Author Archives: Erin Callahan

The First Cannabis Initiative Has Been Filed: The California Craft Cannabis Initiative and the Justice-Involved

In my last post, I signed off with a promise to begin the conversation about economic barriers. This is not an article about economic barriers. Consider this article a bonus. On April 14, 2015 the California Craft Cannabis Initiative was filed, the first recreational cannabis initiative filed in California. Now, before you get too excited, just because the initiative is filed does not mean it will be on the ballot in 2016. The proponents of the initiative still have a quite a few hoops to jump through before that happens. Still, this is very exciting for all of us at DLP because we have the language of an actual California initiative to consider and discuss. Better yet, an initiative that addresses many of the topics being covered by the Drug Law and Policy Blog.

The California Craft Cannabis Initiative (CCCI) came with a few surprises. Sure, there were the well-considered regulations tailored to meet the Cole memo but there are also a few more radical ideas that you don’t see in Colorado’s highly regarded regulations. For example, there is no local control for growing your own cannabis in the CCCI (meaning more conservative counties would not be able to restrict their residents from growing at home), there is a “craft” distinction for those growing less than 100 plants, and craft cultivators may label their product according to the appellation of the region in which it was grown (if that appellation is on the official list that would be compiled by the commission).

There is a provision allowing for the California Cannabis Commission, which would be created by the language of the initiative, “to develop a licensing system by which cannabis may be purchased, sold, served, consumed, and otherwise disposed of in licenses premises in a manner similar to licensed premises serving alcoholic beverages.” This is another departure from Colorado’s regulatory choices. It is exciting to see some outside of the box thinking within the initiative. Contrary to the apprehension of some, allowing “bud pubs” could go a long way to address public safety concerns.

Most relevant to my coverage at the Drug Law and Policy Blog were the licensing and criminal record-related provisions. Specifically, the CCCI vests the commission with the authority to issue licenses and charge related fees. This can include a criminal history check, but “prior criminal history relating to cannabis use, distribution, cultivation, manufacture, or other cannabis-related activity, regardless of jurisdiction, shall not be considered in the granting or denying of a license pursuant to this chapter.”

This proposed regulation is much more forgiving than Colorado’s current licensing scheme, which prevents individuals with “Controlled Substance felony convictions” within ten years of their application date from receiving retail marijuana licenses. There is an exception for felony convictions for possession or use of marijuana, but not for distribution and cultivation. The CCCI includes all marijuana-related offenses in its explicit exception to the ability to check criminal history. It appears the drafters of this initiative understand the value in keeping barriers for those currently working the black market to a minimum.

Additionally, and more astounding in its breadth, is that the CCCI establishes the entirety of Chapter 6.7, The Craft Cannabis Act, as retroactive. The language is very clear in the initiative, stating: “this Chapter shall be retroactive.” Cannons of statutory interpretation apply to voter initiatives and the intent of the statute is determined by examining the plain language. If the CCCI were to be passed by the voters, it would be clear based on the plain language of the initiative that the voters intended the initiative to be retroactive.

Now, the retroactivity would apply to the whole chapter, including the portion of the CCCI that legalizes cannabis in California: “Notwithstanding any other law, the cultivation, processing, transportation, distribution, sale, possession, and use of cannabis is authorized by persons 21 years of age or older.” By establishing the legalization of cannabis in California as retroactive, the drafters of the CCCI have opened the door for attempts to expunge records and potential resentencing of those serving sentences for marijuana-related crimes.

Proposition 47, which passed last November and amended portions of the Penal Code to make specified crimes misdemeanors instead of felonies under California law, also applied retroactively. Unlike the CCCI, Proposition 47 specified the methods by which people currently serving sentences and people with a criminal history based on convictions of these crimes could be resentenced. After voters approved the initiative, requests for resentencing and expungement of criminal records flooded the already cash-strapped court system. Prop 47 allows for a three-year window for people to apply for resentencing but provided no funding for the courts or public defender offices to cope with the workload.

Additionally, trial courts are having to decide issues not specified within the statute such as whether an individual can have their DNA profile removed from the state’s offender database or if Prop 47 applies to juveniles. Ultimately, these cases will end up at the appellate level, with the California Supreme Court cleaning up any circuit splits. The California Supreme Court has already granted review to two cases involving the effect of Prop 47 on California’s “Three Strike” laws because circuits are currently interpreting Prop 47 as not retroactive in its application to Prop 36. The language of Proposition 47 did not specify that the initiative applied retroactively to findings made under Proposition 36, the Attorney General’s office has argued that the intent for Prop. 47 to apply retroactively cannot be inferred from the voter information guide, while defendants and academics argue that voters’ intent to decrease the prison population and reduce spending on incarceration is clear.

What can be learned from Prop 47? That even more specificity is required for things to run smoothly? Or that there will always be complications that cannot be planned for? Either way, if the CCCI were passed, there would be a lot to sort out. The CCCI invests the commission with “the power to make all regulations necessary and proper to effectuate the will and intent of the people in enacting this chapter, and may carry out or delegate the enforcement and administration of this chapter to other public agencies.” Among those regulations would be those necessary for effectuating the retroactivity of the legalization of cannabis.

Creating the necessary and proper regulations would be in addition to the specified tasks delegated to the commission, which include: issuing licenses, ensuring all cannabis sold is carefully inventoried and accurately labeled, regulating testing of cannabis and cannabis products, and terminating business operations of any business that is endangering public safety. First, the Lieutenant Governor must select the commission. The language of the initiative specifies selection must occur before January 1, 2017. From there, the commissioners have a year to begin issuing permits for the sale and cultivation of cannabis. But before issuing permits, the commission will have to make regulations to effectuate that task.

That is a lot of work. Hopefully, those with criminal records wouldn’t be put on the back burner during this time, where their criminal records could prevent them from receiving financial aid or public housing. Looking at what happened with Prop 47 we know that the courts would likely struggle with the additional caseload and lack of resources, a lesson the commission should consider if CCCI were passed.

Overall, the drafters of the CCCI seem to have considered those most affected by the prohibition of cannabis in producing this initiative by banning the commission from considering marijuana-related offenses in granting licenses and making the legalization of cannabis retroactive. We may never know how this would play out; this initiative may never get on the ballot and if it does, may not be passed by voters. This won’t be the only initiative we see in California for 2016; we will have to wait and see how other initiatives measure up.

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What We Don’t Know About the Black Market Workforce and Why it Matters for Successful Regulation of Recreational Cannabis

The danger of making assumptions about who makes up the black market labor force is illuminated by Keith Humphreys’s recent article – “The stereotype of the college-educated pot smoker is wrong.” In the article, Humphreys cites Professor Jonathan Caulkins, who is quoted as saying “Most of the marijuana market is more Wal-Mart than Whole Foods.” Yes, we all know that stereotypes are not often truly representative of the people they are trying to describe. But what was most interesting about the article (aside from the irony that Caulkins used a stereotype about where the poor shop in order to explain a stereotype we have) was the explanation for the college grad-stoner stereotype – that human beings “have a tendency to overestimate the representativeness of their own experience.” Meaning that the people who feed the discussion in our media and political culture (journalists, policy analysts, politicians, etc.) “portray and discuss the world they know, which in fact is a small slice of the U.S. marijuana scene.” Why shouldn’t we make assumptions about who makes up the black market workforce? Because successful regulation of the recreational marijuana market depends on turning the black market green, which requires transitioning the people within the black market to the legitimate market. Admitting there is a lot we don’t know about the black market workforce and their ability to transition to the state-regulated market is the first step in the process of determining what regulations best serve our purported state interests.

First off, it is important to establish that I am defining successful regulation as promoting public safety and preventing diversion of profits to illicit enterprises. Not only are these high priorities for California, these are the priorities of enforcement of the CSA outlined by the Cole Memo. Addressing these priorities serves the interest of the state and is the best option for avoiding the scrutiny of the federal government. From preventing distribution to minors to preventing growing marijuana on public lands, all of these goals are served by transitioning the black market workforce to the state-regulated market. While street level dealers don’t check identification, regulated marijuana storefronts will be required to. Legitimate business will pay taxes and keep financial records, preventing money from marijuana sales from going to criminal enterprises. Passing state regulations that present significant economic barriers and barriers related to criminal records will bar more individuals from participating in the legal market. Will those barred from operating in the legal market continue to operate their businesses illegally?

It is more likely we will have better information on this issue in California after state regulation. There is no good information on the black market workforce because it is not something that people discuss openly. The black market is characterized as such because it takes place in the shadows. It is meant to be a mystery to those on the outside looking in. Recreational marijuana is still illegal in much of the United States, and those on the supply side are unlikely to self-incriminate. If marijuana is legalized in California it is possible there will be more information about the black market because individuals won’t be silent for fear of prosecution. The information that we currently don’t know that would be valuable to this discussion is who it is that makes up the black market workforce and what their skills are, both within and outside of the marijuana industry.

For the purposes of this blog series, I am concerned with individuals currently working with illegal marijuana as their primary vocation, meaning people who do this as their main source of income (which does not necessarily equate to full-time). I am not focusing on the individuals who sell, trim, or grow as supplemental income for two reasons. First, they are less likely to have as large an impact on black market supply, therefore there are less worries about diversion if they continue to operate in the black market. Second, they already have an additional source of income. If they continue to work in the black market because they are barred from working in the state-regulated market, it is not because they are dependent on illegal work as their sole source of income. People who are willing to break the law for additional income should not be the focus of incorporation into the legal market because successful regulation will only work with individuals who follow the rules. There is something inherently different about those who break the law because it is the only way they can make a living or because they are politically or morally opposed to cannabis prohibition and those who break the law for some extra cash.

Now, within the group of people working in the marijuana industry as their primary source of income, there are different specializations, skillsets, and levels of skill. There are those on the production side, ranging from growers with years of experience to those who trim for a season, and then there are those on the distribution side. Within these groups it’s possible to discuss likelihoods and possibilities for transition to a state-regulated market in general terms. But the odds of an individual continuing to work in the black market if barred from entering the legal market depends on their skillset and reasons for working in the black market to begin with.

For those who are doing less-skilled work full-time, whether seasonally or steadily, any barriers may make a legitimate marijuana job not worth pursuing. Maybe even an application process would not be worth the trouble. The full-time grower and cannabis activist is more likely to jump through the hoops of the application process than someone just trying to make a dollar because they are personally invested in the concept of state regulation. This distinction is important when considering how barriers to entry into the recreational market will affect differently situated people in distinct ways. What will skilled growers with criminal records do if they can’t get a job in the newly legal recreational market? What if there are insufficient incentives to transition to the legal market? Odds are, like in Colorado, some growers will continue to operate in the black market.

While there is a lot of discussion about those growing marijuana, what about those selling it? This is the most important group when considering successful regulation as qualified above; dealers are making a lot of the money and are the access point to marijuana for users. It would seem that this group would be the most important to consider incorporating into the legitimate market. But unlike growing marijuana, where the necessary skills don’t change drastically moving from the illicit to legitimate markets, operating a storefront requires additional skillsets that the average dealer probably does not possess, i.e. managing employees and bookkeeping. Will there be a place for dealers or will we be leaving out those who may be the most important to include? If excluded, will they continue to operate in the black market?

The job market outside of recreational marijuana could affect an individual’s propensity to continue operating in the black market. Barriers to non-marijuana-related employment might leave some stranded. Work experience, education, and criminal records all affect an individual’s ability to find a job. When a person has been selling or growing marijuana illegally for a living, connections outside that industry might be hard to come by. Additionally, filling out the work experience section of a job application could be tough. Individuals with criminal records are the most likely to be barred from entering any state-regulated market in California, and they are also less likely to find gainful employment elsewhere. We know that communities of color are more likely to shut out by barriers based on criminal records because of disparate enforcement, creating a heightened inability to transition from the black market. We already know criminal records limit job opportunities outside of the marijuana business. It appears as though the one thing we can know for certain is that the communities most injured by the failed war on drugs could continue to be left behind in the new paradigm of state regulation.

Ultimately, every individual in the black market has a unique circumstance. Considering there is so much that is unknown about the makeup of the black market, it is best to operate under the assumption that there are certain ripples and effects of legalization that we can’t plan for. We don’t know if someone is going to continue growing and selling marijuana illegally, turn to selling harder drugs, or go into a different industry, and we don’t know what their motivations will be. If we want successful regulation, we need to turn the black market to the legal market, and frankly we don’t know enough about the existing black market to make sweeping statements about what people will do if they can’t work within the state-regulated system. This is why it is important to build a market that will be as inclusive as possible, without compromising the integrity of state regulation.

While the market needs to be inclusive enough to bring the black market workforce into the fold, there also needs to be the financial incentive for people to want to work in the state-regulated market. In my next post, I will explore the economic barriers to entry to existing marijuana markets with a focus on capital requirements and finding the balance between supply and demand. Specifically, I will be comparing the recreational markets in Colorado and Washington and notable medical marijuana structures in other states, looking ahead at what would be best for California.

Diversion from the Black Market Also Involves People, not just Plants

Much of the focus in the coverage of state regulated marijuana has been on the plants, the product, and the money. Michelle Alexander, Associate Professor of law at Ohio State University and renowned author, has illuminated the irony of a movement where whites are now looking to marijuana with dollar signs while communities of color still suffer the consequences of the failed war on drugs. “Here are white men poised to run big marijuana businesses, dreaming of cashing in big—big money, big businesses selling weed—after 40 years of impoverished black kids getting prison time for selling weed, and their families and futures destroyed. Now, white men are planning to get rich doing precisely the same thing?” This highlights the importance of focusing on the people, especially those communities who have been affected most, in the rehabilitation of California’s relationship with marijuana.

No matter how you view marijuana reform, any chance of a successful rehabilitation of California’s drug policy must focus on people. Some see marijuana reform as a civil rights issue, citing the failed war on drugs and overcrowding of prisons as evidence that change is needed. If you view reform as a civil rights issue, how do you reconcile that belief with a system where the people who have been the most adversely affected by the war on drugs are now precluded from taking part in the state-regulated market? Others see drug use as something that isn’t going to change, so the government might as well collect additional tax revenue. If you are part of the group who sees dollar signs from tax revenue, the success of taxation depends on a shift from the black market to the legitimate market. This would depend on those currently operating in the shadows being able to operate, or get hired by, legitimate businesses. Regardless of the policy goal, the most important aspect of rehabilitating California’s relationship with marijuana is the shift from the black market to the legal market, which includes the people.

Black market marijuana is grown and sold by a black market labor force. What happens to that labor force when marijuana is legalized? The Cannabist recently published an article on black market growers in Colorado’s state regulated market. Titled “A divided weed world: Black market growers and legit industry jobs,” the article addresses the problems of merging the black market and the legitimate marijuana trade. First, there are the legal hurdles to overcome. If a person has a certain criminal record, he or she legally cannot receive a business license. Those looking for employment at a cannabusinesses must be of good moral character, meaning any criminal history will be considered. Additionally, black market growers aren’t financially incentivized to enter a legal market, where they will take a significant pay cut if they can even get a job. The competition for work is high and most available jobs are entry-level, paying $10 per hour.

Additionally, the legitimate marijuana business is wary about including those who previously operated in the shadows. Being “in any way connected to black market growers (or any type of crime) is the kiss of death in this business.” Not only is it a legal issue, legitimate marijuana businesses are split on the benefit of including black market growers in their operations. Some business owners cited applicable knowledge and experience as the positives of a black market background, but applicants are “better off never mentioning he or she has experience growing and selling their own.” Even in the absence of a criminal record, there is a “stigma that comes with being a black market grower.” There is the concern about bad habits that would be carried over and the sometimes-rocky transition of going from being your own boss to integrating into an already established and functioning business.

While the Cannabist article explored some the problems faced by a small segment of the black market in Colorado, it provides a lens with which to view the broader problem of integration into the legal market in California. Not only will there be growers needing to transition to the legitimate market, there will be trimmers, processors, and dealers. Street level dealers and trimmers do not have the same level of specialized skill and knowledge as growers. Dealers may arguably have more of a tendency to flout laws, for example by selling to minors. Each different area of employment will bring to light different problems and policy considerations.

There is also the criminal history of black market workers to consider. A criminal record makes it difficult to find any gainful employment, but this will be exacerbated in the legitimate marijuana market by regulations that exclude the justice involved from receiving licenses or being hired. The effect of criminal records for both licensing and employment purposes will have a greater impact on communities of color in California, where Latinos are arrested at higher rates than whites, and Blacks are arrested at an even higher rate. While there will be disparate impacts from barriers based on criminal history in California, there are also race-neutral reasons for excluding the justice-involved in the state regulated market that require consideration. For example, it would be reasonable to refuse a business license to an individual convicted of financial crimes to prevent money laundering. Also, because legitimate marijuana is still a cash-only business, barring convicted tax evaders or embezzlers would be sensible policy.

Furthermore, economic requirements, wages, and competition will be a contributing factor to keeping black market workers from turning legit. The licensing structure and any vertical integration requirements could prevent individuals from opening their own businesses. Like in Colorado, those making money in the black market will not be incentivized to transition to the legal market at a significant pay cut, where their wages will also be taxed. In California, where we have one of the nation’s highest wealth gaps and where Black and Latino communities have much higher poverty rates than whites, economic barriers also adversely affect communities of color. This reinforces Michelle Alexander’s point that those with the money and the privilege will be the people profiting off of marijuana reform.

My future posts for the Drug Law and Policy Blog will delve into the barriers to entry into the future state-regulated market for black market workers in California, with a focus on policy that will best serve to bring them into the fold. Ultimately, there is a general lack of information in about the black market in California, including the racial make up of the labor force, so there are questions that will go unanswered. This fact remains true – without transitioning the black market workforce to the legitimate market, marijuana reform will not succeed in the way we hope. Stay tuned for more information as I wade through the murky waters of black market industries and the ever-evolving arena of state-regulated marijuana.

You Can’t Sit With Us: Barriers to Entry in the Business of Recreational Marijuana

If marijuana becomes legal for recreational use in California, who do we want growing and selling it? My research and writing for the Drug Law and Policy Blog will explore two of the barriers to entry into the recreational marijuana industry: capital requirements and criminal records. By looking at the economic barriers to entry and legislation that prevents the justice involved from receiving licenses in states who have legalized recreational marijuana, I want to explore who is being excluded from the “green rush.” The ultimate question is whether we are excluding communities of color and the indigent, communities who have been the most adversely affected by the war on drugs.

The arena of drug policy interests me because it is closely tied to the field of criminal law and disproportionately impacts indigent communities. I came to law school interested in pursuing a career in social justice and public service and I have since narrowed my interest to indigent criminal defense. I interned at the Santa Clara Office of the Public Defender for six months in 2014 and found the work to be both challenging and rewarding. Currently, I am working at the Northern California Innocence Project, a clinic providing representation for the wrongfully convicted, run through Santa Clara University School of Law.