Going to pot?
As both the social costs of and tax revenue from legal marijuana explode, it becomes increasingly difficult to reverse direction
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Manitou Springs, Colo., is a funky resort town on the shoulder of Pike’s Peak just west of Colorado Springs. Along Manitou Avenue, the town’s main street, “No Vacancy” signs dominate the summer streetscape. In an era when most hotels ban smoking, another sign is also conspicuous: “Smoking Rooms Available.”
The message is clear: Marijuana tourists are welcome.
An expected $25 million in marijuana sales in Manitou Springs has been a boon to the local economy. But Manitou’s neighbors are starting to demand the city pay a price for the problems it’s causing, too.
Colorado’s Amendment 64, legalizing recreational marijuana, passed in November 2012, three years ago this fall. The Economist called the new law “an electoral first not only for America but for the world.” Manitou Springs was one of the first towns to approve recreational sales, which began last fall.
Supporters said the law would boost economic development and provide tax money for schools and other essential services—and they haven’t been wrong. Just ask Marc Snyder, the mayor of Manitou Springs. From his perch, marijuana revenue has been a badly needed financial windfall. Manitou Springs normally operates without a lot of extravagance on a budget of about $6 million a year, most of that money generated by hotel and restaurant taxes and other tourist-related income.
But three years ago, the Waldo Canyon Fire devastated the hillsides surrounding Manitou Springs. Townspeople fled when the fire—at that time the largest in Colorado history—spread to the city limits. For more than a year after the fire, every time it rained the downtown area flooded. Several businesses closed or moved. The $1.2 million in additional tax money from marijuana sales has meant that Manitou has been able to accelerate its flood mitigation activities. “That’s a significant amount of money for our small town,” said Snyder.
Money pouring into state coffers is also growing. In May alone, the last reporting month available, Colorado took in more than $11 million in marijuana-related taxes, licenses, and fees. That doubled the total from May 2014. The state is on pace to take in well over $100 million this year—not including the local option sales taxes levied by such towns as Manitou Springs.
Indeed, if Manitou Springs is your only data point, you might conclude that the benefits far outweigh the costs. The positives for Manitou are obvious: Buildings abandoned because of the flooding now have new and thriving tenants. Mayor Snyder says that not only is revenue up from marijuana tax collections but general tax revenue is up, too.
But Manitou’s experience is only one small part of the picture, and others are starting to ask: Has the new law unleashed a more powerful, higher law: the Law of Unintended Consequences?
Those “No Vacancy” and “Smoking Rooms Available” signs suggest most of the people now buying marijuana in Manitou are from out of town, many of them from out of state. Denver has its “Green Mile,” Broadway Street near downtown where a lot of pot is sold and smoked. But towns like Manitou, early adopters of recreational marijuana, have become tourist destinations.
With sales of pot in Manitou Springs likely topping $25 million by next year, what’s sold in Manitou often finds its way elsewhere. That’s why adjoining states are crying foul, claiming Colorado is reaping the financial benefits of marijuana sales while exporting the problems to others. Oklahoma, Nebraska, Wyoming, and Kansas have filed lawsuits seeking compensation from Colorado.
Some of the complaints are coming from closer to home. Of the 321 cities and towns in Colorado, less than 100 allow marijuana sales—many of them small towns like Manitou Springs surrounded by counties or other towns that prohibit recreational sales. The sheriffs in some of the counties that still prohibit marijuana have also sued the state of Colorado and Gov. John Hickenlooper, seeking clarification of the state’s law—and compensation for costs they will bear because of the problems marijuana will cause.
Colorado Springs, Manitou’s closest neighbor and the second-largest city in the state, continues to prohibit recreational marijuana. John Suthers served as Colorado’s attorney general for 10 years before becoming the mayor of Colorado Springs. He has been a staunch opponent of legalized marijuana.
“Manitou is not paying for the problems marijuana is causing,” he said. Among those problems: “Marijuana has become pervasive in our schools. Most of our suspensions are because of marijuana. Legalization has lessened the perception of risk among young people, and when the perception of risk goes down, use goes up.” He said school administrators often hide the consequences and costs of marijuana: “No school administrator wants to tell the public that drugs are out of control in their schools.”
Data from the National Poison Data System support Suthers’ claims. Exposure to marijuana among children is up dramatically in recent years, especially in states where it is legal: Alaska, Colorado, Oregon, Washington, and the District of Columbia. Colorado Springs saw a spike in suspensions last year. Statewide, possession of drugs accounted for 614 of the state’s 1,473 expulsions last year. The overwhelming majority of the incidents involved marijuana, according to Lt. Jeff Kramer, spokesman for the El Paso County Sheriff’s Office. “We get occasional scenarios involving heroin or cocaine, but marijuana definitely leads the way,” he told the Colorado Springs Gazette. “It’s more readily available to kids.”
Substance abuse is the “single most troubling school safety trend,” said Larry Borland, a retired school security chief who is now the administrator for the El Paso County Sheriff’s Department. He said, “We have told our kids, ‘It’s OK to smoke marijuana, it’s OK to drink alcohol. Mom and Dad are doing it.’ That kind of behavior is going to come right back into behavior on the part of the students.”
The problem has become so acute that in August Colorado rolled out a new advertising campaign to discourage young people from smoking pot. Marijuana tax money is paying for the program. It’s the state’s second campaign: The first campaign, launched last year, was widely criticized for its cost—about $2 million—and lack of effectiveness.
Suthers also believes other social costs, and the direct costs to taxpayers, are much higher than most government bureaucrats will admit. For example, Suthers said, “One of the dirty little secrets of the Social Security system is that the number of people collecting disability benefits has skyrocketed.” Suthers suspects one of the reasons is drug abuse.
The number of Americans receiving disability payments from the government has tripled since the 1990 passage of the Americans with Disabilities Act—during a time when job opportunities for disabled persons have never been greater. “Too many of these people,” Suthers said, “are not disabled in the classic sense. They are drug abusers who can’t hold a job.”
Suthers admits that many of these abusers are on hard drugs such as meth, cocaine, and heroin. “But the idea that marijuana is not a gateway drug is ridiculous,” he said. “I have never had an addict tell me that his first illicit drug wasn’t marijuana.”
Finding answers to some—but not all—of the questions related to marijuana usage will take time—and data. But data have been slow to materialize. Beau Kilmer is co-director of the RAND Drug Policy Research Center and the co-author of what has become the essential book on the subject: Marijuana Legalization: What Everyone Needs To Know. “What are the data saying?” he said. “Not enough. There’s a real data lag.”
One recent study from Washington state has marijuana opponents saying, “I told you so.” The Washington Traffic Safety Commission released an analysis of blood tests from drivers involved in fatal accidents. Before the legalization of marijuana, about half of such blood samples had active THC, the psychoactive ingredient in marijuana. The new study found 85 percent of blood samples had THC.
But all this cautionary data hasn’t discouraged marijuana supporters. President Obama is on record in support of legalized marijuana. Ohio voters will decide on legalization of recreational and medical marijuana on Nov. 3. The National Organization for Women and the American Civil Liberties Union have campaigned in favor of pot in Ohio. In what could be a harbinger, on Sept. 15 Toledo voted overwhelmingly to change city ordinances to decriminalize marijuana, eliminating jail sentences for most possession offenses.
RAND’s Kilmer recommends a go-slow approach to marijuana legalization, saying governments could become addicted to the revenue before they know the true costs and who will pay for those costs. “If the states are a laboratory, a place to experiment, then we should at least wait until the results from the experiment are in before we draw conclusions,” he said. “And it’s far too early to do that yet.”
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