By Matthew Walstatter
With the recreational marijuana industry taking root in two states last year and poised for further expansion into new markets, a great deal of attention is being paid to the relationship between medical and adult-use cannabis.
Business owners, lawmakers, regulators and patients are asking tough questions about how taxed, licensed cannabis companies can compete with MMJ operators that face lower taxes and, in the case of Washington State, virtually no regulations. Some are asking if we even need a medical system at all.
I believe that the situation calls for a holistic approach, one that protects medical patients while also aligning the medical and recreational systems and streamlining regulation. The goal is to build an efficient, professional cannabis community and industry that will thrive over the long run.
The best way to accomplish this is to craft a system that meets the needs of medical patients, recreational customers, the businesses that will serve them and the regulators who must assure that the system remains safe and fair.
As a business owner, such a system would allow me to serve both medical and recreational customers in the most efficient (and thus profitable) manner.
Stakeholders and Their Needs
Creating such a system begins with identifying the needs of each of the stakeholders.
All stakeholders have a similar interest in creating:
- a safe, secure and adequate supply of cannabis and cannabis products;
- a safely regulated system for processing, packaging and labeling cannabis and cannabis products
- secure access points to learn about and purchase cannabis and cannabis products.
As business owners, we need certainty in the marketplace. That means building a fair regulatory and tax structure and requiring all industry players to abide by it.
Not all medical users are physically able to grow their own, either because of their physical condition or their living situation. These patients should be allowed to designate a grower to produce their meds for them.
The primary concerns of state regulators revolve around public safety, efficient regulation and optimizing tax revenue. They must ensure that the supply of cannabis and marijuana products is safe, unadulterated and clearly labeled as to potency. The government also has a strong interest in assuring that cannabis products are kept away from children.
Don’t Tax Medical Patients
Taxation is perhaps the most vexing issue in the medical/recreational dichotomy.
Medical users should not be taxed for their medicine, but recreational cannabis will certainly be taxed. A system that meets the needs of all must find a way to fairly tax the distribution of cannabis without unfairly taxing patients or choking off the profitability of the industry.
The endgame here is to create a fair, efficient tax structure, one that captures as much tax revenue as possible without pushing prices so high that people remain in or turn to the black market.
Fairness also dictates that we refrain from taxing medical patients. After all, what other medicine comes complete with its own excise tax? This works best if medical and recreational cannabis are permitted to be produced, processed and sold under one roof. Medical patients with cards would not pay the tax imposed on all others. This helps to avoid the issue of competition between taxed recreational providers and untaxed medical providers.
As we will see below, it also promotes efficiency by allowing for the easy movement of product between the medical and recreational side. We could even allow for one inventory, with taxes collected on products sold to rec customers and no taxes for medical patients.
Most cannabis strains are suitable for both medical and recreational customers, as are most cannabis products made from these strains.
As one commentator noted, the difference between medical and recreational cannabis is much like the difference between water and holy water. The distinction is in the use, not the product itself.
This means that as long as we account for the needs of all stakeholders, we can regulate medical and recreational marijuana in much the same way.
Minimum safety and security requirements for the production, processing and retail sale of medical cannabis would be more than adequate for recreational cannabis as well. Having one set of rules and regulations serves the interest of both the state and the industry in efficient regulation, while helping guarantee public safety.
Such a system could allow stores to have both MMJ and rec products in their inventory, or at least make it easy to obtain or transfer both. This is extremely important because it allows business owners to respond to relative levels of demand in the moment. Thus we avoid the problem of having either too much or not enough of one type of product.
This would permit business owners to serve both medical and recreational customers under the same roof, with one inventory, one set of rules, one regulatory body and less needless duplication. Growers, processors and retailers could focus primarily on the rec or medical markets if they wanted to, but wouldn’t be forced to choose as a result of government regulation.
Protect the Patient Registry
We can serve the additional needs of patients by establishing or maintaining a patient registry and medical card system. Those with a genuine need for medical marijuana could continue to obtain a medical card with a doctor’s approval.
Patients who obtain a medical card would have higher possession limits and higher plant counts in their homegrows. They would also be allowed to designate a caregiver to help them obtain and use their medicine and a grower to cultivate for them if they are unwilling or unable to do so.
Patients could show their cards in the retail outlet so that their purchases would be subject to the higher possession limits. And those who present a valid medical card would not be subject to the taxes that rec customers pay. We could even create a medical certification program for retailers so that patients would know which shops carry the more medically oriented items and offer the more detailed information that many medical patients seek.
Cannabis is unique in that it is both a powerful medicine that helps a long list of ailments and a relatively safe and benign recreational drug. For many who use it for relaxation, the line between medical and recreational use is anything but clear.
This presents a problem for our society, which tends to see things as either this or that. Rather than focus on whether cannabis is medical or recreational, we must focus on creating a system that meets the needs of all cannabis users, the industry that provides it and the government that regulates it. This will allow us to avoid prejudices and preconceptions and build a system that works.
Matt Walstatter and his wife own Pure Green, a dispensary in Portland, Oregon