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Ohio's Marijuana Referendum: Watch the Money

The Huffington Post The Huffington Post 27/10/2015 Pat Oglesby
WEALTH © Jon Boyes via Getty Images WEALTH

When Russell Long came to the U.S. Senate and joined the Finance Committee, legend has it, he voted against every motion, no matter how noncontroversial. Eventually, a more senior senator asked him why. Long reportedly answered: "I'm not for any deal unless I'm part of it."
Ohio voters might bear that saying in mind when they vote on the Issue 3 marijuana legalization plan on November 3.
Issue 3 exemplifies "regulatory capture" -- when an industry writes the rules for itself. Regulations are supposed to protect the public from industry. With regulatory capture, regulations protect an industry from the public.
In the short history of marijuana ballot initiatives, two examples of regulatory capture stand out. First, a 2012 initiative in Oregon would have created a "Cannabis Commission." Shortly before the 2012 election, the commission was explained this way: "Measure 80 puts control of the commission in the hands of the marijuana industry. After a brief start-up phase, five of the commission's seven members would be elected by licensed growers and processors... Will that commission work to maximize revenue for the state -- or to benefit constituents in the marijuana trade?" Oregon's 2012 initiative failed, even as more moderate 2012 initiatives in Colorado and Washington sailed through to passage. So Oregonians had to wait for legal cannabis until 2014, when a less grabby initiative passed.
Second, Ohio's upcoming Issue 3 would put all commercial growing rights in the hands of a small group of wealthy funders -- call it an oligopoly, or a cartel. It turns out (uh-oh!) that Ohio's proposed 2015 deal is even grabbier than Oregon's failed 2012 deal.
OK, politically, 2015 may be different from 2012. Some cannabis consumers take the rhetorical high ground. More and more people are shifting to the view that marijuana should be legalized. That shift seems to prove that those cannabis consumers were right and the prohibitionists wrong. All along. So the consumers would like to maintain their momentum. As they prevail on whether to legalize, they would also like to say how to legalize. Because they kept repeating the right answer to "whether," they claim credibility on "how."
But "how" is a completely different question. Just because more and more people agree that prohibition has failed doesn't mean they will take cannabis consumers' word for what should come next.
Like it or not, the average voter may look at a deal and say, "What's in it for me?" Marijuana can bring in huge revenue. Colorado is already collecting more tax on marijuana than on alcohol. Washington officially projects over a billion dollars in taxes by 2019. And the revenue flow is just getting started. Taxes can start pouring in once the industry is on its feet and the black market is defeated.
Who gets marijuana money? There used to be three choices: gangs, ganjapreneurs, or government. Once gangs are pushed out, three choices narrow to two: The money will be split up between ganjapreneurs (the cannabis industry) and government (We the People, at least in theory). Cannabis consumers don't care primarily about how that money will be split up -- or whether there are many ganjapreneurs to share the wealth, or just a few, so that the rich get richer. Naturally enough, consumers make freedom their priority.
OK, back to Oregon 2012 and Ohio 2015. A huge problem for the 2012 Oregon deal was that it was a blatant industry money grab, setting up "regulatory capture" from the get-go. The average voter was left behind. From a taxpayer's point of view, Oregon's 2012 measure ranked dead last among the three 2012 initiatives. And it was the only initiative to fail that November. So the Oregon cannabis community had to wait until 2014, when a less money-grabby initiative passed.
But Oregon's 2012 failed initiative could have been worse. It would have been amendable. Even so, in 2012, Oregon voters waited for a better deal, and they got one in 2014 -- another amendable initiative, but without that regulatory capture.
Fast forward to 2015. If Ohio's Issue 3 becomes the law, voters won't have the legislature to fix any problems that turn up. Issue 3's funders not only grab the entire commercial cannabis market for themselves, they cap their taxes permanently, at low rates. "Permanently" is the key word. By Constitutional amendment. Issue 3 freezes the law, not just about who can grow and how little tax they must pay, but on every other question, too.
Sure, cannabis taxes need to be low at first to let the legal industry beat the black market. But pre-tax prices are likely to collapse as the legal industry moves out of the shadows. And then revenue from Issue 3's permanently-fixed percentage-of-price taxes will collapse with them. Only another voter-approved Constitutional amendment can change a single word of Issue 3's new language. And if Ohio voters change their minds, taking away vested Constitutional rights can be costly.
I cast no aspersions on folks in the marijuana community who vote for Issue 3. Big Money presents them a hard choice. The Founders understood that we wouldn't all have "the same opinions, the same passions, and the same interests."
But Issue 3 gives the average Ohio voter a worse deal than the failed 2012 Oregon initiative. The grab for power and money in 2012 in Oregon was statutory and reversible. The grab for power and money in 2015 in Ohio is constitutional, and pretty much permanent. That's a big difference. So average Ohio voters next Tuesday can wait, like Oregonians in 2012, for a deal they might be part of. Or they can take a deal that shuts them out -- in all likelihood, forever.

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