Bloomberg News

Legal Pot in Colorado, Washington Won With $7.7 Million

November 08, 2012

Pot in Colorado, Washington Won With $7.7 Million Push (Correct)

In Colorado, the Campaign to Regulate Marijuana Like Alcohol received $1.5 million, according to data from the secretary of state. Photographer: Brent Lewin/Bloomberg

Campaigns to legalize marijuana for recreational use in Colorado and Washington were well-financed and gave states regulatory and taxing power over it, both changes from a failed attempt in California two years earlier.

The first successful U.S. measures grew out of California’s Proposition 19 in 2010, which attracted donations of $4 million, according to campaign finance records. By contrast, the two states, which combined have one-third California’s population, raised at least $7.7 million.

“I’m sure they learned from the California experience,” said Beau Kilmer, co-director of the Rand Drug Policy Research Center in Santa Monica, California. “There was serious money behind the Washington and Colorado initiatives.”

Regulating the drug through such means as licensing and taxes may also benefit state governments strained by soaring costs for labor, including pensions and retiree health benefits, while sales- and property-tax revenue plunged after the longest recession since the 1930s.

The two measures also drew on support from younger voters, who are more likely to go to the polls in a presidential election, and growing tolerance for marijuana in a nation where one-third of states already permit its use for medical purposes.

Voters of all ages are moving toward supporting marijuana legalization, said Mark Kleiman, a public policy professor at the University of California, Los Angeles.

Out of Closet

“People know more people who smoke marijuana,” Kleiman said. “It’s a little bit like gay rights issues where, as people come out of the closet, the fear tended to go away.”

Washington will allow those at least 21 years old to buy as much as one ounce (28.3 grams) of marijuana from a licensed retailer. The measure directs the state liquor control board to regulate marijuana and tax its sales at a rate of 25 percent.

The board has until Dec. 1, 2013, to set rules on marijuana advertising, licensing producers, processors and retailers, and limiting the number of retail outlets allowed in each county.

Colorado, where the National Marijuana Business Conference begins today, allowed possession and purchase of as much as one ounce by those 21 and older, along with permission to grow as many as six plants in private, secure areas.

The new law directs Colorado’s revenue department to adopt regulations by July 1, 2013, on procedures for issuing a marijuana business license, labeling requirements for marijuana products, restrictions on advertising and civil penalties for not complying with the rules.

A similar measure failed in Oregon. Arkansas voters refused to legalize the medical use of marijuana, while Massachusetts voters approved such a measure, adding to the 17 states and District of Columbia that already allow it.

Laws Enforced

The Justice Department yesterday affirmed its intent to enforce federal drug laws, in spite of state legalization.

“The department’s enforcement of the Controlled Substances Act remains unchanged,” according to a statement provided by Nanda Chitre, a department spokeswoman. “Congress determined that marijuana is a Schedule I controlled substance. We are reviewing the ballot initiatives and have no additional comment at this time.”

Federal officials have previously cracked down on medical- marijuana dispensaries near schools in Colorado and sent letters to clinic landlords in California threatening them with jail if they didn’t evict the shops.

“What the states have done is perfectly constitutional,” said Robert Mikos, a law professor at Vanderbilt University in Nashville. “All they’ve done in essence is legalize the possession, cultivation and distribution of marijuana under state law.”

Resources Lacking

If the U.S. Drug Enforcement Administration wants to prosecute cases in Washington and Colorado, “nothing is going to stop them,” Mikos said. “But as a practical matter, the federal government doesn’t have the resources to enforce the federal ban that rigorously.”

Private support bolstered the wins in Colorado and Washington, said Jonathan Caulkins, an operations research professor at Carnegie Mellon University in Pittsburgh, Pennsylvania.

“Colorado and Washington got a lot of money,” Caulkins said. “They got a small number of very rich people to write very, very big checks. There was no big funding of any opposition.”

New Approach Washington, the group supporting the ballot measure, raised $6.2 million, compared with $16,195 raised by opponents, according to data from the state’s Public Disclosure Commission.

Big Donors

Top donors include Progressive Corp. (PGR:US) Chairman Peter B. Lewis, who gave $2 million. Another $1.7 million came from Drug Policy Action, the political arm of the New York-based Drug Policy Alliance whose donors include billionaire investor George Soros.

“I have funded much of the movement to enact laws that give patients access to marijuana as relief for pain and nausea -- and have made no secret of being one of those patients myself, using marijuana to help with pain following the amputation of my lower leg,” Lewis wrote in an August letter to Bill Gates, chairman of Microsoft Corp. (MSFT:US), and Warren Buffett, chairman of Berkshire Hathaway Inc. (A:US), in joining their Giving Pledge campaign to get billionaires to pledge at least half their wealth to charity.

In Oregon, where a measure to legalize recreational marijuana use failed, supporters raised $67,149, according to data from the secretary of state.

Organized Supporters

In Colorado, the Campaign to Regulate Marijuana Like Alcohol received $1.5 million, according to data from the secretary of state. The Marijuana Policy Project was the largest contributor with $871,372, according to the data. Lewis gave $33,700 and the Drug Policy Alliance gave $100,000.

The Coalition to End Marijuana Prohibition secured another $511,414 in contributions, according to Colorado data.

“When states start adopting policies that work, other states take notice,” said Mason Tvert, co-director of the Denver-based Campaign to Regulate Marijuana Like Alcohol, which supported Amendment 64. “It would not come as a surprise if other states opted to follow its example for years to come.”

To contact the reporter on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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