Marijuana task force recommends giving current MMJ businesses a one-year quasi-monopoly?
Of recommendations made this week by the Amendment 64 task force, one allowing pot tourism received the most attention. As a result, a controversial piece of advice has gotten short shrift. To whit: The panel suggests that only current medical marijuana businesses be allowed to apply for recreational shop licenses for the first year after regulations take effect. Would that create a quasi-monopoly?
According to Sederberg, the licensing issue came up in the context of recommendations about vertical integration -- the requirement that retail outlets also grow their own product. This model is currently in place under state medical-marijuana regulations, which state that centers must grow at least 70 percent of their own cannabis; the other 30 percent can come from other vendors.
Sederberg notes that "there was a bunch of back and forth" about vertical integration "at the work-group level and in the regular framework of the task force." The arguments in favor of the approach include consistency -- "that we shouldn't change systems right away, and allow a period of time for the transition" from medical marijuana to the recreational kind, "so we don't have to find ourselves with a whole new system.
"Also, there was talk of diversion," he goes on, "and how right now, adding a number of new cultivation facilities that didn't have a retail facility associated with them could led to incentives for someone to divert if they didn't have an ability to sell their products to any retail stores."
As for the arguments against vertical integration, Sederberg says opponents at the task force level talked about how "it's not a natural market to require something like that. And some of the smaller store owners said they didn't want to go through the expense and difficulty of operating a cultivation facility." Moreover, "some people just thought that it's generally inefficient."
How about the theory that vertical integration gives current medical-marijuana businesses an unfair advantage over competitors, by making it much more expensive and complicated to get into the business?
Continue for more about the task force's licensing recommendations. "That was raised by a number of people during public comments," Sederberg says, "but it wasn't really discussed by the larger task force.
"I can certainly understand that argument," he notes. "But there are probably ways to address that -- by not requiring that a retail store have a cultivation facility, but requiring that everyone that has a cultivation facility has a retail store. That was not recommended by the task force, but it's certainly something that I'm sure will be discussed."
The first task force meeting took place in mid-December.
Photo by Sam Levin
With that in mind, Sederberg favored adopting vertical integration for the first two years after formal rules are in place; then, the question could be reexamined. In his view, "that would allow for a smoother transition. And I was concerned that by opening up to more of a free market, you'd see a lot of people coming here and opening up cultivation facilities because it's been their dream. But by throwing the gates open, it might really burden the system and potentially cause a situation where we had substantial over-production," potentially leading to illegal diversion.
In the end, a version of this tack was given the task force's blessing -- the difference being that a three-year vertical-integration system was suggested, as opposed to two. But also adopted, Sederberg says, "was a recommendation that the only people who can apply for any new business license for the first year are businesses that are currently in the system" -- meaning already licensed medical-marijuana operations.
He opposes this recommendation for a slew of reasons, including a very simple one: "I don't think it's fair." He adds, "What if local governments not currently involved in the medical-marijuana program are thinking about opening their cities or counties up to these businesses, but no business from their locality can apply? I'm very concerned that those cities and counties would be hesitant, or maybe decide not to take part, because unless their own local people are already operating in another locality, they won't be able to apply."
As such, Sederberg and University of Denver professor Sam Kamin, who's spoken to Westword on a number of occasions about marijuana laws and potential federal intervention, offered an amendment to drop the existing-businesses proviso. But it was defeated.
Of course, there's no guarantee that a proposal granting current businesses with what some may see as a year-long monopoly, or at least a significant head start, will definitely become law. The task force is only offering its take, not writing legislation. But as Sederberg notes, "there's a general sense that if we come up with a good set of recommendations that deal with a lot of these big-picture items, the legislature will seriously consider them, and adopt many of them."
To him, however, "the restriction of new license applicants to only current medical-marijuana-business licensees goes really, really far. And I would not be surprised to see the legislature or someone else take a hard look at it. As they should."
More from our Marijuana archive: "Marijuana tourism recommended by task force -- but can rules prevent smurfing?"
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