I 502 was passed, we’ve come a long way.

The broader implication of these kinds of creative destruction is clear. If States simply make bridges for the previous order to come in and own their own experience, skills, and livelihoods –rather than crush them through unnecessary legislative fiat — the social peace can be optimized. We live in an incredibly and increasingly unequal society, and prohibition was a tool for making that happen. Post-prohibition markets must not reinforce that process. It’s not good for anyone. Let the livelihoods transform themselves, instead of being thrown away like the disposable citizens they seem to be.

 

Legality, Medicality, and Good/Bad Actors

CASP T Shirt

by Dominic Corva, Social Science Research Director

The previous conceptual post really helped me find a way to engage with complex intersections without flying too far off the ground. Today’s post is an effort to deal with the “moral panic” phenomenon around medical cannabis in Washington, and elsewhere. I start with the assumption that policy that is created in response to moral panic is not good social policy, because (a) prohibition morality stems from fear not science and (b) in order to leave prohibition behind — the urge to punish our way to public health — we have to leave prohibition culture behind. And prohibition morality is perhaps the foundation of prohibition culture. It’s the equation of law with justice absent any critical reflection or nuance. If one is doing something legal, then one is doing something good. That attitude got us to mass incarceration and the politics of fear. Here’s a series of connected engagements with intersection of legality, medicality, and the moral distinction between Good and Bad Actors.

  1. Legality is a technical term, not a moral or ethical one. This is helpful to keep in mind as the State of Washington continues to deploy it as a moral or ethical one — State-legal cannabis is constructed as “good” versus “bad” medical and black cannabis. The logical problem: State-legal cannabis is Federally prohibited but tolerated under interpretations of the Cole Memo. Even those who argue that legality connotes moral superiority — those that disagree with the first sentence — have to face a simple logical argument: any moral or ethical quality associated with State legality is cancelled out by its simultaneous association with Federal illegality.
  2. The basic premise of ending the war on drugs rests on the assumption that laws can be unjust, and therefore morally wrong. The argument about whether legalization can be unjust (not that it is, or is not) is therefore supportable. The argument that legalization can also, at the same time, be just is also supportable. Efforts to critique legalization are not necessarily against legalization.
  3. So, technically: regulation and tax collection are the two main State practices of legalization. The active participation of the State in these two ways constitute what we mean by legalization. There are many dimensions to this participation: altering the legal code is both an end to the first step and the beginning of a network of practices associated with implementing legalization. The implementation of legalization — system creation, output and maintenance — is and always will be an ongoing process.
  4. Technically, this time with respect to medical cannabis: since “medicine” is not a state monopoly, medical cannabis means many, many things. For our purposes here let’s distinguish between medical state laws and “legal medical” state laws, since the former came first. Medical state laws are “decriminalization” laws for which the state plays no active implementation part. “Legal medical” laws require the active participation of the state via regulation and/or special taxation (independent of sales taxes, for example). The core of Washington’s current medical cannabis controversies stems from the State’s unwillingness to transition from medical to legal medical in 2011.
  5. Technically, this can be avoided in every state that adopts “legal medical” either as its first step or as a reform (see California); and then using the existing medical legality to develop (not replace wholesale immediately) the pre-existing legal system. Oregon’s decision to allow and tax over-21 nonmedical purchases at its medical retail points is one example of this. Technically, if the starting conditions for legal medical were unjust, this transition will not necessarily be a socially optimal one.
  6. Oregon is complying with the same Cole memo as Washington, so model variation can’t be explained by that. There was no technical reason why Washington’s medical cannabis system couldn’t have been more slowly transitioned, as the I 502 system continues to come on line. This is not the same as an argument that medical should have remained unregulated. “Regulation” as a practice as opposed to a concept deserves far more critical attention than I can give here.
  7. The illegality of medical cannabis under (some) State laws is now being used to stigmatize and exclude cannabis people by implementing high barriers to entry, while attempting to bring the plant as a commodity into a regulatory framework. That stigma is not necessarily new, and not confined solely to medical cannabis. In fact, the stigmatization of medical cannabis seems to be the re-enclosure of black market cannabis stigma to include informal medical cannabis markets. Prohibition culture never stopped fearing a stoned planet, and that fear is now being encouraged and amplified by legal cannabis militants. Pointing this out does not mean I conclude that “all cannabis markets are good.”
  8. I will say that the closer the consumer is to the grower, in any cannabis market, the easier it is to sort the good from the bad. The distance between consumer and farmer is a function of two things: prohibition, and the fact that most of the rest of the formal economy has been increasing that distance since the Industrial Revolution.
  9. Legal cannabis markets and actors are not inherently “good actors,” nor are they inherently “bad actors.” The legal economy is filled with bad and good actors — many of them both at the same time. The Gilded Age philanthropists whose names are plastered all over our urban landscapes were a symptom of massive inequality, against which the Labor Movement formed. Our second Gilded Age is no different.
  10. Medical cannabis markets and actors are not inherently “good actors,” nor are they inherently “bad actors.” Our medical system in the U.S. is totally commercial, a far cry from the single payer systems of most of our peers. Our herbal product markets are virtually unregulated. Our televisions give us medical advice. Our diet fads rage from year to year. And we are on more pharmaceutical drugs per capita than any other society on Earth. If there is anything nonprofit or community-oriented in a medical marijuana system, then our medical marijuana systems are far more socially conscious than virtually every sector of the formal economy that might be related.

There’s a lot of conditionality and open-ended starting points for engaging with prohibition culture, which is coming now not just from prohibitionists but legalization stakeholders. It should be clear that this critique does not apply to legalization stakeholders en masse. I have no idea how prevalent prohibition culture is amongst legalization stakeholders, but enough of them so that we are getting a socially violent transition via policy. It also should be clear that medical cannabis markets and actors are not necessarily less greedy than the level accepted for non-cannabis markets and actors. Neither of those facts should get in the way of basing policy on facts instead of fear in Washington State.

Contingency, Canopy and the Producer/Processor Application Process

Inventory June 15 final

by Dominic Corva, Social Science Research Director

Last week I focused on how the retail application process, however planned, has had to be adjusted on the fly based on unexpected applicant phenomena. Our Medical Transitioners represent, by contrast, a segment of the applicant population that was expected by the LCB, and who may have initially designed their rules in anticipation of their participation. The LCB has had to adjust their rulemaking processes — all of them — significantly based on outcomes they did not, and perhaps could not, anticipate. This post sketches that phenomenon as it applies to “Producer/Processors.”

Before we begin, let’s establish that the formation of 3 different kind of licenses (producers, processors, and retailers) reflected a segmentation of the legal cannabis supply chain that was not balanced so in the underground and Medical markets. Many access points started out at least partially vertically integrated, as an extension of underground gardens and gardeners. Many Medical businesses were collective gardens (and networks of these) that vended to Access Points. And many Medical Cannabis brands developed from singular enterprises that grew, processed, and branded an array of products besides flower.

The tripartite division of licenses developed by the LCB meant that initially, our Medical Transitioners had to figure out what they were and how they would specialize in the I 502 market. So even given the regular input the LCB sought from Medical Collective Gardens like Solstice and Dama at the beginning of their rulemaking process didn’t necessarily give the bureaucracy a clear picture of who would be applying for what, and how many. The process was fraught with contingency and unexpected outcomes, rather than designed and executed in a way that could either benefit or damage existing actors. The purpose of our Producer/Processor chapter, as well as our Specialty Processing chapter, highlight just how uncertain the landscape was for everyone, and how that posed particular challenges for Medical Transitioners.

The evidence considered stems from the fact that the LCB always received far more applicants than it anticipated, for all of its licensing windows, and that a large percentage of these came from applicants that were not ready to actually open or operate their licenses for a variety of reasons. This conclusion is even more stark for Producer/Processors, and is a bit simpler to discern through an analysis not only of applicant numbers, but how these translated into canopy potentials.

That’s because the LCB’s own rules anticipated 2 million square feet of canopy would capture 13-25% of the cannabis consumption market in the first year of retail operation, based on initial BOTEC analysis. Those numbers are easy to identify and break down. By those calculations, it would take four or eight times as much canopy — 8 million to 16 million square feet — to meet 100% of the State’s adult consumption market. That potential canopy was far exceeded in the first round, and sort of only, application round. But only a tiny percentage of those applications were ever able to open, and it appears that of those that opened most have fallen far short of their maximum allotted canopy.

The 30 day application window started Monday, November 16, 2013 and lasted till December 20, 2013. The LCB received almost 3000 producer applications (processor applications usually but not always accompanied producer applications). More than 900 of those applied for the up to 3 licenses permitted by rules. The resulting potential canopy from those applications dwarfed the LCB’s 2 million square foot goal, and in fact exceeded the upper limit that BOTEC had calculated as sufficient for the entire State’s supply. This unexpected development immediately resulted in two significant rule changes.

First, all applicants who applied for more than one producer license were allowed to move forward on just one of them. Last month, the LCB made that change permanent, but with one caveat: starting in January 2016, all licensees would be permitted to acquire up to two more producer licenses by purchasing them on the open market. Over the course of three years, many licenses were acquired via “minority” partnership by existing licensees and new venture interests, a point to which I will return in a moment.

And second, the canopy allotment for each application was reduced by 30%. It was restored last fall, across the board. Let’s discuss the results not only up to now, but how those results threw LCB projections out the window very soon after retail stores opened in July 2014.

Eleven months after the application window opened, LCB director Rick Garza reported that 267 producer/processor applicants were either approved or had begun the process of approval, and that the canopy represented by that population was 2.8 million square feet, about 50% more canopy than their target date for having 2 million square feet of canopy … seven months ahead of schedule. Retail stores had only been open 5 months at that point. Of course, the fall harvest data indicated that about 70 of 182 approved licenses were actually producing and of that number, seven producers accounted for more than 50% of production through December 2014, of which most of it was the fall harvest. Six of those seven were outdoor Tier 3 producers.

This incongruity demonstrates the difference between LCB accounting and real production capacity, which has always been difficult to determine. It’s clear that most producers struggled to get off the ground once they were approved, and the ones that did averaged a very low percentage of their maximum possible canopy. As a result, the potential canopy of the system itself has far exceeded actual production.

This was difficult to “see” as late as December 2014, given the relatively high prices for flower in the few retail stores that struggled to stay open with so little product on the shelves. But the Fall outdoor harvest, which was driven by seven (!) outdoor producers, created an inventory glut that allowed retailers to open, and stay open, for good — and with lower and lower flower prices. Edibles and concentrates remained rare on the shelves until July 2015, when the tiered tax structure choking intermediate supply chains was replaced by an end tax through 2166, 5052’s companion bill.

The inventory glut stabilized about six months later, when monthly indoor production began to exceed monthly retail inventory, and was probably finalized after the Fall 2015 harvest when outdoor’s annual boost created, essentially, a bottomless inventory for the limited retail landscape to exploit.

After two years of production, when it came time to decide whether to open another canopy approval window, the LCB decided that the original application pool — active or not — still represented far more canopy than than the State system needed. As a result, they permanently closed the up to two more licenses applied for by 900 applicants and ruled that all remaining inactive license applications, as well as active ones, could be acquired on an open market starting January 1, 2016. This rule changed in tandem with the decision to allow out-of-state financing at the same time.

The decision to move from a “command economy” approach to a privatized market approach solved one technical problem, how to deal with the vast amount of potential canopy held up by nonviable canopy applicants. But it also created a potential social problem. Producer/processor expansion could only happen via investment, increasingly likely to be out of state investment. “Mom and Pop” small businesses that hoped to expand their way to sustainability given very low wholesale prices had to abandon that hope. They would either have to finance license acquisition themselves or take on investors that could buy them out. The likelihood of Producer/Processor industry consolidation just went through the roof.

This narrative addresses the “aboveground” evidence of canopy allocation and rule changes, but to be clear, investors have been finding ways to acquire licenses and control canopy over the last several years. This is not inherently “bad” for undercapitalized applicants and small businesses, as many have found new life with the right investment partners. But it has been happening in the “loopholes” of I-502 regulation. Shell corporations fronting for out of state money, the most underground example, operate in direct defiance of LCB rules and intent — and many of these are behind some of the biggest producers in the State.

But canopy control doesn’t have to happen through direct ownership. Instead, “brand” companies have emerged to coordinate supply chains from canopy production, usually through agreement with processing licensees, to develop and sell branded products for I 502 shelves.  They are following a model pioneered by original applicant Producer/Processors that have used their Processor license to acquire production and create their own branded products. The tax structure reforms from July 2016 essentially opened up this business strategy by eliminating transaction costs associated with buying product from production licenses not held by the Processor — really, Brander — in question.

The emergence of the Processor/Brander as the market’s primary canopy allocator is really the story of the last year or so. There are plenty of Producers who just want to grow, harvest, and be done with it — especially outdoor producers, whose costs of production are so much lower than those of indoor producers. This is common across the Tiers, and many licensees who originally thought they would be processing and branding from their own production are now sourcing from “Producer only” licensees. This has helped many struggling producers with no branding or distribution inclination stay afloat, and provided otherwise struggling Producers with a way to increase their razor-thin margins.

The basic logic, though, is indifferent to whether its wielders are Big, Medium, or Small. Our interview subjects run the gamut, but every last one of them have shifted or are attempting to shift their business identities from Producers to Producer/Processor/Branders. In fact, that’s kind of what they were when they were Medical. In the book, we will examine how our Transitioners chose to become Producer/Processors, how that process worked for them, and how their business identities are adapting to the changing landscape.

 

 

Merit and the Second Wave Application Process

By February 2015, about 120 of lottery-allotted 334 retail stores had opened across the State.

by Dominic Corva, Social Science Research Director

This blog post skips the politics of 5052’s legislative process and focuses instead on how 5052’s mandated “merit process” for approving new I 502 retailers, ostensibly as a window for existing Medical Access points, was defined and implemented, between July 2015 and February 2016. It’s a post about an unfinished process, given that three of our interview subjects aim to be part of that transition but their individual processes are not completed. Dockside has two locations open from the first application window and three from the second wave in process; and Herban Legends transitioned to a new I 502 location almost as soon as the second wave application process achieved lift-off in January.

One of our other three applicants remains unapproved to transition and has a lawsuit pending against the WSLCB over whether there was in fact a merit process; another has fought to remain open in their current location until a Jul 1 switch over, and the fifth interview subject has closed her Access Point down while working to open in another location by July 1. All three in this group received letters from the WSLCB in January 2016 stating that they would remain open at their peril, since they were too far down the Priority I merit list to expect to be approved for Seattle. A flurry of media coverage ensued, as well as a different lawsuit, and about a week later two of these three applicants were informed that they were approved for Seattle, after all.

Which is to say that our Transitioner sample had a very diverse experience with the second retail application round. One of them made the top of the Priority I application list for Seattle; one of them and each of his two other business partners cleared the approval bar right away (two in Seattle and one elsewhere); and the other three have had to fight for Transition approval for different reasons with one of those still fighting.

Now that you know the current status of the results, let’s review the context for these highly variable outcomes.

SB 5052 directed the WSLCB to create a second retail application window based one merit criteria, which the WSLCB would also develop. This process began early summer 2016, not long after the bill was signed by the governor. Interestingly, the merit language appears to have been developed in the legislative process by UFCW, who intended merit criteria to include stringent labor standards. Those merit standards were recently folded into the renewal process, after closed-meeting pressure from the UFCW. It would have been bureaucratically difficult, if not impossible, to triangulate labor standards when the LCB’s main legislative obligation was to re-create Medical Cannabis access for the State by July 1, 2016.

So the initial challenge faced by the LCB was to define merit criteria that was focused on defining what criteria could plausibly be used to identify Medical “good actors” who deserved a chance to get into the I 502 system — especially since the previous window’s lottery process made such qualifications irrelevant.

However, the lottery results were still active — all of the lottery applications from the previous window had numbers, and had been promised that if their numbers came up, their applications would be processed. A second window had to fold the first window in to avoid lawsuits from hundreds of still-pending applicants further down on the lottery draw.

As a result, the LCB settled on two merit criteria that would define three Priority Tiers. The first criteria was, did you apply in the lottery round? And the second was, had you been paying taxes since before January 1, 2013 — roughly, the timeframe in which I 502 had become a reality. Priority I was the list for applications that met both criteria; Priority II was for applications that met the second criteria without the first; and Priority III was for applications that met neither criteria.

Effectively, the primary merit consideration became, did the application include someone who had applied in the lottery round. The secondary merit consideration had to do with whether someone on the application had belonged to an Access Point collective garden, evidenced by tax receipts. The prioritization of lottery applicants meant that every existing I 502 retail store had in hand the primary merit consideration. And that every access point that hadn’t applied did not. Those with the easiest route to Priority I status were access points open and paying taxes before 2013 AND a lottery application in hand. Four of our five Transitioners met those criteria.

A marketplace developed for applicants that had one of the stated merit criteria and not the other. This became especially clear when most of the new retail allocation went to existing I 502 recreational stores, all of whom partnered with a criteria-eligible access point business partner or collective garden employee to meet both merit criteria. Applications were cobbled together to meet both criteria, usually in exchange for business partnership or payout, to such an extent that by mid-November more than 800 retail applications had been received by the WSLCB. That number increased considerably through the March 31, 2016 closure of the second retail window. In the book, we will look more in depth at merit criteria and the way it affected who was able to transition and who was not.

Parallel to the development of the merit criteria, the WSLCB found its retail window process challenged unexpectedly by another powerful State political force, the Association of Washington Cities. The new window was originally conceived as uncapped and indefinitely open: applications would be accepted, assigned a Priority Tier, and then approved on a rolling basis, at LCB discretion. Jurisdictions revolted en masse, individually and through the AWC, citing concerns about clustering and not willing to leave it to the LCB how many could open in each jurisdiction. Even Seattle pressured the LCB for a capped process that would specify how many per jurisdiction would be available, and to close the window sooner rather than later. Some of this pressure was amplified by a new I 502 trade association representing existing I 502 retail stores that clearly didn’t wan’t more competition. But jurisdictions backed up their concerns with a promise to limit new retail stores by zoning them out of possible locations and establishing minimum distance to existing retail stores.

As a result, the LCB initiated a process for determining how many new retail stores could open, and in mid December announced specific allotments per jurisdiction as well as an end-date to the window process. That’s a story for another post, but the takeaway point to this narrative is that the second window application process was shaped considerably by political pressure on the LCB after 5052 was passed. The messiness and discontinuity of that process can’t be laid at the feet of 5052 itself, nor the bureaucracy charged with its implementation. The difficulties with defining merit and the ease with which existing I 502 retailers gamed the system to grab new stores at the expense of possible Medical Transitioners is not strictly the fault of the legislature, nor of the LCB, but broader political and economic developments concerning I 502 in the rest of the State. In the book, we address the complexity of these power relationships as they were experienced by our interview subjects.

 

Caution: Approaching Legislative Vehicles

State Medical Cannabis tax revenues July 2013- November 2014. Source: Washington Department of Revenue
State Medical Cannabis tax revenues July 2013- November 2014. Source: Washington Department of Revenue

by Dominic Corva, Social Science Research Director

NOTE: this excerpt is from a work in progress, as indicated by the first paragraph. We will adjust our analysis going forward, without a doubt.

This post addresses a section of the retail chapter that is a recently discovered blind spot, and for which we have just begun to re-envision, through focused archival research and a few phone calls out. Until recently, Dr. Corva has understood SB 5052, the Rivers vehicle that ended “parallel” cannabis systems as of July 1, 2016, as coming a bit out of the blue due to Senate capture by Republicans in November 2015. In fact neither parts of that narrative are true, although they aren’t completely false either. This post provides a starting point for revising that history, that will be developed completely in the book.

First, let’s start with why it matters. The approximately biannual (because in Washington, bills have a two year life-cycle) tradition of Senator Kohl-Welles’ amendments to RCW 69.51.A since the 00s produced amendments in 2007 and 2010, but generally those amendments were aimed at increasing and/or improving patient access. For example, the 2010 amendment that liberalized authority to write authorizations may have had a great deal to do with the explosion of retail access points, in two ways. First, authorized patients were necessary for medical access points to function in compliance with State law, and now there could be a lot more of them. And second, for collective gardeners (some of whom were vertically integrated into retail spots), there was a surge of demand through less underground “off the street” outlets. Patients could be authorized to grow their own, but that didn’t mean they had the skill, time, or inclination to do so.

Senator Kohl-Welles’ 2011 bill, SB 5073, was a comprehensive reform of the Medical Cannabis legislation in that it sought to improve through regulating the increased and improved patient access to which her previous efforts contributed. There were a LOT of other factors, and it’s impossible to say what percentage each contributed, but here are a few: the election of “choom gang” veteran Obama to the presidency; the financial crisis that had most of our country trying to figure out how to pay mortgages and bills; the Ogden Memo and its successor Federal memos of which the Cole Memo is only the most recent and clearly spelled out; the bankruptcy of State and local budgets including for law enforcement against a plant; the widespread availability of information on how to grow cannabis on the internet; the completion of years-long prosecutions in favor of Medical Marijuana defendants that set a more liberalized precedent; and so forth. If not perfect, it was a hell of a storm for evolving social and policy conditions. And our subjects, along with many others, certainly found those conditions amenable to choosing Medical Cannabis livelihoods.

Certainly, the choices made by more and more people to practice civil disobedience against a racist, unjust and genocidal Federal prohibition meant more and more storefronts becoming visible in the landscape. They not only served a burgeoning number of authorized patients: they channelled cannabis markets off the streets and into a space of visibility that itself may have served to discipline violence associated with street corner dealing and turf warfare. They served to employ an army of unemployable people in the middle of the greatest financial crisis of our lifetime. In the book, we go into more detail about the social benefits of visible access points and the commercialization of domestic sinsemilla. But the point of this paragraph is to highlight the social conditions that, indisputably, made cannabis markets much more visible to policymakers and the public.

But prohibition culture did not recede as rapidly as the post-prohibition economy. Some lawmakers chose the old fashioned response to “seeing cannabis like a prohibition State” (see anthropologist James Scott on “seeing like a State“). Cannabis could be tolerated as long as it remained in the social closet, but the emergence of retail access points in the urban landscape began to promote a politics of “moral panic” that joined with other political currents (I 502 being one of them) to demand something be done. Senator Kohl-Welles SB 5073 caught the State legislature at a moment when the politics of regulation were just beginning to sort themselves out, when those politics could only be framed in terms of reforming the current system rather than attempting to re-create it via not just “recreational” law (I 502, one year later) but the subsumption of Medical into a Recreational legal framework (5052, four years later).

What seems clear is that SB 5073 represented a reformist turn for Senator Kohl-Welles, for which the legislature was ready (but not the Governor); that the Medical Cannabis community had started to go its own way via Representative Appleton in a “improve patient access” vehicle that went nowhere but siphoned energy from the previously unified Kohl-Welles Medical Cannabis front; and that power in the State legislature shifted away from Democrats (and therefore towards Republican lobbyist-recently-turned Senator Ann Rivers. Legislative focus shifted definitively away from “increasing patient access” towards “regulating patient access,” ostensibly in order to “improve patient access” via quality control.

At this point it is obligatory to state that the objective of improving patient access via quality control was always necessary and could have been a focus of legislative energy starting in 1998. It’s not the basic meaning of the discourse that became a point of major social conflict, it’s how the discourse was mobilized in a way that could not improve patient access because it was busy tearing up the access system that had evolved organically over 15 years, through Senator Ann Rivers.

In 2013, Rivers successfully killed Kohl-Welles’ efforts to resurrect SB 5073 and introduced her own vehicle, SB 5887, that definitively shifted how Medical Cannabis would be handled in the legislature right through to 5052’s radical re-writing of what it meant, legally, in Washington State. SB 5887 was introduced late in the 2013 session and re-introduced for the biennial 2014 session, when most of the legislative work that ultimately proved futile was done. It died when revenue sharing disagreements in the context of the ongoing State budget crisis proved irreconcilable. The end of the two-year legislative cycle meant that legislative reform efforts would begin again in 2015 with a clean slate.

Senator Rivers’ majority party advantage established through the “Majority Caucus Coalition” formed with two renegade Democrats 2012 was cemented by the November 2014 elections, when Republicans gained an outright majority. Any cannabis legislative vehicle would have to go through her, and thus the 2015 session began with a radical one: SB 5052. It was economically radical because it sought to re-create cannabis markets in Washington State, rather than align the old with the new via regulation; it was politically radical because it accepted no input or amendment from the political representatives and stakeholders that had been increasing and improving patient access since 1998; and it was culturally radical in that it relied on a campaign of “moral panic” to characterize the Medical Cannabis policy experiment in Washington State a total failure because Medical Cannabis people were “Bad Actors” creating a “Wild West,” “unruly,” and “out of control” environment. Collective gardens were unredeemably greedy, patients were 90% fakers and gamers of the system, and so forth. The only verifiable fact associated with this discourse was that yes, the State could finally begin to see Cannabis culture out of the closet and, over more than 20 years, totally invested in Medical Cannabis in all its definitions, and these just weren’t the people it wanted to regulate. Well, maybe some of them — but just a few.