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Fri March 29, 2013
Pot consultant: Revenue estimate way off
Estimates of how much money marijuana legalization can bring to the state's coffers have been way off, Washington's new marijuana consultant said.
In an interview with public affairs channel TVW aired Thursday, Mark Kleiman said several factors, including competition from the loosely regulated medical marijuana market, illegal sales and high prices for legal pot are likely to affect the demand for the state-approved marijuana.
"It's entirely possible that by the time we finish regulating and taxing this product, it's going to be uncompetitive with what you can get at the collective gardens," he told Austin Jenkins for the show "Inside Olympia."
Washington and Colorado last year became the first states to pass laws legalizing the recreational use of marijuana and setting up systems of state-licensed growers, processors and retail stores where adults 21 or older can walk in and buy up to an ounce of heavily taxed cannabis. Sales could begin at the end of the year.
In 2011, efforts to regulate the medical marijuana market were vetoed by then-Gov. Chris Gregoire, who said among other reasons that she didn't want state workers dealing with a drug still considered illegal by the federal government.
Kleiman, a public policy professor at University of California, Los Angeles, leads the Massachusetts-based BOTEC Analysis Corp., which the state picked this month to help with the legalization process. The firm includes a former executive of the company that is the sole licensed supplier of medical marijuana in the Netherlands.
It also includes researchers with RAND Corp. who will help figure out how much marijuana state-licensed growers should produce. Kleiman said he hopes to have that estimate ready within a couple of weeks.
Initial estimates said the state could bring in more than $400 million a year from the marijuana market. But Kleiman said if the state sees $100 million in revenue during the first fiscal year marijuana is sold, it would be a good start.
"Price will be crucial because people who smoke a lot pay attention to price," he said.
While acknowledging state lawmakers are looking for money to stabilize the state budget, Kleiman said the process to launch the marijuana market will take time. Even if The Washington Liquor Control Board finishes its rule-making process on time in December, then it has to issue licenses to grow marijuana. It takes four to five months for a crop to mature. Marijuana probably won't hit the stores until late 2014 spring.
As legalization is rolled, Kleiman said he expects some occasional users to increase their frequency over a long period of time.
Kleiman also said the state shouldn't have revenue goals for marijuana.
"The only way to get a lot of revenue is to sell a lot of marijuana and the only way to sell a lot of marijuana is to sell to people who smoke a lot of marijuana and that's not a good thing," he said.
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