Pubdate: Sun, 28 Dec 2014
Source: Denver Post (CO)
Copyright: 2014 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Author: Ricardo Baca

FOCUSING ON A NEW KIND OF BLACK MARKET BETWEEN STATES

The black market for marijuana in Colorado isn't what it used to be.

Nine or 10 years ago, the narrative of illicit cannabis in the state 
focused on illegally grown product filtering in from Mexico, 
California and elsewhere. Now it seems officials and experts are more 
concerned about Colorado-grown marijuana infiltrating other states, a 
trend that is seeing a significant upward trajectory, according to 
data obtained by The Denver Post.

"In a lot of ways, our legal industry has become the black market for 
other states," said Tom Gorman, director of the Rocky Mountain High 
Intensity Drug Trafficking Area.

Although some facets of Colorado pot are simple to quantify - taxes, 
sales, demand - the black and gray markets are by definition 
difficult to track, especially in the first year of legal 
recreational sales. It doesn't help that the underground market is a 
complex, multi-headed beast.

"There are four black markets," said Mark Kleiman, a professor of 
public policy at the University of California Los Angeles. "There's 
people growing it in Colorado to sell in Colorado. People bringing 
stuff up from Mexico to sell in Colorado. People with medical cards 
reselling their marijuana in state and out of state, including sales 
to minors. And there may be some diversion from the commercial 
market: People buying it retail in Denver and selling it in Chicago 
or somewhere else."

For example: The black market is straight up illegal. The gray market 
represents gray areas of the law among unlicensed, unregulated caregivers.

So what do the local black and gray markets for marijuana look like 
almost a year after recreational sales started on Jan. 1?

"We say this with regard to everything on these societal impact-type 
questions: It's too early to tell," said Ashley Kilroy, the city of 
Denver's executive director of marijuana policy.

Some industry experts agree with Kilroy on that point.

"It's absurd that a system that has grown over 80 years would end in 
a week or a year," said Mason Tvert, communications director for the 
Marijuana Policy Project and a director on Colorado's pot-legalizing 
"Yes on 64" campaign. "This is an issue that cannot be addressed in a year."

Ripple effect

With the pot coming into Colorado, the situation looks to be 
improving. Some Mexican marijuana growers have abandoned the crop 
entirely because stateside legalization has cut wholesale costs in 
half. "I wish the Americans would stop with this legalization," 
50-year-old lifelong pot farmer Rodrigo Silla told The Washington 
Post in April. Another Mexican farmer, identified only as Nabor, told 
NPR in November: "If the U.S. continues to legalize pot, they'll run 
us into the ground."

But with the pot leaving Colorado, a sticking point for the U.S. 
Justice Department is that it must prevent "the diversion of 
marijuana from states where it is legal ... to other states." The 
situation is getting worse. There is substantial data pointing toward 
an increase in the amount of legal and illegal pot being seized on 
its way out of Colorado to other states.

The number of Postal Service-mailed packages containing pot 
intercepted in Colorado increased by 1,280 percent from 2010, when 
there were 15 seizures, to 2013, when there were 207, according to 
HIDTA, a federally-funded drug task force. (The data did not include 
FedEx, UPS or other carriers.) The agency said the pounds of 
marijuana in those packages increased by 762 percent in the same time 
period, from 57.2 pounds in 2010 to 493 pounds in 2013.

"Some of the pot is out of dispensaries," said Gorman, who spent 30 
years with California's Bureau of Narcotic Enforcement. "Some is out 
of retail stores, some is out of home grows, some is from co-ops, 
some is from patients and caregivers - you take that whole segment, 
and that to me is what the black market looks like now in Colorado."

HIDTA's August report also shows a 397 percent rise in highway 
interdiction seizures of Colorado marijuana bound for other states 
from 2008, when there were 58, to 2013, when there were 288. When the 
organization informally polled 100 law officers on how much of the 
pot leaving Colorado actually is being seized, they estimated less 
than 10 percent, Gorman said.

"Nebraska, Kansas, Missouri, Oklahoma - it's Colorado dope going into 
those states," Gorman said. "It's very high-quality, very desirable 
pot, and you can get twice the amount of money for it in Iowa or Missouri."

The amount of illegal marijuana seized by the Denver Police 
Department increased 959 percent from the first quarter of 2013, when 
it took in 275 pounds of pot, to the first quarter of 2014, which it 
seized 2,912 pounds of cannabis - a result of the department's 
marijuana team, which "focuses on these bigger operations, the 
illegal marijuana grows," said Kilroy.

Meanwhile Kilroy also points to a recent report from public policy 
research organization the Cato Institute that says legalization 
hasn't brought on any significant changes to how much taxpayers are 
spending on state costs involving police, courts and jails.

"The overall impact on our criminal justice system ... the current 
statewide data shows no meaningful change in criminal justice 
activity costs," Kilroy said.

Marijuana policy

While some pot activists point at recreational marijuana's 
higher-than-average taxes as a reason for an illegal grower-rooted 
black market, there are bigger factors to some of the issues plaguing 
Colorado, according to Jeffrey Miron, a senior lecturer on economics 
and director of undergraduate studies at Harvard University.

"Compared to the rate of taxation for alcohol and cigarettes in many 
states and countries, (Colorado's) marijuana taxes are not 
excessive," said Miron, who is also the director of economic studies 
at the Cato Institute, which published his "Marijuana Policy in 
Colorado" working paper in October. "The magnitude of taxation for 
marijuana in Colorado isn't enough to create a black market. But I 
think if it were fully legal under federal law we would see the vast 
majority of the market become legal if not gray."

One of the next major milestones for black markets in Colorado, 
Washington and beyond: the 2016 election, when at least five U.S. 
states will vote on recreational pot within their borders and the 
whole country will elect a new president.

"Will he or she continue this hands-off, benign approach to 
marijuana?" asked Miron of the next U.S. president. "Then I think 
we've hit the tipping point. Without knowing the results of that, we 
can't quite know.

"Federal policy can be changed with the stroke of a pen. The new 
president can say to his or her attorney general: 'We should enforce 
the marijuana laws in all of the states.' That would be perfectly 
legal under the existing paradigm of federal law trumping state law, 
even in states like Colorado and others.

"The federal government in 1920 enforced alcohol prohibition in a 
whole bunch of states that had not criminalized alcohol."

Miron's working paper used data predating the 2000 introduction of 
Colorado's medical marijuana system to determine that "neither 
judicial and legal employment nor corrections employment shows any 
meaningful change after a marijuana policy change."

The finding discredits activists' theories that legalization would 
severely increase or reduce expenditures on criminal justice activities.

The Denver Police Department, however, is spending more money on 
marijuana enforcement in 2014 than before. But its additionally 
budgeted $410,005 is being used primarily for new hires (a sergeant, 
detective and crime lab scientist) and is funded by the 3.5 percent 
special sales tax on recreational pot - and not taxpayers as a whole, 
according to Kilroy's office, which also added that an additional 
$175,000 has been appropriated for 2015 to hire more park rangers to 
enforce public consumption laws.

Merits of legal purchase

Tvert points toward one number when he discusses the old school black 
market of customers buying from illegal growers and dealers: More 
than $550 million has been spent on legal medical and recreational 
pot in Colorado from January to October 2014, according to Department 
of Revenue data.

"The fact remains that hundreds of millions of dollars in marijuana 
sales are taking place in licensed businesses instead of the 
underground market," Tvert said. "It cannot be argued that the 
underground market is anywhere near where it was previously. In fact, 
it's probably a fraction of what it was."

Tvert attributes the success of Colorado's legal market to four 
factors: convenience, variety, safety and cost.

"And for the most part, all of those things will be found in a 
regulated market," Tvert said. "You'd be hard-pressed to find adults 
who would rather call around to people to find out who has illegal 
marijuana and hope it's the kind they want and hope that the person 
is able to meet them and hope that the whole transaction goes 
according to plan - as opposed to stopping at the store on the way home.

"If you think about how real life works, it's not a reasonable notion."
- ---
MAP posted-by: Jay Bergstrom