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The Great Marijuana Experiment: A Tale of Two Drug Wars

As Washington and Colorado create rules and regulations for selling legal marijuana, in many other cities across the country pot arrests are near record highs

Illustration by Victor Juhasz
January 3, 2014 9:25 AM ET

Legal marijuana in America is now estimated to be a $1.43 billion industry. And it's expected to grow to $2.34 billion in 2014. If those numbers hold, the 64 percent increase – a steeper trend line than global smartphone sales – would make pot one of the world's fastest-growing business sectors.

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Signs of the new age abound. In Colorado, retail marijuana stores welcomed their first legal-age customers (21 and older) on January 1st. Washington state is expecting to license the first of its projected 334 pot shops by late spring. A Gallup poll taken last fall found that 58 percent of Americans supported legalization, a 10-point uptick from the year before. Alaska and Oregon will likely vote to go legal in 2014; California and five other states are expected to do the same in 2016. The legalizing states aren't going in half-assed, either. Officials tasked with ramping up a marijuana regulatory system are taking to it with a tradesman's pride. "We are going to implement Initiative 502," says Sharon Foster, the brassy chairwoman of the Washington State Liquor Control Board, at a public hearing last fall. "This state is not going to allow it to fail."

But these gains tend to obscure the dismal reality playing out in many other states. As Colorado and Washington license pot growers and sellers, cops elsewhere continue to carry out marijuana busts at a rate of one every 42 seconds. If you drop a gram of Sour Diesel on the sidewalk in Seattle, a police officer may help you sweep it up. Do that in New Orleans and you could face 20 years hard labor.

What we're witnessing now is a political movement giving birth to an economic awakening. The struggle to end the War on Drugs – at heart a movement to stop the mass incarceration of black men – is creating one of the greatest business opportunities of the 21st century.

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At a recent drug-reform conference in Denver, Drug Policy Alliance executive director Ethan Nadelmann acknowledged the uncomfortable transition that's now occurring. Those who have suffered the most in the War on Drugs and those who have struggled against it, he noted, may not be among those who profit from its conclusion. "The capitalist forces at work in a prohibitionist market are violent and brutal," Nadelmann said, "but the capitalist forces at work in a legal market are even more brutal in some respects. We know that the people who may come to dominate this industry are not necessarily the people who are a part of this movement."

That may be a necessary price to pay. For the War on Drugs to end, Colorado or Washington must succeed. That will require risk-taking entrepreneurs, not movement leaders. If both states fail, it may be impossible for others to follow.

Fortunately, they're beta-testing two distinctive ways of regulating legal pot. For now, Colorado has a simple, vertically integrated medical-marijuana industry where retailers grow and process most of the pot they sell. Colorado will have a flexible limit on the amount of pot that may be grown. Washington, on the other hand, is breaking marijuana production into a three-tiered system that mimics the alcohol industry, where growers sell to processors, processors sell to retailers, and retailers sell to consumers, and the state strictly caps the amount of pot that can be grown.

There are other quirks. Colorado allows small-scale home cultivation. Washington does not. Colorado gave existing medical-marijuana (MMJ) operations first priority for adult-use licenses. Washington didn't, forcing MMJ owners into a license lottery with newcomers who've never grown or sold a single bud.

It doesn't much matter which system works, as long as one does. Then we'll be able to mark 2014 as the year control of marijuana passed from drug cartels and weed dealers to government inspectors and shopkeepers.

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