Chad Gilmore, store manager at the Patient ID Center marijuana dispensary, rings up Britt Freitas as she pays for her new medical cannabis patient identification card in Oakland, Calif., in March 2012. A panel led by California Lt. Gov. Gavin Newsom released a 93-page report Wednesday for how marijuana should be grown, sold, taxed and kept out of the hands of minors. (Jeff Chiu, Associated Press file)

California report breaks down legalization goals, conflicts

The report on California marijuana legalization, led by Lt. Gov. Gavin Newsom, says limiting black market should trump quest for tax revenue

SAN FRANCISCO — A blue-ribbon panel says curtailing the illegal marijuana market in California should be the primary goal of legalizing the drug’s recreational use in the state, and not developing another tax source.

In a 93-page report released Wednesday, the panel chaired by Lt. Gov. Gavin Newsom presents a wide range of choices and competing interests involved as advocates work to bring a recreational use initiative to voters next year.

Chief among the issues will be to determine how to structure licenses that growers and others in the industry will need. The panel indicated it wants that done in a way that both allows existing small suppliers to participate as well as leading to legitimate jobs without creating an unwieldy system.

The group said it was also important to develop a regulatory system that doesn’t make it easier for children to obtain the drug and doesn’t encourage exports by producing more pot than Californians use.

The country’s most populous state already has a well-established medical marijuana industry as well as a thriving black market with ties to Mexico.

“This industry should not be California’s next Gold Rush,” the report states.

The Blue Ribbon Commission on Marijuana Policy was convened by Newsom with the American Civil Liberties Union of Northern California. The work of the 24-member panel, which includes law enforcement representatives, tax experts, legal scholars, addiction doctors and a former White House drug policy advisor, is expected to influence several groups of marijuana activists and entrepreneurs that are trying to qualify a November 2016 ballot proposal that would legalize marijuana use for adults 21 and older.

Newsom, a declared Democratic candidate for governor in the 2018 race who supports legalization, said in an interview Tuesday that presenting the report as a series of options rather than detailed recommendations reflected both the difficulty of getting the group to agree on some of the thornier issues and the consensus that any law put before voters would ideally allow future fine-tuning.

“Perhaps the most important message from the report is what we are not recommending. We are not recommending maximizing the amount of tax revenue, we are not recommending that we promote and create a large industry, and we are not promoting and recommending that the price of marijuana drop significantly,” he said. “And the reason is all of those goals would depend on and encourage heavy use.”

Setting the right sales tax rate for different segments of the industry was a subject the commission singled out as integral to the overall objective of minimizing illegal activity.

If pot were taxed too highly, it would encourage sellers to stay in the illicit market, while taxes that were too low could spark a price drop that would make it easier for minors to score, said Stanford University psychiatry professor Keith Humphreys, a former adviser to the White House Office of National Drug Control.

“High prices, which you can induce by putting a minimum price on or setting high taxes, are good for deterring use, especially by kids, but if they are too high the illicit market can still continue,” Humphreys said. “So that’s a balancing act and that’s why one of the other things we emphasize is the importance of some flexibility in the process.”

At the same time, the commissioners agreed that money raised from licensing fees, taxes and fines should be funneled back into drug education programs, treatment programs for youth and policing over unlicensed growers who divert water from streams and foul public lands.

“The only regulatory tool we have over the illicit market now is to arrest people and put them in jail,” said Abdi Soltani, the ACLU’s executive director in Northern California. “When you switch to a legal market, you can test the product for safety, you can inspect the farms for their water use, and you can make sure the workers are paid a wage and not abused.”