Rachel Barry on Proposition 64

Summary: I give California’s Proposition 64 very high marks for tax structure, avoiding two deadly tax traps “better than any marijuana initiative voters have ever seen..” I asked Rachel Barry, a public health expert and my good friend and conscientious colleague on the Newsom-ACLU California Blue Ribbon Commission on marijuana legalization, what she thinks of Proposition 64 from a public health perspective – does she oppose Proposition 64, or just severely criticize it?  I asked because I wanted to quote her in my document.

That resulted in the following back and forth. I do not express an opinion on her views, but want to put them on the record:

RB:

I’ve been thinking a lot about this lately. I’m more of the severe critic. I don’t know if we have enough information or intelligence for that matter to design a framework for marijuana legalization that would protect public health within the confines of the capitalist economy. While there are lessons that were ignored in Prop 64 because it would mean stricter regulation, there is not enough evidence to suggest that these policy interventions would work for whatever the goal of legalization is. That is another critique I have of the initiative, and the legalization effort in general, that advocates and policymakers are working within an environment where the goals of legalization are not entirely clear or thought out. What is the goal of legalization? Are there multiple goals? Do these goals conflict with one another? Take social justice for instance if that is a goal, I do not see how legalization of marijuana will resolve social injustice, private prisons, or discriminatory targeting of blacks by police, and in fact it hasn’t in Washington where black men still are arrested on marijuana distribution charges disproportionately to white males. Also, not adequately considered was health as a social justice issue, and the impact of retailer density on health disparities.

. . . I just don’t want to be labeled as someone with a particular stance on the initiative or an agenda. I think it is really complicated and so I will take the eternal critic role.

PO:

I’m with you [about being an analyst rather than an advocate – that’s what I want to do].  Are you willing to say publicly that California 64 does more to protect public health than any other initiative so far?  Or at least, than the other four this year?   On tax, all four are weak.

RB:

Honestly, I think all of the state initiatives are failing to capitalize on the immense resources and historic knowledge to regulate marijuana without excessive commercialization.

PO:

Yes, I’m think the Rockefeller-Socialist model, the one the liquor control states use, is worth a try. https://newrevenue.org/2016/08/09/4900/. North Bonneville Washington is already using it.

RB:

This is where the multiple goals conflict. If

— one goal is to legalize to minimize the harm associated with the war on drugs,

— yet another is to protect youth while at the same time create new business opportunities, then the marketing, product regulation, and package design restrictions, to name a few, are more consistent with emphasizing market growth.

PO:

I hear you.  Respect for law is an overarching goal for me.  I would be more for creating jobs than for creating new business opportunities.

RB:

I’d be more convinced by the goals of legalisation to reduce negative impact of the war on drugs and to protect children if it were complemented with a prohibition on marijuana industry marketing and advertising, and promotional activity (including but not limited to event sponsorship, point of sale advertising, online marketing, coupons, and online marijuana store locators which often clandestine forms of advertising)  as well as flavours,

PO:

Flavors we know how to prohibit.  Marketing is vague.  But Tax Code Section 280E at least prevents all selling expenses from being tax-deductible. https://www.brookings.edu/blog/fixgov/2015/12/18/how-bob-dole-got-america-addicted-to-marijuana-taxes/

RB:

. . .  and on marijuana packages that use branding or other design techniques to create attractive and appealing marijuana products. Tobacco companies use package design techniques to mislead consumers into perceiving their products as less harmful or safer than other tobacco products. Tobacco product packaging with descriptors such as “natural”, “light”, “mild”, and “organic” are associated with false beliefs of the health risks of smoking, and are perceived as less harmful or healthier than tobacco products without these descriptors. These descriptors are already being used in Colorado and Washington State, with marijuana packaging stating that a product is “natural”, “awakening”, “calming”, or take another example for instance: “Marley Natural”. These descriptors may send messages to consumers that marijuana products are safe or at least safer than other marijuana products, and may encourage use.

PO:

Do you have example of legislative language that would do that?  From some other country?  Restrictions are constitutional now.  If California doesn’t do this kind of thing legislatively, other legalizing states can – until federal free speech kicks in.

RB: I do. Australia, New Zealand, Canada, and Uruguay require that tobacco products are contained in standardized packaging created by their respective Departments of Health. Here is a link to the language for New Zealand, which follows requirements set forth by the World Health Organization’s Framework Convention on Tobacco Control: http://www.tobaccocontrollaws.org/files/live/New%20Zealand/New%20Zealand%20-%20Std.%20Packaging%20Amdt.%20Act%202016%20-%20national.pdf

The idea is to reduce the appeal and attractiveness of tobacco product packaging. An additional side effect of plain packaging is that it enhances the effectiveness of warnings and health messages on tobacco products, and it helps to correct misconceptions about the risks associated with tobacco product use. Reduced risk perceptions are associated with an increased likelihood of experimentation with tobacco among young people.

What I have suggested here I know will receive criticism b/c of commercial speech protections in the US and California Constitution. However, I’m presenting policy that is consistent with the stated goals of legalization in these initiatives, which is to protect health and children (although I still don’t see how either of these goals will be accomplished).  A prohibition on marketing and promotional activity would decrease the likelihood that marijuana use will become socially normalized and where use would increase following legalization

These internal inconsistencies make me question the logic of these goals, which to me seem more like window dressing to get policy passed quickly in this limited time frame.

PO:

I hear you.  The tax structure has compromises, too.  It’s not that I’m an easy grader, I think and hope.  It’s that California’s tax structure is more solid than anywhere, except maybe untested Alaska.  I think criticism of the other four tax structures is more appropriate than criticism of Proposition 64.

 

What are your views on the other four initiatives? You could rank all five on public health criteria like the last pages of this article did for tax: https://newtax.files.wordpress.com/2012/10/gangs-ganjapreneurs-or-government-marijuana-revenue-up-for-grabs.pdf.

Or, more simply, isn’t 64 the best of this year’s crop? If so, the others need the kind of treatment you gave 64, right?

 

RB:

The other four initiatives: AZ, NV, ME, MA, share several of the same characteristics. Like California, the other four do not designate the Dept of Public Health as the lead agency, and rather designate either a new commission or the Department of Revenue or Agriculture as the lead agency. History has shown that designating the revenue department or agriculture department as the lead regulatory agency has not benefited public health because the interests of revenue generation are considered equal to or at times more important than that of public health. Aside from California, most of the rulemaking will be conducted by said lead agency including development of product regulations, packaging, marketing/advertising restrictions, licensing rules, and sales transactions. California’s initiative is far more prescriptive than the other four. For example, the maximum THC level per serving size and per package is written into the initiative even though there is no scientific consensus on what this level should be set at yet that would protect public health.

Aside from Maine, the other four initiatives (including CA) allow for marijuana industry representation on advisory committees developing the rules around marijuana licensing, product regulation, health education, and disbursement of tax revenue. Having the tobacco industry or other vested interests on advisory committees guiding or developing public health regulations leads to policy which is either weakened, blocked, or defeated because it would adversely impact market growth and sales. Corporations that manufacture and sell unhealthy commodities have an irreconcilable difference between protecting health and increasing profit. This is not unique to tobacco (e.g., alcohol, sugar, and oil industries) and likely will be the case for marijuana.

Revenue is designated to a public health information campaign in Arizona (20%) and in California (decided by California Legislature) to inform the public on the laws surrounding marijuana legalization (public usage, youth access, drugged driving). AZ and CA also dedicate funds to substance abuse prevention and treatment programs aimed at youth. None of the five states have funds dedicated to broad-based media campaigns to denormalize marijuana similar to that of tobacco denormalization campaigns.

None of the states place caps on firm size or prevent vertical integration, aside from in CA and ME where testing facilities may not hold licenses in other tiers. There are no requirements that would avoid the problems associated with retailer density or over-concentration of marijuana businesses in low-income communities. While in California this is included in a list of criteria to consider when granting a license, the licensing authority has to consider this alongside other criteria including whether or not granting a license will impede market growth. In the other four states, licensing regulations will be developed by the designated lead agency in the rulemaking process.

Local control is protected in California, Maine, and Massachusetts but not in Arizona and Nevada. Marijuana is included in smokefree laws in California, Maine, and Massacchusetts but not in Arizona and Nevada. Maine allows for marijuana use inside marijuana lounges while California and Nevada allow for local governments to adopt weaker smokefree laws than the state.

It is complicated and so research should pay attention to the impact of a prescriptive initiative (CA) versus granting control to regulatory boards to develop the overall regulatory structure (AZ, ME, MA, NV). This is a unique opportunity to study the impacts of marijuana legalization on use, consumption, attitudes, and chronic disease as well as criminal justice impacts and revenue generation, which may not be as easily accessible in the future. To answer your question I cannot rate these initiatives because I do not know what the rules will be for the other four and so cannot ground them in a historic context similar to how I analyzed the California initiative. There are some policies which were included in the California initiative that are based on best practices (i.e., local control and smokefree laws) and there are some that were not included (i.e., prohibiting marketing, flavors, and products infused with nicotine or tobacco, industry participation on regulatory advisory committees, or requiring that revenue be dedicated to broad based media campaigns and marijuana-related disease research). As you are the tax expert I will leave that part up to you with caution because modifying the tobacco tax in California has been met with fierce opposition over the past 23 years and is currently facing opposition by the tobacco industry’s anti-Proposition 56 campaign (see: http://www.bloomberg.com/news/articles/2016-09-09/big-tobacco-pours-millions-into-california-cigarette-tax-fight) to defeat an increase by $2.00/pack. I would imagine that a professionalized marijuana industry will do the same.

 

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Author: patoglesby

From 1982 to 1990, I worked in tax policy for Committees of the United States Congress. In recent years, I was Adjunct Lecturer at UNC-Chapel Hill's Business School and then Adjunct Professor at its Law School.

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