Come November, medical pot dispensary operator Lanette Davies won’t be joining others in her industry in voting for Proposition 64, a measure that would legalize the recreational use of marijuana.
The initiative could create a flood of new customers for Davies’ nonprofit Canna Care pot shop, which is located in the back of an industrial park on the outskirts of Sacramento. But Davies fears the Nov. 8 ballot measure will result in big corporations driving out small operators, and the government setting steep taxes and fees on cannabis that will put it out of reach for many of her mostly low-income customers.
“Because of the double taxation and the permit fees, you are not going to have affordable medication,” Davies predicted as her customer bought a $33 bag of Jedi Kush marijuana. “The people who are going to suffer are those who are disabled, who are on low incomes. They are not going to be able to get life-saving medicine.”
She is not the only one concerned. Proposition 64 has split the medical cannabis community, with some seeing new opportunity and others fearing it will wreck a system that is working for nearly 800,000 medical pot card holders.
The division was exposed recently when the California Growers Assn. conducted a survey of 770 industry members, mostly marijuana growers and activists, according to Hezekiah Allen, executive director of the group.
He said 31% of those who responded — some 238 industry members — opposed the ballot measure, while 31% supported it and 38% were undecided. With hundreds of its members in opposition, the growers association decided to stay neutral on Proposition 64.
“We are totally divided,” Allen said. “We have strongly mixed opinions.”
Many growers, dispensary operators and customers of the existing medical cannabis market oppose the measure, arguing it undermines the intent of the Compassionate Use Act of 1996, which allowed marijuana to be used for medical purposes.
Dennis Peron, coauthor of the proposition behind that law, opposes Proposition 64 because he thinks current state laws allow for medicinal use of cannabis with little meddling by the government.
“We don’t need it,” Peron said of the initiative. “Why are there so many restrictions that they insist on as if [pot] were super dangerous?”
Proposition 64, whose major backers include former Facebook President Sean Parker and Lt. Gov. Gavin Newsom, would allow adults 21 and older to possess, transport and use up to an ounce of marijuana for recreational purposes and allow individuals to grow as many as six plants.
It also would impose a 15% excise tax on retail sales for medical and non-medical users, on top of taxes that cities and counties would be allowed to impose. Those would be in addition to the sales taxes — which total 9% in Los Angeles County — that would be charged to non-medical users.
In addition, there is a $9.25-per-ounce tax on cultivation, as well as license fees that will be charged by the state, both of which will be passed on to consumers, Davies said.
Newsom said the initiative was drafted to preserve the current community of medical marijuana users and the regulatory system approved by the Legislature.
“We wanted to respect that and as a consequence we preserve that and build around that in our initiative,” Newsom said in a live Facebook talk Sept. 26. “There is a reason why it is 62 pages long, Proposition 64.”
Jason Kinney, a spokesman for the Proposition 64 campaign, said the tax proposals are based on experience in Colorado, Alaska, Oregon and Washington, where recreational use is allowed but regulated.
“While we respect the need for access by medical marijuana patients, the experience of other states has overwhelmingly demonstrated the need to tax medical and non-medical marijuana at roughly the same rate to eliminate the incentive for people who are not legitimate medical marijuana patients to remain in the medical marijuana system following decriminalization,” Kinney said.
Kinney said the additional percentage being paid through the new 15% tax would be offset by the decline in retail price that experts are predicting for marijuana after legalization.
He cited research by experts including Matthew Newman of Blue Sky Consulting Group, a public policy and economics consulting firm founded by a former director of the state Department of Finance. Newman predicts that legalization will lead to a drop in marijuana retail prices.
“Any suggestion that patients will somehow be priced out of access under Prop. 64 is simply wrong, especially when every economist agrees that marijuana prices will decrease when the market is fully legal and regulated,” Kinney said.
A recent USC Dornsife/L.A. Times poll conducted by SurveyMonkey found 58% of California voters are in favor of the initiative.
Those in favor do not include Brian and Barbara Jones, who operate a small, second-generation marijuana farm in Nevada City and fear deep-pocket corporations will muscle in to take over the marijuana industry in California.
“We’ve watched a lot of people struggle through the years with legal issues, going to jail, losing their farms and now that things are set to be legalized, people with money are coming in,” Brian Jones said. “We are afraid we are going to get bullied over in the process.”
Allen, who heads the California Growers’ Assn., said he is leaning toward voting against Proposition 64 because of concerns that include potentially undermining protections for the existing cottage industry that were included in a new medical marijuana regulatory scheme approved last year by the Legislature.
The recently adopted state rules implement a cap of one acre per marijuana farming license and limits the number of licenses that one person or business can hold, while Proposition 64 does not limit the size of farms licensed after five years. The delay is to give small, existing farms a head start.
Allen said the industry estimates 1,100 acres of marijuana farms will be needed to meet the state demand.
“That could be three 500-acre farms or 4,400 quarter-acre family farms,” Allen said.
Kinney said Proposition 64 will do more to protect small growers than the rules approved by the Legislature.
“Nothing in the medical legislation limits the number of cultivation licenses a single entity can hold, and nothing in the medical legislation requires regulators to assess whether issuance of licenses could lead to a monopoly or anti-competitive behavior — as is the case with Proposition 64,” Kinney said.
The rules approved by lawmakers require licenses for cultivation, manufacturing, retail, distribution and testing. One entity can get licenses in only two of three categories. Proposition 64 would allow one corporation to get licenses in all of the categories at once, creating a conglomerate with a competitive advantage, Allen said.
“We’re going to see a lot of attrition in our community,” he predicted. “A lot of our businesses won’t make it.”
Kinney disagreed, noting Proposition 64 charges lower cultivation fees to smaller farmers and would result in state regulators denying licenses that could lead to a monopoly.
“Proposition 64 unwaveringly protects small farmers who want to play by the rules and work and thrive in a legal industry, and the notion that they are under any greater competitive risk under Proposition 64 than they are under the current medical system is patently false,” Kinney said.
The possibility that marijuana use may be legalized in the most populous state in the U.S. has national advocacy groups excited and hopeful it will give momentum to legalization efforts nationwide.
That prospect, which was set back in 2010 when California voters rejected the last legalization initiative, also has Allen still undecided.
“I have spent my entire life waiting for this day when this tremendous injustice of prohibition is history,” he said.
That is also among the reasons why Proposition 64 is supported by the California Cannabis Industry Assn., which represents many dispensary operators.
“We believe it represents the first step in bringing the production and distribution of cannabis from the underground market into a regulated one,” said Nate Bradley, executive director of the association.
The initiative could mean much more business for dispensaries as recreational users join medical cannabis consumers at the counter, according to Jamie Kerr, who owns a storefront dispensary in Shasta Lake, where she also is chairwoman of the city planning commission.
Still, Kerr, like Davies, plans to vote against Proposition 64.
“For the small players to suddenly be marginalized by big corporate interests, that provides incentive to divert people into the illicit market,” Kerr said.
Davies, who is also a director of a group called Crusaders for Patients Rights, estimated that the cost of cannabis at dispensaries could triple with taxes and fees and that half of her customers will no longer be able to afford their medical cannabis.
That concern has spurred patients’ rights groups including Progressives Against Prop. 64, Weed for Warriors and Davies’ group to set up websites with anti-Proposition 64 messages targeted to patients.
Weed for Warriors advocates for military veterans who use cannabis to overcome battle-related maladies including post-traumatic stress syndrome, according to its president, Sean Kiernan.
“Our big concern is you are going to criminalize the poor by forcing them onto the black market because you are going to restrict access via cost, via taxation and regulation,” said Kiernan, a San Diego resident and a U.S. Army Airborne Infantry veteran.
Canna Care customer Sandra Yuhre, 58, is another medical marijuana user who plans to vote against Proposition 64.
Yuhre is afraid it will force her and her husband, Rick, to turn to the black market for their medical cannabis as they are priced out of government-taxed marijuana.
“I see the cost going up tremendously and that’s a big concern for us because we are on a fixed income,” Yuhre said.
The couple spends $300 to $350 per month on medical cannabis, a tight fit as they rely on his Social Security disability checks. Yuhre said it helps her with pain from breast cancer surgery and assists her husband, a welder, with ailments including pain he suffers because his legs were crushed by steel plates in an accident at work.
Yuhre said the backers of Proposition 64 appear to be motivated by profit at the expense of medical marijuana users.
“We are older patients. We are not looking for a high. We are looking for pain management,” Yuhre said. “I don’t see that they are addressing patients at all. I feel we are being left out.”
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