Report: California Should Enact Strict Marijuana Regulations

Months before California voters will likely have a chance to legalize the recreational use of marijuana, a new report from the Public Policy Institute of California provides a series of recommendations for how the drug should be regulated in the state.

A measure backed by former Lt. Gov. Gavin Newsom and former Facebook President Sean Parker has already received 25 percent of the signatures needed to qualify for the November ballot. The initiative, known as the Control, Regulate, and Adult Use of Marijuana Act, has also received support from the California Medical Association and the state NAACP.

The PPIC study, released Wednesday, analyzes how regulations have played out in Washington and Colorado, the two states that have already legalized recreational marijuana.

The report says if California joins those states, it should be strict with its initial rules, while remaining flexible enough to change direction if the laws aren't working as planned. Recommendations include limiting sales to designated stores, banning "home grows" or cultivation for personal use and establishing stiff penalties for selling marijuana to people under 21.

"That tight system will be a lot easier down the road to loosen up," report co-author Patrick Murphy says. "Whereas if you sort of said 'let's roll this out,' which is pretty much where we started with medical marijuana, and we went 20 years with really trying to tighten this up."

California became the first state in the nation to legalize medical marijuana when voters approved Proposition 215 in 1996, but it wasn't until last year that state lawmakers finally established a regulatory system around medical cannabis.

Build Off Existing System, With Horizontal Structure

The PPIC report calls on the state to integrate any new recreational marijuana regulations into the existing medical system.

"For transparency and simplicity, California should establish recreational marijuana market regulations that adopt most features of the medical market," the report says. "[The new medical marijuana regulations] represents a constructive step in developing a plan for regulating recreational marijuana."

The report recommends a horizontal structure that mirrors the current system of medical marijuana regulations. This would mean licensing growers, distributors and sellers separately. While that could lead to a more expensive end product, it would encourage wider participation in the industry.

"It's also a check from some people's perspective that you won't have some big industrial entity coming in," Murphy says. "You will have tighter control over each of those steps and more ways in which you can hold folks accountable."

Licensing businesses in different parts of the supply chain could be reassuring to small growers, who have feared that the legalization of recreational pot would lead to "Big Ag" taking over the industry.

Enact Tax Similar to Alcohol, Cigarettes

Estimates of tax revenue that California would bring in from a system legalizing recreational marijuana have exceeded $1 billion.

The study recommends an excise tax on sellers, like the existing point-of-sale alcohol and cigarette taxes.

Again, the study calls for flexibility so that the state may balance the need to deter consumption without setting a tax so high that it will diminish revenue.

High tax rates "should deter recreational use and reduce negative consequences, such as abuse," the authors write. "However, steep marijuana prices could fuel the illicit market, the opposite of what legalization is intended to achieve."