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How Colorado Intends Protect Marijuana Industry from a Possible Federal Crackdown

Colorado is contemplating an uncommon strategy to safeguard its nascent marijuana industry from a possible federal crackdown even at the expense of hundreds of millions of dollars in tax collections.

A bill pending in the Legislature would enable marijuana growers and retailers to reclassify their recreational marijuana as medical marijuana if a change in federal law or enforcement happens.

It’s the boldest effort yet by a U.S. marijuana state to prevent federal intervention in its weed market.

The bill would enable Colorado’s 500 or so licensed recreational marijuana growers to immediately reclassify their weed. A change would cost the state more than $100 million a year because Colorado taxes medical marijuana far more lightly than recreational marijuana — 2.9 percent versus 17.9 percent.

The measure says licensed growers could instantly become medical licensees based on a business need as a result of change in local, state or federal law or enforcement policy. The change wouldn’t take recreational marijuana off the books, but nevertheless, it wouldn’t completely safeguard it either. What it could do is help growers protect their inventory in case federal authorities begin confiscating recreational marijuana.

The provision is receiving plenty of attention in the marijuana industry following recent opinions from members of President Donald Trump’s administration. White House spokesman Sean Spicer has said there’s a “big difference” between recreational and medical marijuana.

Sponsors of the bill call it a possible exit strategy for the new marijuana industry. It’s difficult to say how many businesses would be affected, or if medical marijuana would flood the market, because some businesses hold licenses to both grow and sell marijuana in Colorado.

The state had about 827,000 marijuana plants growing in the retail system in June, the latest available data. More than half were for the recreational market.

“If there’s a change in federal law, then I think all of our businesses want to stay in business somehow. They’ve made major investments,” said Sen. Tim Neville, a suburban Denver Republican who sponsored the bill.

If federal authorities begin seizing recreational marijuana, Colorado’s recreational marijuana entrepreneurs need in order to convert that merchandise into the medical side to allow them to sell it,” Neville said.

His bill passed a committee in the Republican Senate 4-1 last week.

But it’s uncertain whether the measure could pass the complete Colorado Senate or the Democratic House. Skeptics of the proposal doubt the classification change would do considerably more than cost Colorado tax money.

“It’s a big deal for our tax system because this money has been coming in and has been set aside for this, that and the other,” said Sen. Lois Court, a Denver Democrat who voted against the bill.

Schools would be the first casualty of a tax change. Colorado sends $40 million a year to a school-building fund from excise taxes on recreational marijuana. It’s a tax that doesn’t exist for medical marijuana.

Other things financed by recreational marijuana in Colorado include training for police in identifying stoned drivers, a public-education campaign aimed toward reducing teen marijuana use, and a range of medical studies on marijuana’s effectiveness treating ailments like seizures or post-traumatic stress disorder.

The proposal comes amid mixed signals {from the federal government on the way in which the Trump administration intends to take care of states that aren’t enforcing federal drug law.

Spicer said the president understands the suffering and pain many individuals, particularly people that have terminal diseases, suffer “and the comfort that some of these substances, including medical marijuana, can bring to them.”

But Attorney General Jeff Sessions has expressed doubts about marijuana’s medical worth.

“Medical marijuana has been hyped, maybe too much,” Sessions said in a speech to law enforcement agencies in Richmond, Virginia.

Marijuana activists say giving the industry a choice to keep their inventory legal is a precious idea for recreational marijuana states. They point out that a change in federal policy wouldn’t make the drug magically vanish from the eight states that allow recreational use, along with Washington, D.C.
Colorado would be the first marijuana state to take action to safeguard producers from a federal drug crackdown in case the bill becomes law.

A bill pending in the Oregon Legislature intends to protect the names and other personal information of marijuana buyers by making it illegal for shops to keep an internal log of customers’ personal data, a practice that’s already prohibited or discouraged in Colorado, Alaska and Washington state.

Other states such as California are considering proposals that will bar state and local law enforcement from cooperating with federal authorities on investigations into cannabis operations which are legal in their jurisdictions.

Members of Congress from some marijuana states have talked about attempting to block federal intervention in marijuana states. Congress could reclassify marijuana so medical use is allowed, or it can attempt to block federa enforcement of marijuana prohibition during the federal budget.

Nevertheless, the proposed Colorado change could be a long shot attempt.

Recreational and medical marijuana are the same product. The only difference between them is how they’re used, and also the U.S. Controlled Substances Act says marijuana has no valid medical use. Federal health regulators have rejected repeated efforts to carve out a legal place for marijuana use by sick people.

Sponsors granted there aren’t any guarantees that reclassifying all that marijuana as medicine would cease a federal crackdown.

However they say Colorado shouldn’t sit idly by and wait to find out whether the Trump administration begins enforcing federal drug law by attacking businesses which are legal under state law.

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