[Updated August 16, 2015]
Come November, voters in Ohio will have to decide if they want a highly regulated cannabis legalization law to go into effect in their state by voting yes or no on Issue 3. The law would allow citizens to legally purchase, possess, and consume marijuana for medical or recreational purposes.
Like progressive leaders Oregon, California, Colorado, and Alaska, all of which legalized recreational cannabis within the past two years, Ohio’s law would permit adults 21 and over to cultivate the herb. Ohio’s particular regulations specify up to four indoor plants and possession of up to eight ounces of raw marijuana flowers. Outdoor gardens, permitted in much of California and Oregon, would be prohibited, however (just as they are in Colorado,). All forms of personal cultivation are currenty banned in Washington State.
Only Ten Producers
The initiative, sponsored by a group of wealthy individual investors (some of whom are minor celebrities) and based in Columbus, the state’s capital, would limit production of marijuana to only ten pre-selected facilities positioned throughout the state. The state would then license roughly 1,100 businesses, at fees of between $10,000 and $50,000, to open manufacturing facilities, medical dispensaries, and retail outlets.
These businesses would be forced to purchase their herbal product from the ten cultivation facilities. In this respect, the scheme is a monopoly (technically, it is an oligopoly) that would prevent any person or business, regardless of their expertise or potential benefit to the market, to get into the business of cannabis production (above the four plants per adult personal limit).
ResponsibleOhio, of course, argues that it will not be a monopoly, oligopoly, or cartel based on the fact that the ten companies will compete with each other. It is assumed that retail outlets and dispensaries would be capable of purchasing from any and all of the ten facilities. However, this would ultimately be determined not by ResponsibleOhio or its member companies, but instead by a governing board appointed by Governor Kasich, a Republican who is opposed to legalization (and may appoint his prohibitionist buddies to administer the program).
It can easily be argued that so few production facilities would result in a lack of innovation and possibly little research and development—such as the breeding of new medicinal strains. The recreational quality (high type), medical efficacy (cannabinoid profile), and potency of pot produced by the ResponsibleOhio investment group-cum-constitutionally amended state law would depend entirely on how vigilantly the ten production facilities competed with one another (and the regulations surrounding that competition and their individual operations that are eventually written and implemented by the state).
Good for Consumers
For consumers, ResponsibleOhio is a pretty sweet deal, but would almost certainly result in higher prices than in some other states. Medical users will be permitted to purchase discounted (wholesale) marijuana at designated dispensaries (among the 1,100 businesses permitted under the initiative) if they are registered with the state (as in California). Recreational users would purchase from retail outlets and require no registration. If ResponsibleOhio’s legal herb is of relatively low quality or costs more than the black market, citizens will have the option of growing their own (if they wish to remain legal).
Unlike what is offered by the current black market, the investment group’s ten cultivation factories would utilize outside laboratories to batch test all cannabis grown. It could be argued that the ability to visit a medical dispensary or retail outlet and purchase a product that has been thoroughly tested, with accurate labeling and a guarantee of quality, safety, and purity is certainly worth the prices currently being charged by the black market.
It is sad, however, that a lack of competition at the cultivation level would most certainly curtail innovation and the competition necessary to truly drive down prices.
For cannabis consumers in the Buckeye State, ResponsibleOhio is so much better than the prohibition with which they live now that it’s not even funny. With the exception of the continued prohibition of outdoor gardens, consumers would have the option of purchasing on the black market (and possibly getting busted), buying from a medical dispensary or retail outlet, or growing their own. No longer would adults be convicted of possession of small amounts of marijuana or personal gardens.
Bad for Employees
However, the proposed ResponsibleOhio legislation in no way protects employees who legally use medical or recreational marijuana. Employers who are acclimated to drug testing employees—and firing those who fail drugs tests—will continue to be legally permitted to do so.
In this respect, ResponsibleOhio addresses some of the concerns of Ohio’s citizens who wish to avoid the black market and legally cultivate, possess, and consume cannabis as medicine or euphoriant while avoiding some of the stickier issues of workplace drug testing and the rights of both workers and the companies that employ them.
On June 15, 2015, the Colorado Supreme Court ruled that medical marijuana patients can be fired if they fail a drug test. Even in this progressive state, prohibitionist forces are defending employers and outdated practices from the late 20th century and Nancy Reagan’s Just Say No campaign. Would a legal challenge in Ohio’s court system produce a different result, especially given the current conservative Republican legislature and presidential candidate Kasich’s opposition to cannabis legalization of any type?
A Crain’s Business Cleveland article from August 16 describes how a variety of groups in Ohio oppose the bill, including the Council of Smaller Enterprises, the Greater Cleveland Partnership, the Ohio Manufacturers’ Association, and the Dayton Area Chamber of Commerce.
The board of directors of the Ohio Manufacturers’ Association on August 13 announced opposition to the ballot issue “on the grounds that granting what, in effect, are business monopolies would undermine free-market competition.”
According to Ian James, the executive director of ResponsibleOhio, “This is disappointing, but not surprising.”
“They all know that legalization does not have an impact on the ability to enforce drug-free workplaces. After passage of the marijuana legalization amendment, you remain a drug-free and a zero-tolerance workplace, period.” — Ian James
The only problem with James’ logic is that metabolites of THC, the chemical compound in cannabis that delivers its euphoric high, remain detectable in the human body for roughly 30 days following consumption of the herb or an extract or concentrate thereof (like tinctures, edibles, and oils). Heavy habitual users may test positive up to two months after ceasing consumption.
Thus, patients and recreational consumers who are not consuming cannabis or high while at work, but who smoked at a party or medicated for a disease like Crohn’s or cancer weeks prior to a workplace test, would be penalized for their fully legal consumption of cannabis. Most of Ohio’s citizens must work to earn a living. According to James, the same people to whom his investment group would be marketing cannabis flowers and manufactured products if the law passed would be subject to dismissal because “legalization does not have an impact on the ability to enforce drug-free workplaces.”
Unfortunately, those growing their own would have to register with the state and pay a $50 annual fee. I don’t think anybody cares about the $50 (that doesn’t even buy a quarter ounce of quality herb in the state today). But registration in a state-owned database is something that justifiably intimidates and frightens a lot of existing growers who are contemplating passage of this initiative and the ability to legally grow a few plants.
What if the Republican-dominated state cooperated with federal authorities (like the DEA) and handed over the database, revealing exactly who was growing cannabis (in flagrant violation of federal law)? Regardless of the real possibility of this occurring, many curious cannabis cultivators are wary.
While I personally would like to see the grow limit raised and legal outdoor gardens—from a consumer perspective—ResponsibleOhio looks pretty nice. In theory, prices set by all stages of cultivation, manufacturing, and retail sales would strive to equal or beat those of the black market, helping ensure market demand and sufficient sales volumes to maintain all segments of the industry. If retail outlets and the black market engaged in a price war, consumers would obviously benefit.
Can a Closed Market Drive Down Prices?
States like Oregon, Colorado, and Washington have proven that open markets drive down prices while simultaneously improving quality, selection, and brand dependability. In some areas of Colorado and the West Coast, ounces of top-shelf sativa and indica strains, like Jack Herer and G13, sometimes sell for only $130 to $200—significantly below the national average for the black market.
In tightly regulated New Jersey, state-run dispensaries sell an ounce of top-shelf cannabis flowers for $550; at Delaware’s sole dispensary, that ounce costs $400-450.
The only problem for those in Ohio, however, is that theirs would not be an open market. With only ten production facilities—albeit owned by ten separate companies—market competition likely wouldn’t occur at a level necessary to significantly drive down prices through the natural forces of the market. At least not like in Washington, Oregon, and Colorado. With only ten potential sources of raw plant material, sales outlets could cut their margins only so thin in an effort to compete with one another on price.
In this respect, retail stores would be hobbled by limited selection and greater difficulty in differentiating themselves from their competition. Exclusivity is a trait of many successful marketing campaigns. None of the 1,100 retail outlets would be able to claim that they offered a unique strain of cannabis. Thus, customer loyalty would be considerably harder to obtain. Pot customers would understand that they could purchase the same basic product—albeit possibly in different packaging or processed in a somewhat different manner—from each and every retailer in the state.
This frustrates some activists and progressive leaders for two reasons. First, they cite that Ohioans will likely pay more for their cannabis than citizens in other states featuring true open market production, manufacturing, and retail sales. Second, what about other entrepreneurs who might want to get into the production of cannabis for sale in the state? Is it ethical, in a supposedly open market democracy, to exclude them?
Voters should not assume that legal herb produced by the ResponsibleOhio group would be cheaper than that of the black market. In states like Colorado, black market prices have been driven down by legal dispensaries and retail shops, but are still cheaper than legal herb. Thus, cannabis consumers in Colorado prove that they are willing to pay more for legal and safe access to tested, labeled, and reputable marijuana.
(In March 2015, Colorado sold about $75 million worth of cannabis in combined medical [dispensary] and recreational [retail shop] sales. By July, the monthly revenue for recreational sales alone topped $50 million for the first time, contributing about $4 in taxes to Colorado’s schools.)
Pros and Cons
Thus, marijuana consumers in Ohio who are tired of high prices, dealing with the black market, and, of course, the threat of being busted for purchasing street weed might want to embrace ResponsibleOhio and vote Yes in November. In the end, ResponsibleOhio is offering a value proposition to pot consumers: Would cannabis users rather pay the black market a little less, but get a baggie full of something that has no strain name, no brand, no pedigree, and certainly no guarantee?
The simple ability for a patient or recreational consumer to shop a retail outlet during business hours, purchase up to an ounce of a particular strain like Kali Mist or Jack Herer, and then take it home and consume it—all within the bounds of the law—is something that sounds almost too good to be true for the average toker or patient almost anywhere in the Midwest, including Ohio. The fact that this luxury would be enabled by a pseudo-monopoly on the production side of the business somewhat sucks. Most would agree that monopolies, especially those encouraged and maintained by the state, are anti-American and anti-middle class.
For those of a libertarian mindset who encourage free markets, believe in the power of entrepreneurialism (consider the wealth that has been generated by Silicon Valley), and don’t support arbitrary government restrictions that put wealth into only the pockets of a few will be against ResponsibleOhio on principle. Of course, if ResponsibleOhio fails to pass, they’ll also be forced to continue purchasing their cannabis on the black market, with uncertain quality, a total lack of testing, no labeling or ability to choose strains, high prices, and the risk of imprisonment.
Come November, Ohio voters must decide if they not only embrace marijuana legalization, but if they are willing to limit production to an artificial monopoly of only ten cultivation facilities. ResponsibleOhio is basically telling voters: “We’ll pay the $20 million required to get this issue on the ballot and educate voters so it passes if you’ll give us exclusivity on the production of the product.”
To learn more about ResponsibleOhio, check out ResponsibleOhio: The Upside.
Image credit: ResponsibleOhio PAC
Gooey Rabinski is a technical writer and instructional designer who has contributed to magazines such as High Times, Cannabis Culture, SKUNK, Heads, Weed World, and Cannabis Health Journal. He is currently a contributing writer to Whaxy.com and the author of Understanding Medical Marijuana (2015 Edition), available on Amazon Kindle.