Editorial: Californians overwhelmingly supported legalizing marijuana. Why is it still a mess?

Five years ago, California voters overwhelmingly chose to legalize the adult use of marijuana. The passage of Proposition 64 was supposed to replace the state’s vast illegal and quasi-legal medical marijuana market, in which virtually anyone could get their hands on marijuana, with a tightly controlled system of safe products, taxed sales and regulated commerce.

In recommending Proposition 64 to voters, the Times Editorial Board argued that it’s better for public health, for law and order, and for society to treat marijuana more like alcohol and less like heroin — as a legal regulated product for adults.

And backers of the initiative said it would create a controlled market that allowed adults access to safe, regulated marijuana products while protecting children. The new government-overseen industry would reduce the environmental harm of illegal pot farms, lessen the power of criminal drug gangs and help repair damage from War on Drugs that disproportionately targeted Black and Latino communities.

But today many of the promises of Proposition 64 remain unfulfilled.

The black market is as big as ever, with roughly 75% of marijuana sales in the state coming from unlicensed sellers. Illegal pot farms are still degrading sensitive environmental habitat. Untested and unregulated cannabis products, including edibles and oils, still flood the market. And the pledge to help communities disadvantaged by the War on Drugs is still a work in progress. California, which was one of the first states to end prohibition, has become an example of how not to legalize marijuana.

Proposition 64 fulfilled at least part of the proponents’ mission: Adult use of marijuana has been decriminalized and normalized. Prosecutors have cleared tens of thousands of marijuana-related convictions from individuals’ records. Pot shops were deemed essential businesses and allowed to stay open during the COVID-19 closures. Pop star Justin Bieber croons about getting his “weed from California,” and even traditional media companies offer cannabis gift guides.

But underneath that widespread acceptance is a big problem — the vast majority of marijuana consumed in the state is not legal.

It was always going to be a challenge transitioning to a regulated system; unauthorized and quasi-legal medical marijuana growers, manufacturers and sellers operated in the state for years. But even those in the industry have been surprised by the continued vibrancy of the black market, which is due, in part, to requirements, such as high taxes and local control, in Proposition 64. Now, the abundance of illegal pot makes it nearly impossible for California to do what the initiative intended.

An imperfect initiative
Even before election day, there were tensions and contradictions baked into Proposition 64. To appease local government and law enforcement groups, the initiative gave cities and counties the power to completely ban marijuana-related businesses in their jurisdictions. And that’s exactly what two-thirds of localities have done. That doesn’t mean people aren’t selling or buying marijuana in those communities — they’re just doing it illegally, using unlicensed shops or local dealers.

Proposition 64 was also pitched as a cash cow for the state. The initiative imposed taxes on commercial cultivation and sales, and it allowed local governments to layer on their own taxes. The hope was that marijuana would bring in more than $1 billion of state tax revenue every year to pay for afterschool programs, job training, drug addiction treatment, environmental cleanup and other worthy services. (Cannabis tax revenues exceeded $800 million in 2020-21.)

But the steep state and local taxes can add 50% or more to the price of products in a legal pot shop. When the cost of labor, product testing and packaging is factored, running a licensed business often doesn’t pencil out — especially when there are plenty of black market operators still producing and selling to customers, who may not know or care that they’re buying illegal pot.

And that undermines another Proposition 64 goal to ensure marijuana products are tracked, tested, pesticide free and safe for consumers. This has real implications for public safety. In early 2020, authorities seized marijuana vape cartridges from illegal shops in Los Angeles that contained a dangerous additive blamed for an outbreak of deadly lung illnesses.

Meanwhile, even as the large-scale licensed pot farms have grown in places like Santa Barbara and Monterey counties, illegal marijuana cultivation has continued to thrive, often to the detriment of the environment. In rugged Northern California coastal areas, illicit growers flatten hillsides, spray pesticides and divert streams just when salmon and other fish species are migrating in the late summer and fall.

In the Southern California deserts, illegal marijuana plantations have stolen precious water supplies and trampled plants and wildlife. And environmental groups that backed Proposition 64 say they still don’t know how marijuana tax revenue is being spent to repair environmental damage from illegal grows; the state hasn’t been transparent in how the money is being used.

California

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Can this market be saved?
There is still time to fix the system to achieve the promise of Proposition 64. But it will take a lot of work and committed leadership from state lawmakers and local elected leaders, many of whom have kept cannabis policy at arm’s length.

California can emerge from this marijuana mayhem by flipping the incentives. It’s too easy and profitable to remain in the black market and too onerous and expensive to join the legal one. By easing licensing procedures or reducing taxes temporarily, and ramping up enforcement and penalties for illegal operators, the state has a better chance of coaxing fence-sitting operators to get licensed. Earlier this year the state consolidated cannabis industry regulation in one department to help speed up regulatory reform. But the work is challenging because Proposition 64 required a two-thirds vote by the Legislature to make significant alterations to marijuana laws. (In recent years, most states have legalized marijuana through legislative vote, not initiative, which makes it easier to adjust the laws going forward.)

Plus, the state can’t do it alone. Far too many cities and counties still ban cannabis businesses. Proposition 64 guarantees that right, which is why some advocates are floating the idea of another ballot measure to eliminate cities and counties’ veto power over marijuana businesses. Local leaders have to acknowledge that refusing to recognize a now-legal industry is only encouraging the black market. Some localities are beginning to shift. Los Angeles County, for example, is considering revisiting its ban on pot shops in unincorporated areas.

Transforming California’s marijuana market is going to take real political leadership, which has been lacking at all levels of government. Gov. Gavin Newsom bears a special responsibility. As lieutenant governor, Newsom led a commission to study marijuana legalization and he campaigned for Proposition 64 two years later. However, until recently, he’s mostly shied away from marijuana politics. But there’s now widespread agreement that California’s marijuana system needs an intervention to prevent the legal market from collapsing.

It’s time for Newsom and lawmakers to get to work to find the right balance that will help the legal, regulated market grow while protecting public health and the environment. We can’t wait another five years to get this right.