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The Marijuana State

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JOANNE FARYON: Hello, I'm Joanne Faryon. California could become the first state in the nation to legalize marijuana under Proposition 19, a ballot initiative that would regulate and tax pot just like alcohol. The marijuana industry is estimated to be worth 14 billion dollars in California, making it the largest cash crop in the state. The prospect of legalizing pot and commercializing its sale has many believing the Golden State could find its way out of an economic slump as the marijuana state. Tonight we take a look at who stands to lose and who stands to gain if Prop 19 passes. Our story begins in Northern California. MUSIC: Yeah bring me champagne when I'm thirsty, bring me a reefer when I want to get high. FARYON: Halfway between Los Angeles and the California-Oregon border, across the San Francisco Bay, is a city that knows where it stands on marijuana. MAN: This is our menu – welcome. On the back page our high grades we keep three at a time. You're free to open them up- give them a sniff. Your total will be 200 even. FARYON: Oakland California, where people take their pot seriously. MAN: Now comes the tedious job of manicuring getting everything ready so they'll dry nice Where there are plans to build the country's first commercial indoor marijuana factory. Did you ever think when you bought it you'd be growing marijuana in it? JEFF WILCOX: Not in my wildest dreams. FARYON: Where the city council has unanimously endorsed Proposition 19. REBECCA KAPLAN: This is not about wanting there to be more cannabis, there's plenty already, this about wanting to regulate it, control it, provide revenue to fund basic public services and to take it off the streets and out of the hands of criminal enterprises.” TEACHER: What is it we're extracting when we're talking about cannabis? THC, that is the most common element we're talking about. FARYON: Proposition 19 can be traced to this place – Oaksterdam University in downtown Oakland. The name combines Oakland with Amertsdam – the Dutch capital which allows the sale and use of marijuana in coffee shops. The school claims to have enrolled 12,000 students in three years and collected $1.5 million in tuition. Oaksterdam is the brainchild of cannabis activist Richard Lee – who co-authored Prop 19. RICHARD LEE: I always thought if alcohol is advertised and legal on television than cannabis should be legal too it's hypocritical and unfair to lock people up for cannabis and not alcohol. FARYON: Lee isn't an aging hippy or a liberal. He's a 47-year-old Libertarian and advertising major who worked in the1980's as a lighting technician for the rock band Aerosmith. An accident in 1990 left him paralyzed from the waist down. He discovered marijuana helped control his back spasms. But discovering the medical benefits of marijuana isn't what prompted Lee's crusade for legal cannabis. In 1992, Lee became a victim of a serious crime – a carjacking. LEE: And the police took a long time to response and that made me as mad as the car jacking, so I started thinking about how the police were wasting time for people like me instead of the real predators, the sociopath and real criminals out there so that's how I got started working toward ending cannabis prohibition. FARYON: People like you? You mean small time personal users? LEE: Yeah at the time I'd find out how cannabis did have medical benefits for people who have spinal chord injuries that it's a works well to control muscle spasms, so I saw that police shouldn't be wasting their time looking for people who aren't hurting anyone. FARYON: In 1996, California legalized marijuana for medical use when voters passed Prop 215, or the compassionate use act. At the time, pot was being used by AIDS patients to relieve symptoms and by cancer patients to help with nausea associated with chemotherapy. Despite prop 215 becoming law, Both San Diego and San Bernardino Counties refused to issue medical marijuana cards until the courts forced them to last year. Today, the medical marijuana industry is thriving with dispensaries like this one. Many in the industry concede medical marijuana cards are easy to get from doctors for ailments ranging from stress to insomnia. SALES PERSON: So how's your day been? Very good. How about you? You know, ready to get high again. FARYON: If Proposition 19 passes it does two things it makes it legal for people 21 and over to possess less than an ounce of pot and grow their own small plot of marijuana if they choose to. LEE: The second part gives cities and counties the ability to regulate sales and commercial cultivation. How they want to and if they want to. FARYON: It's the second part that is proving to be far more controversial and political, as people on both sides of the debate try to maintain or gain a financial foothold of this 14 billion dollar industry. WILCOX: My name is Jeff Wilcox I'm the founder of AgraMed and you're sitting in the first commercial cannabis cultivation facility in the state of California and in the United States. FARYON: Imagine this empty factory full of marijuana plants. Hundreds of union employees earning more than 50,000 a year, growing and harvesting thousands of plants. Jeff Wilcox is willing to invest 20 million dollars, most of it his own money, in that vision. He's one of several hundred business people who plan to apply to the city of Oakland for one of four licenses to operate a large scale marijuana factory. WILCOX: I approached the city of Oakland with a question. If cannabis was in our community could we legally grow it on a large scale, tax it regulate it, bring in union jobs. So the city of Oakland in July passed new legislation, a new law that said yes we could do that on a large scale basis. So what this is a tax and regulate basis to provide jobs and tax revenues. FARYON: Wilcox says his factory could produce 58 pounds of marijuana in a single day. That's 33,000 joints. At today's street value – that's $330,000 in marijuana. For now, the factories can only produce marijuana for medical uses – but if Prop 19 passes – all that changes. WILCOX: The city of Oakland asked me about that because this was started before prop19's passage and to be honest there is a recreational use for cannabis on our society we have to be honest about that. There's also a true medical use. So the city of Oakland has passed a tax, they're going to tax recreational usage at 10 percent and medical use at 5 percent. Oakland is going to take a started position, almost the silicon valley of cannabis and capitalize on this. PETE DUNBAR: Marijuana equals money. FARYON: Pete Dunbar is Chief of the Pleasant Hill police force about 20 miles from Oakland. He also represents the California Police Chiefs Association as their spokesperson against Prop 19. DUNBAR: I think the term morally bankrupt is probably an apropos term to think about we're just thinking about marijuana and money, we're not thinking about the short term and long term consequences of this. I think it's very short sided. FARYON: But everything is about money, alcohol is about money, cigarettes are about money, we consume a lot of things that aren't good for us because there's a market and people want to make money, how is that different? DUNBAR: Marijuana is a commodity, but it's a commodity that alters one's mind when it's used. Certainly alcohol and pharmaceuticals can offer the same experience, if they're used properly it's not a problem with alcohol and pharmaceutical drugs, but we see abuse of both and there's no doubt going to be abuse of marijuana. CHRIS SMITH: It's herb. We've been using herb. We've been using herbs forever, so its just trip that medical descriptions are coming out, like post traumatic stress, acute adjustment disorder. FARYON: If politics makes strange bedfellows, marijuana makes them even stranger. For years, Chris Smith has been selling marijuana underground and more recently above ground to people with medical marijuana cards in Berkeley California. SMITH: Do we don't have customers we have members, that's one thing around us you see all these dispensaries talking about they got customers we was never customers, we was patients. FARYON: Chris Smith, like Pete Dunbar, doesn't like Prop 19. SMITH: Some people say about Prop 19 they going to can medical marijuana. It's necessary for us. Hold on we all tapped into the real thing here. Every hustles' based on the truth anyway. We had it first they use to come get it from us. Maybe that'll be cool about prop 19 everybody have enough herb. But we all worried about Prop 19. DWANE WATERS: My name is Dwane Waters. I am a consultant; I'm a vendor in what we call the Cana business, the cannabis industry. FARYON: Dwane Waters works with Chris Smith. WATERS: I can honestly say this much about this industry at this time. There's a lot of old money that doesn't want the new money to come in. It's very political. But at this point in time I hope the initiative doesn't pass because I need a little more room. And we will be affected by the industrialization and corporatization of this industry. Can you imagine going to Wal-Mart and going to the pharmacy and being able to buy marijuana? This is what they are talking about. FARYON: The marijuana trade is estimated to be worth $14 billion in California – twice as much as the state's leading agricultural commodity which is dairy. People in the business say a pot grower can harvest an ounce of marijuana at cost of 20 dollars – but sell it for $400. WILCOX: That's why there are a lot of people pissed off at me it's because they're making a comfortable living in this grey market and its all cash, its all cash. FARYON: The Rand Corporation, a national think tank, the California Legislative Analyst, and the California Board of Equalization have all done some kind of cost benefit analysis. The Rand report says the cost of marijuana would likely drop dramatically if legalized. The Legislative analyst suggests the legal pot trade could bring in hundreds of millions of dollars in taxes, while the Board of Equalization puts that number closer to 1.4 billion dollars. FARYON: If the discovery of gold was responsible for California's modern development, could legal cannabis be responsible for its rebirth? It's a legitimate question given the size of the market - remember 14 billion dollars - that is largely illegal and underground. The California Wine industry pays that much in state and federal taxes along. The city of Oakland has not only pondered the question of just how much revenue a legal pot market could generate, but has addressed in policy too. Rebecca Kaplan is a councilmember in Oakland and running for mayor. KAPLAN: The fact that we are failing to collect the tax revenue of the number one cash crop bought and sold right, that's part of why our budget is such a disaster. The way I see it is I am the rational politician, the way I see it, it is irrational to pretend the cannabis isn't happening and therefore fail to regulate it and tax it and let violent criminal cartels retain control because we would feel more comfortable being in denial. FARYON: The city of Oakland taxes medical marijuana sales at five percent and it's expected if Prop 19 passes, it will tax recreational marijuana sales at 10 percent. It also expects hundreds of new, unionized jobs to be created in the marijuana industry. FARYON: By contrast San Diego County Board supervisors unanimously supported a resolution against Prop 19 last month. If Prop 19 passes, it's up to each city and county to decide whether it would license commercial cultivation and sales and whether it wants to collect a marijuana tax. San Diego County could become a so-called dry county, whereas Oakland – well, it just might live up to the Oaksterdam moniker. TOM AMMIANO: It could be a piece of our exports. FARYON: That's San Francisco Assemblymember Tom Ammiano. AMMIANO: You have San Joaquin; Imperial Valley for vegetables would marijuana be part of that? Probably. FARYON: A new Napa valley? AMMIANO: You never know what you to smoke with your favorite cabernet. Its fun to trip out on it all and think of Cheech and Chong. FARYON: Ammiano introduced legislation earlier this year that would have legalized pot – he withdrew it when the Prop 19 was put on the ballot. Ammiano says he wanted to address social justice issues in his legislation, like who's in prison - but if legal marijuana also helps the economy; it's not such a bad thing. AMMIANO: If a lot of the money goes to drug education and prevention and talks about addiction that's not a bad thing either and was pointed out to me this is America and entrepreneurialism is king or queen depending on your orientation and I can't fight that. But you know I can try to put a moral compass to it all and not always try to achieve a goal that I think should be the prefect world. Absolutely there's gold in them there hills. FARYON: If there is money to be made legalizing marijuana, is there also money to be saved? Advocates of Prop 19 say the state could save millions in prison and court costs. KAPLAN: We have a governor in the state of CA who is on video tape consuming cannabis And yet he is allowed to not be in prison, while other people who have less privilege and less money are being put in prison at great cost for all of us for the very same act our governor is on film engaging in. FARYON: So just who does go to prison for marijuana offences and how much does it cost? First, let's start with the law. In California possession of less than an ounce of marijuana is an infraction- that means if you get caught with a joint you are subject to a $100 fine – similar to a parking ticket. But that law just passed last month. So who's in jail for pot? KPBS crunched the numbers and this is what we found. Less than one percent of California's state prison beds are taken up by people who are serving time for marijuana offenses alone. It's a similar story in county jails - counts for the state's three largest counties show prisoners serving time for just marijuana charges make up a similarly small portion of those county jail populations. However, the law is much harsher for dealers. And under federal law, possession of any amount of marijuana is still a criminal offence that could send you to jail for up to a year and net you a $1000 fine. California was the first state in the nation to prohibit marijuana in 1913 – followed by decades of anti-marijuana movies like this one – and a war on drugs that has spanned two generations. Voters have demonstrated they're willing to consume cannabis – government analysts estimate people in California consume a million pounds of the stuff every year. But are they willing to vote to make it legal? So far the polls, say yes. LEE: People, the WWII generation was not familiar with this so it was easy for the government to put out lies and propaganda to scare people, now people have experience with it they consumed cannabis in college. AMMIANO: One of my friends said we're going to have gay marriage and legalize marijuana, do you take this man to be your husband, ‘I doube.'” DUNBAR: I think you'd be surprised, more people then not don't smoke marijuana, the latest poll I saw 47 percent were supportive, 43 percent opposed, 10 percent undecided, it's a very close thing because people feel this isn't the way to make money, they're looking at the moral standards, sure people smoke and it and possess it and its not a huge deal and in fact there's a whole cultural experience with it, but I don't think this state and the people of the state are ready for that yet. FARYON: So do you smoke marijuana? WILCOX: Always have, yeah. SMITH: One thing we find off is we don't want prop 19 to be so busy trying to be a business plan. WILCOX: Look at what happened during prohibition with people being machine gunned down during prohibition, no one does that anymore, that's our goal. There is a huge profit margin in this, and it's attracting the wrong kind of people and it has been for a long time. So if we legalize it in bring out in the open you get people like me involved. FARYON: Richard Lee got involved in the campaign to legalize marijuana because he thought police spent too much time looking for small time pot smokers. Now, he says, the most compelling reason to legalize pot is to stop the drug violence in Mexico. Just how could the outcome of Prop 19 affect Mexican drug organizations? Reporter Amy Isackson put the question to officials on both sides of the border. Here's what she found. AMY ISACKSON: The SUVS rolled quietly down the street, June 3 years ago. BRANDON PRICE: I was just simply sitting on my couch and my father walked up to me and said look outside, look outside, and there was swat team. ISACKSON: Brandon Price was 9 years old. He peaked out the living room window to see what was going on. His dad went outside. The SWAT team had the house across the street surrounded. Eventually, six men came out with their hands up. The FBI freed a 32-year-old Mexican businessman. He'd been held for ransom for eight days. The group, Los Palillos, is one example of drug violence related to Mexican cartels that occasionally flares up in San Diego. Los Palillos is linked to the killing of nine people. They dissolved some victims' bodies in acid and dumped others in the streets. They also smuggled marijuana and methamphetamine from Mexico. Richard Lee is a marijuana activist who wrote the proposition to legalize marijuana in California. LEE: The strongest argument I think personally is to make a first step toward ending the violence in Mexico, I read the stories down there, you're closer to it, you guys are well-attuned to it, its worse than Iraq and Afghanistan, they're beheading people. ISACKSON: 28,000 people have been killed in the drug war in Mexico since President Felipe Calderon launched an historic battle against cartels three years ago. His crackdown is unprecedented. Even so, drugs continue to stream across the border to feed US demand. The contraband comes hidden in about every place imaginable…in baby strollers, heavy machinery, a bike frame, through tunnels, taped to US teenagers. But, marijuana is just one of many drugs that cartels smuggle. Joe Garcia is a special agent with Immigration and Customs enforcement. He says Mexican cartels used to provide most of the marijuana in the US. It was their cash crop. But that's changed. JOE GARCIA: They diversified, there's a larger increase in manufacturing of meth in Mexico. That meth now constitutes 80 percent of what US authorities seize…comes from Mexico. IASCKSON: A recent study by the RAND Corporation says legalizing marijuana in California will make the retail price of the drug drop by 80 percent. Prop 19 proponents say that means less profit for drug cartels. Less profit means cartels will stop trafficking. No trafficking, no violence, the argument goes. But, David Shirk, who directs the Transborder Institute at the University of San Diego, says legalizing marijuana in California may not have a sizeable impact on the cartels' pocketbooks. DAVID SHRIK: The reality is that you would probably have to legalize consumption of marijuana throughout the United States, or in several significantly sized states, to have any kind of reverberations here in Mexico. According to ICE's Joe Garcia, Prop 19 wouldn't touch the Mexican cartels' profits from their other illegal activities. JOE GARCIA: Heroin, cocaine, extortion, gun running, bulk cash smuggling, whatever. They're going to find a way to do it. ISACKSON: Mexican drug groups may have already found a way to help protect their marijuana trade. They're growing hundreds of tons of marijuana in California…most of it on public lands. That way, the groups avoid the cost and risk of smuggling marijuana from Mexico. Some US federal officials speculate California's Proposition 19 will create an even bigger market for this marijuana. South of the border, however, the Mayor of Tijuana, Jorge Ramos, worries Proposition 19 could increase pressure on the border. JORGE RAMOS: The drug dealers are going to intensify to put marijuana on the other side of the border. And that's cost us a lot of lives and peace here in Tijuana. ISACKSON: Tijuana has made progress fighting organized crime. But the battle to control the city's local drug market continues. The fight has claimed about 320 lives so far this year. That's 60 percent of all murders in Tijuana. Baja California officials also worry that because an open market for marijuana in California would depress marijuana prices to the point that Mexican cartels won't risk smuggling marijuana into California…they'll try to sell more in Tijuana. The city has more drug addicts than any other city in Mexico. Baja California's Attorney General Rommel Moreno says whatever the decision; Baja and California should make it together. ROMMEL MORENO: It can't be made in isolation. ISACKSON: USD's David Shirk says, ultimately, someone needs to do a fair cost benefit analysis of legalization. SHIRK: “I think it is a question that American voters and politicians do need to start asking because the current strategy does not seem to be meeting those end goals of reducing violence or reducing flows and consumption of goods in the United States, or the profitability of organized crime.” FARYON: Voters will ultimately decide whether they want marijuana taxed and regulated like alcohol when they go to the polls November 2nd. Advocates of Prop 19 says they won't be discourage by a no vote – they say even if Californians aren't ready to say yes to legal pot now – they believe its only a matter of time. To see more stories on marijuana, go to Thanks for watching.

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