Comprehensive Marijuana reforms would increase revenues, create jobs, decrease law enforcement and incarceration expenditures, increase tourism, and create new educational opportunities in Oregon’s universities.
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The existing medical marijuana program in Oregon has been highly successful, but is in many ways less than optimal. I am not personally a medical marijuana user, nor do I have any association with the organizers of the medical marijuana regulation campaign in Oregon. My opinions on these issues are my own, and should not be confused with the proposals of any of the other groups who advocate on these issues.
Medical Marijuana Law Reform
Marijuana is different than other widely used illegal drugs for a number of reasons. Unlike cocaine or methamphetamine, for instance, it has a wide range of legitimate medical uses; it is less prone to abuse, and it has comparatively negligible side effects.
Most importantly, Marijuana can be produced within the State. Marijuana is already produced extensively within the State, although under less than optimal growing conditions. The illegalization of Marijuana makes it impossible to openly sell locally produced Marijuana, and results in highly inefficient production methods.
Further Marijuana law reform is an immediate necessity. This reform should allow for licensed outdoor marijuana production by Oregon’s farmers; licensed production of manufactured goods including cannabinoid oils, hashih, and food products; licensed operation of businesses that sell these products; reform of the rules for obtaining medical marijuana permits; and steps to prevent the diversion of Oregon produced Marijuana into the illicit wholesale market.
The implementation of comprehensive Marijuana reforms would increase revenues for Oregon’s farmers, create new jobs, increase tax revenues for State and Local Governments, decrease expenditures for law enforcement and incarceration, increase tourism to the State, and create new educational opportunities in Oregon’s universities.
Marijuana for Oregon’s Farmers
Growing Marijuana indoors is highly inefficient. It requires excessive capital investment, and wastes enormous amounts of electricity. The additional cost of indoor growing renders the plants produced uncompetitive for use in value added manufactured products.
Allowing Oregon’s farmers to grow Marijuana outdoors would reduce the cost of production as well as the overall environmental impact of production, which is very high for indoor growing. It would also place Oregon production on a competitive basis with outdoor production elsewhere in the world, and lower the cost of production to a point where the manufacturing of value added secondary products would be profitable.
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The strict regulation of licensed production is an absolute necessity for a variety of reasons. Legalization without regulation would almost certainly result in over- production. Over-production would result in a collapse in prices, mass diversion to illicit wholesale markets, and a subsequent lowering of production standards and quality in order to compensate for lower revenues.
A regulatory regime for legal marijuana production must set reasonable production quotas necessary to maintain stable prices. A method for assigning quotas to farmers based on a desire to participate and other factors must be arrived at. Strict quality standards and production guidelines must be created, enforced, and adhered to.
Value Added Manufactured Products
Demand exists for high quality cannabinoid oil, hashish, and food products manufactured from Marijuana plants.
Allowing for regulated outdoor farming of Marijuana would lower the prices for raw materials sufficiently to make small scale manufacturing of value added products profitable at prices low enough to insure sufficient effective demand.
Use of raw Marijuana plant material for manufacturing would also serve to utilize available production capacity and discourage diversion of production into illicit wholesale markets.
Small scale manufacturing of Marijuana based products would be a new source of employment for Oregonians.
The number of jobs created would not be very large, but they would require and develop specialized skills in employees. As a result, these new jobs would result in living wages that would remain steady over time.
Licensed Marijuana Dispensaries
The sale of Marijuana and Marijuana products from licensed production and manufacturing requires licensed retail distribution. Both new and existing businesses should be allowed to apply for retail licenses.
Rules for the division of licensing between State and local authorities must be determined in a way that is suitable for all parties.
The State has a strong interest in maintaining the integrity of the retail licensing program over all. Localities have a strong interest in setting their own rules for what types of businesses they want operating in their communities. It would probably be reasonable for local city governments to have the right to issue or refuse to issue a license to any business within their jurisdiction. If a city approved a license, then that license would be submitted to the State, which would have final authority over approval or rejection.
Since prices for retail products will be essentially fixed, the State has an interest in limiting the number of retailers involved in distribution and preventing them from competing on price. Excessive competition will result in declining revenues and create incentives for diversion into illicit wholesale markets and other unsound business practices.
Licensing for retailers should take into account community support, a demonstrated record of business experience, a demonstrated record of moral and ethical conduct, and the type of business requesting the license. Businesses that have a commitment to providing a safe, open, and inclusive environment for medical marijuana users should receive the highest priority in licensing decisions.
Medical Marijuana User Permit Reform
The current system for issuing Medical Marijuana permits is insufficient in a number of ways. It makes demands on patients that many find unreasonable, and as a result limits the use of the program. Expanding access to the Medical Marijuana program is necessary.
The primary obstacle to patient access to Medical Marijuana is cost. The requirement of a Doctor’s referral and the yearly fee for licensing create significant and unbearable costs for patients, especially among Oregon’s low income and uninsured populations.
The requirement of a Doctor’s referral is also problematic because of the limited amount of scholarly research into Medicinal Marijuana, and the ongoing classification of Marijuana as a Schedule I substance with no legitimate medical purposes. Many doctors are in a position of not being able to refer patients for Medical Marijuana, simply because the scholarly research that would allow them to make that referral within the normal operating guidelines of their profession does not exists, or is not well established enough to be conclusive.
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In light of the high costs of obtaining a doctor’s referral and the difficulty for some doctors of giving such a referral based on the paucity of academic research on the subject it, is necessary to make the doctor’s referral an optional element in obtaining a Medical Marijuana permit.
Along with making a doctor’s referral optional, the cost of Medical Marijuana permits should be lowered. One option would be to allow for a shorter term permit, such as for one month, at a correspondingly lower cost. It is unreasonable to charge patients for a one year permit before they have even tried a medicine, which they may discontinue the use of after only a few weeks, if they find it to be inefficacious. A similar up-front permit cost exists for no other medication, and is prejudicial to the use of Medical Marijuana. Finally, Medical Marijuana permits should be provisionally effective from the time of application. Licensed Medical Marijuana retailers should be allowed to accept applications, and if they certify that they are complete and have verified the identity and age of the applicant, a provisional permit should be issued on the spot. This would expedite the application process and reduce the overhead costs of processing applications for the State.
Preventing Diversion of Medical Marijuana into Illicit Wholesale Markets
Preventing the diversion of Medical Marijuana grown in Oregon into illicit wholesale markets is a necessity of operating an effective program. Oregon’s freedom to set its own laws in this area is limited by the potential impact of Oregon’s laws on other States and Countries. If Oregon were to become a major source of wholesale Marijuana flowing to other States, this would almost certainly result in negative repercussions.
The best way to limit diversion is through tight control of production quotas and maintenance of consistent retail prices for end user products. The purpose of licensing every aspect of production and distribution, from the field to the end user, is to fairly distribute profits amongst all parties. In the end, retail prices for consumers need to be competitive with illicit retail prices, but no person in the licensed distribution chain should have any incentive to compete with illicit wholesalers.
Maintaining retail prices at current illicit levels, even as the costs of production are decreased and the quantity of production is increased, requires adding value to the licensed product through increased quality, regularity, and variety of product. Diversion of significant amounts of production into manufacturing of value added secondary products is an important element of this strategy. Production of licensed plant product for retail sale should adhere to strict guidelines requiring organic production techniques. Product for retail sale should be visually inspected and graded, as well as tested and graded for cannabinoid content. Only the highest grade plant materials should be allowed into the retail supply chain, with the rest being restricted to manufacturing use.
Unique packaging for all retail plant product should be created, and required to be used for all licensed product sales. This packaging should be designed to prevent damage and degradation of the product in transportation and storage to the greatest extent possible. Labeling for all retail plant product should be consistent and uniform, and clearly state the essential information necessary for retail customers to make informed decisions about their medicinal purchases.
All retail product should be marked with a seal indicating that it is licensed product. In addition, every unit should have a unique serial number applied to it. The serial number of each unit should be of the “scratch off” form, which would prevent seeing the serial number without defacing the label. A system for verification of serial numbers should be put in place, which would allow a retail buyer to scratch off the label, then verify the serial number via phone or internet. The combination of a uniform seal and unique serial number would provide the best possible guarantee of quality and authenticity for licensed retail product being sold for medical purposes.
Economic Benefits of Marijuana Reform in Oregon
Broad reform of Marijuana laws would result in major economic benefits to the entire State. These benefits would flow to farmers, medical marijuana patients, the State government, local municipalities, job seekers, and even law enforcement.
Farmers would benefit dramatically from the availability of a new cash crop. The shift in Oregon Marijuana production from indoor to outdoor growing would make production more efficient and result in increased production. This in turn would increase the share of local production vis-à-vis foreign production in local consumption, resulting in more money staying in the State.
A shift to local production would decrease the illegal importation of illegally produced Marijuana, reducing crime by reducing the potential for criminal organizations to profit. This would allow for the reallocation of law enforcement resources to other priorities, while decreasing non-drug criminal activity that arises from drug related organized crime.
Growing marijuana legally and openly does potentially create a target for thieves and other criminals. Local law enforcement agencies would play an important role in securing marijuana grow sites, and preventing the theft and diversion of Marijuana crops. Enforcing laws against the illegal importation of illegally grown foreign Marijuana would remain a law enforcement priority at its same current level.
Medical marijuana patients would greatly benefit from licensed and regulated production that would guarantee them consistent access to a wide variety of uniformly high quality product at competitive prices. Lowering barriers to entry for obtaining medical marijuana permits would dramatically increase participation in the program.
State revenues from permit fees would likely increase by several times over. The increase in State income tax revenue from licensed producers, manufacturers, and retailers would be an order of magnitude greater at least. This increase in revenues would accompany decreasing costs for law enforcement, incarceration, and health care.
The creation of a comprehensive program for producing, distributing, and retailing medical marijuana would make Oregon, and especially Portland, a major destination for medical tourism. Medical Marijuana user permit reform would make it possible for patients seeking care to visit Oregon and immediately obtain a temporary permit at a reasonable cost. Medical tourism could be a major source of additional revenue for all of the businesses in a community. As Portland would be the most likely destination for out-of-State patients, the City of Portland and its businesses would receive increasing revenues over time from Medical Marijuana reform.
Shifting Marijuana production to farms and creating new business opportunities in the manufacturing of Marijuana related products would create new jobs available to all Oregonians, and especially Oregonians in rural areas. These rural areas currently have the highest unemployment rates in the State. Reform of Medical Marijuana laws would immediately create new private sector jobs without any Government spending.
Comprehensive Medical Marijuana reform would also create new opportunities for research and education into Marijuana that could be beneficial for Oregon universities. Oregon State University would be a natural fit for new research and education programs related to Marijuana production. The University of Oregon and Oregon Health Sciences University would be naturally suited to running programs that focused on the medicinal uses of Marijuana as well as other related subjects. Legal reform would make Oregon universities leaders in this field of research.
Marijuana Prohibition is coming to an end. Currently, Oregon is obligated by Federal Law to stay within the framework of Medical Marijuana, but within that framework, Oregon should be a leader and an innovator.
Comprehensive reform of Medical Marijuana laws, as outlined here, would result in a domestic industry with gross revenues on the order of hundreds of millions of dollars per year. This revenue would be spread broadly across many sectors of the Oregon economy, and flow proportionately to both rural and urban areas.
Medical Marijuana reform would benefit all. The only real losers would be international drug cartels, and their illegal drug distribution networks. The legislature and the voters of this State should make this reform one of their top priorities.
March 10, 2010
Economic Benefits of Medical Marijuana Reform in Oregon