Regulating Marijuana: Water Agencies vs. Law Enforcement

Photo: USFS Region 5

Marijuana legalization is spreading quickly across the United States.  One of the toughest challenges for state governments will be to create a regulatory infrastructure for the marijuana industry that strikes the right balance.  Enact policies that are heavy-handed and the industry will continue to show itself capable of surviving on the black market.  Fail to regulate at all and the legal marijuana market will struggle with uncertainty and negative externalities.  Colorado's nascent marijuana regulations have been relatively well-reviewed, in part because it had the luxury of starting from nothing.  But in California the marijuana industry has been entrenched for decades, while cultivation and consumption for medicinal use has been legal since 1996.  Nonetheless, the state has not prioritized regulation of the industry, nor made any meaningful attempts to innovate or adapt to changing conditions.  I've written in the past about the environmental impacts of excluding the industry from the regulatory framework (see here and here), as well as the difficulties states may have when choosing which of their many administrative agencies will take responsibility for regulation (see here).

Both of those issues are now converging in Northern California, where the state's regional water board is at odds with state and local law enforcement.  Adrian Fernandez Baumann reports on the North Coast Regional Water Quality Control Board's efforts to partner with marijuana farmers to regulate water resources:

The water board reps' basic pitch: Starting this summer, and going fully into effect next spring, the board would regulate cannabis cultivation on the basis of environmental impacts. Growers would be asked to invest time and money in the proper stewardship of the land and in repairing damage that had already been done. In exchange, the board offered, basically, an understanding: the government would give growers time to fix old problems and would provide a them with a framework to diagnose and repair issues. And all of it would be totally, officially, unconcerned with the legality of marijuana.

In principle the system should work, and some growers are enthusiastic.  But this program, and any others promulgated by state or local agencies, will face the same challenge: establishing sufficient (if not exclusive) control over marijuana regulation such that the actions of other agencies don't interfere.  This was a problem for a similar program that was eventually broken up by the federal government.  And considering that marijuana raids as recently as late June targeted private property owners, it may be a problem for the water board's program as well.

For law enforcement, there are strong incentives to ignore the water board's call for cooperation and to just keep raiding. Asset forfeiture laws allow police to seize large amounts of money and assets in pot busts. In 2014, Mendocino County seized $5.2 million in assets, including $3.9 million in cash.The Mendocino District Attorney's Office takes things even further with its "restitution" program, which co-opts a law intended to pay for meth lab clean-ups to extract more money from growers. Basically, the DA approaches busted growers with a deal: Give us some cash for each pound confiscated and you get no jail time. The amount is negotiable. Officially, it's $50 per plant and $500 per pound, but it often ends up in the tens of thousands of dollars. The funds then get divided up between the DA and the arresting agency, creating a revenue stream with little democratic oversight.  

There are advantages to decentralized regulation, among them the innovation and experimentation that local agencies create.  But there are drawbacks as well, and generally speaking, decentralization and fragmentation are not the same thing.  The former shifts power to local governments with local expertise, while the latter spreads overlapping mandates around between agencies and requires extensive coordination and cooperation.  The marijuana industry will implicate many state and local agencies, but to be effective and integrated, the state will need to set some ground rules for how those agencies interact.  If it does not, expect more programs working at cross-purposes.

Who should have regulatory authority over marijuana?

The Mayor of Seattle signs an ordinance creating a regulatory framework for marijuana in the city.  Photo: Jen Nance.

Recreational use of marijuana is now legal in Colorado, Washington, Oregon, Alaska, and Washington DC.  Between now and election day 2016, an additional 14 states may place marijuana legalization initiatives on their ballots, including: Arizona, Arkansas, California, Georgia, Ohio, Maine, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nevada, New Mexico, and Wyoming.  23 states and Washington DC have legalized medical marijuana, with up to seven states pending legislation.  In 2016 Florida is likely to again consider legalizing medical marijuana; a similar 2014 ballot measure narrowly failed to reach the 60% supermajority required.  

Amid the stampede to legalize marijuana production, distribution, sale, and use, states are experimenting with various regulatory schemes.  A central question in developing a regulatory framework for marijuana is: who should have authority to regulate it?  So far there have been a multitude of approaches.  Some states are proposing to create a new institution devoted to marijuana regulation.  Ohio's 2015 ballot initiative proposes a Marijuana Control Commission.  Pending legislation in California proposes an Office of Medical Marijuana Regulation responsible for creating rules, with local governments in charge of enforcement.  Elsewhere states are placing authority in an existing institution, such as the Oregon Liquor Control Commission or the Washington State Liquor Control Board.  Colorado uses a hybrid model in which local governments and the state legislature share responsibilities.  And some ballot initiatives require the legislature to decide at some future date where authority should lie.

The marijuana legalization movement is developing rapidly, but it's worthwhile for states to think about which of their many institutions is best equipped to handle regulation of the burgeoning marijuana industry.  There remains a great deal of uncertainty in this regard, but at the very least it seems clear there isn't a one-size-fits-all model available.  A relatively small state like Maine might be able to handle a centralized approach, concentrating regulatory authority in a state-level institution.  California, on the other hand, has a diversity of stakeholders with varying degrees of tolerance for marijuana cultivation and use, so a decentralized power-sharing arrangement, where local governments set the terms of engagement, makes sense.  

Regardless of the choice, it will be important for states to understand the limitations of their choice.  Local governments are typically not as well-funded, staffed, or equipped to handle administrative burdens as state-level agencies are.  On the other hand, state agencies tend to be less responsive to local context and might be overwhelmed themselves with state-wide regulation.  

Take California, for example.  A pending Senate proposal would establish a regulatory body - the Office of Medical Marijuana Regulation - that would create regulations and issue licenses.  Local governments would be responsible for enforcement.  The proposal is a poor approach in my view, as state-wide regulations may not be responsive to local conditions, and as a consequence, local governments may not be enthusiastic about their enforcement obligations.  On the other hand, the California Assembly is proposing to establish a regulatory agency that sets the rules, while various state agencies would be responsible for enforcement.  Again, the proposal doesn't maximize local knowledge and sensitivity, and this time, fragments enforcement responsibilities across departments, creating the potential for confusion or diffusion of responsibilities.  A better approach for California, in my view, would create a state-level agency dedicated to marijuana regulation that creates a basic regulatory framework and serves to support local governments in setting specific rules and developing enforcement capabilities by providing technical expertise and financial assistance.  In any case, adoption of any of these proposals is likely better than nothing.  California's lack of marijuana regulation does not bode well for the state's preparation if current polling accurately foretells full blown legalization in 2016.  

Some states are using existing mechanisms - like their liquor control boards - to create a smooth transition.  But marijuana is a unique industry, and may eventually require a more tailored regulatory framework.   The legal marijuana industry is the fastest growing industry in the United States, and may eventually become larger than the entire organic food industry, the NFL, or newspaper publishing.  Estimates of the size of the US black market marijuana industry range from $10 to 120 billion annually.  Slotting marijuana regulation into existing mechanisms might avoid messy transitions for now, but eventually states will have to come up with a more dedicated regulatory plan.  Where states choose to allocate regulatory powers is an issue that will require more attention than it currently receives.