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The Perils and Promises of Legalized Pot

legalized marijuanaIt’s been just over two years since voters in both Colorado and Washington voted to legalize recreational cannabis on November 6, 2012. Since then, both states have born witness to a flourishing marijuana industry while also paving the way for Oregon, Alaska, and (possibly) The District of Columbia to join them in the very near future.

Since the legal sale of recreational weed began in earnest last year, both states have already seen a significant impact on everything from tax revenue to a revision of DUI laws. Nonetheless, many questions remain regarding weed’s impact on a wide variety of socioeconomic issues, and experts and analysis believe the jury is still out on most of them.

“The wheels of something like this turn very slowly,” says Chris Walsh, managing editor of Marijuana Business Media. “This whole process is still in its infancy, but there are some interesting developments to look at nonetheless.”

The Impact on Economics

The impact of legalizing recreational marijuana has perhaps been most immediately and noticeably felt on the economic landscape.

For instance, according to The Cannabist—a Denver-based marijuana industry and culture publication—Colorado witnessed just shy of $700 million in both medical and recreational cannabis sales in 2014. Of that $700 million, $313.2 million were for the sale of recreational marijuana.

Moreover, Colorado took in $53 million in tax revenue since legalization was implemented on January 1, 2014. And while that’s certainly a sizable boon it does seem the state will fall short of its projected $70 million in tax revenue by June 2015.

Meanwhile, Washington hauled in about $16.4 million in marijuana taxes last year. The numbers were smaller, but that’s because recreational pot sales in Washington didn’t begin until July 2014.

“Colorado and Washington have approached this very differently, and the impact has been very different as well,” says Walsh. “Even though they both legalized on the exact same day in 2012, Colorado already had a very mature industry set up on the medical side. So they were able to rely on that to start the recreational industry more quickly and smoothly.”

In Washington, however, medical marijuana was not especially well regulated by the state, and, according to Walsh, “you had countless cultivators and dispensaries operating in a legal grey area…they were more or less tolerated in cities rather than legally allowed.” So when Washington began its recreational industry it needed to establish regulations from the ground up, which was a long and tedious process.

Washington and Colorado also tax marijuana differently. In Washington, a 25 percent tax is levied on three separate entities: the grower, the processor, and the seller. Meanwhile in Colorado, a flat 30 percent tax is levied only upon the sale of recreational marijuana.

“As a result, Washington has a significantly higher tax rate than Colorado,” says Walsh. “And that affects everything from price to profit margins.”

Nonetheless, Walsh says the jury is still out when it comes to the long term economic impact recreational marijuana will have on either of these states.

“We won’t likely have a really good picture of this for several years,” says Walsh. “Yes, $700 million in medical and recreational sales of cannabis last year is huge. And there’s no question that a tax benefit has resulted. But there’s more to it than that.”

For instance, Walsh says each state will need to collect many years worth of data on the relationship between tourism and recreational pot. Also worth considering is the workforce impact. According to Walsh, several thousand jobs have been created in Colorado since legalization.

“People usually only think of growing and selling, but there is just as much revenue being generated by businesses that don’t even touch marijuana, like law firms, advertisers, and dozens of others,” says Walsh. “But the only thing worthwhile right now is concrete data on things like tax revenue, jobs, and numbers of businesses. The problem with everything else is you can’t account for just the marijuana industry in the numbers yet. For instance, tourism could have gone up in 2014 but it could be from numerous other factors. The big picture is still too hard to see.”

The Impact on Driving and Accidents

One of the most significant questions concerning legalization was whether or not recreational pot would lead to more incidents of so-called drugged driving. Now that it’s been a year, the answer to that question is…well, still a bit unclear. And it depends on whom you ask.

“I would say the legalization of marijuana has caused a spike in auto accidents for a few reasons, and the most significant one is that new users who don’t have any tolerance to marijuana often overuse it and are not aware of its effects until it’s too late,” says Lindsey Parlin, a Colorado-based criminal defense attorney who specializes DUI cases. “Even if you smoked 30 years ago, you might not realize that the effects of the marijuana out there today are much more significant.”

Nonetheless, it’s very difficult to find any empirical data that links marijuana legalization to an increase in stoned driving in either Colorado or Washington. And that’s because neither state has a comprehensive way to track instances of marijuana-impaired driving.

“A big problem is that there is no separate DUI law for driving under the influence of marijuana,” says Sam Tracy, former chairman of the international nonprofit Students for Sensible Drug Policy. “They just sort of wrapped it into the alcohol laws, so if you get charged with a DUI we don’t have data that splits out marijuana versus alcohol versus prescription we haven’t been able to get a solid understanding of the effects of legalization.”

Still, there are some who urge a great deal of caution despite the lack of data.

“With the higher prevalence of marijuana in the world, what we’re seeing is a sort of denial of the fact that marijuana can be impairing,” says Chris Cochran, spokesperson for California’s Office of Traffic Safety. “Marijuana is not a benign substance when it comes to driving ability. It throws off your perception of time, loosens inhibitions, and changes reaction times. We can’t just say, ‘Oh, people who are high drive slower and nicer.’ Anything you put into your body that will alter your brain chemistry is potentially impairing and dangerous behind the wheel.”

The Impact On Driving Laws

But just how dangerous is it to drive while stoned? The answer to that question—or lack thereof—has had a profound impact on how Colorado and Washington designed driving laws in the age of legal pot.

Both states have set the legal limit for THC at 5 nanograms per milliliter of blood. Anything above that is considered too stoned to drive.

“The problem with these cutoff points is that they don’t have much scientific backing,” says Tracy. “There’s been very little research on this and that’s a serious concern, because a DUI conviction for marijuana could bring about the same legal consequences as a DUI for alcohol. But they aren’t the same.”

Indeed, according to a recent study conducted by the National Highway Traffic Safety Administration (NHTSA), drivers who use marijuana are significantly less likely to get into an accident than those who are under the influence of alcohol. According to the study, drunk drivers are 400 percent more likely to get into an accident than sober drivers, while those with marijuana in their systems are just 25 percent more likely to get into an accident.

Going one step further, the study notes, “At the current time, specific drug concentration levels cannot be reliably equated with a specific degree of driver impairment.”

“I’m not saying that driving stoned is okay, but it’s far less dangerous than driving drunk, so it shouldn’t be punished the same way,” says Tracy.  “In fact, some studies have shown that texting while driving actually doubles your risk of a crash and making a phone call triples it. But those only result in a $50 fine.”

Meanwhile, the penalties for driving under the influence of marijuana are much harsher. According to Tracy, a first-time marijuana DUI conviction in Colorado results in five days in jail, a $600 fine, and 48 hours of community service (in addition to now having a criminal record).

In Washington, a first time marijuana DUI conviction will result in at least one day in jail, a minimum fine of $350, and a 90-day license suspension.

“When you factor in things like legal fees, higher insurance premiums, and other expenses, you’re looking at spending more than $10,000 on a first offense,” says Tracy. “That’s 200 times the cost of texting and driving, which studies say is just as dangerous.”

For Denver-based attorney Jay Tiftickjian, this all demonstrate the “serious problems” inherent in current THC testing policies in Colorado and Washington.

“It’s obviously dangerous to drive while impaired by any substance, but this is a classic example of putting the cart before the horse and making knee-jerk reaction laws based on emotions and prosecutors' constant cries that they need more tools to convict,” says Tiftickjian. “With alcohol we have limits based on years and years of research. With marijuana we don’t. And that’s a problem.”

If you’re curious about your state’s drugged-driving laws, check out this comprehensive database.

The Impact on Insurance

If someone in Colorado or Washington is convicted of driving under the influence of marijuana, the insurance consequences are going to be the same as those for drunk driving—a significant premium spike and the possibility of being dropped by your insurance provider.

But for Brenda Wells, director of the risk management and insurance program at East Carolina University in Greenville, North Carolina, that’s not the most interesting part of this story.

In a 2014 paper titled "Marijuana Legalization: Implications for Property/Casualty Insurance," Wells researched pot-related insurance claims and discovered that home and auto policies do not exclude coverage for marijuana losses.

“That means if your house burns down or your car is broken into and you loose a stash of marijuana, insurers could be made to cover that loss. At least for now,” says Wells. “But marijuana is still illegal at the federal level, and insurers are beginning to challenge this. We’ll have to wait on the Colorado Supreme Court to make a significant ruling on that issue before we know what things look like moving forward.”