PDF Occupational and Business Licensing of Recreational Marijuana

OCCUPATIONAL AND BUSINESS LICENSING OF RECREATIONAL MARIJUANA

by Allie Howell December 2018

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TABLE OF CONTENTS

OCCUPATIONAL AND BUSINESS LICENSING OF RECREATIONAL MARIJUANA....................................... 1 Licensing Comes at a Cost ................................................................................................................ 1 Overview of State Licensing............................................................................................................. 3 Restrictions on Who Can Apply ....................................................................................................... 4 Criminal Convictions ........................................................................................................................... 6 Fees ........................................................................................................................................................... 7 Local Control.......................................................................................................................................... 9 Potential Impact on Economic Gains ..........................................................................................11 Conclusions ..........................................................................................................................................12

APPENDIX: WANT TO START A NEW MARIJUANA BUSINESS?..............................................................14 State: Alaska.........................................................................................................................................15 State: California ..................................................................................................................................16 State: Colorado....................................................................................................................................17 State: Massachusetts.........................................................................................................................19 State: Nevada.......................................................................................................................................21 State: Oregon .......................................................................................................................................22 State: Washington ..............................................................................................................................23

ABOUT THE AUTHOR ...................................................................................................................................25

Allie Howell | Occupational and Business Licensing of Recreational Marijuana

OCCUPATIONAL AND BUSINESS LICENSING OF RECREATIONAL MARIJUANA

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OCCUPATIONAL AND BUSINESS LICENSING OF RECREATIONAL MARIJUANA

LICENSING COMES AT A COST

Occupational licensing, while presented as a form of consumer protection, is oftentimes a tool used by industry incumbents to prevent competition and keep wages high.1 In a new industry like recreational marijuana, there are few incumbents. Rather than preventing new market entry by adding licensing requirements to existing professions, occupational licensing for marijuana reduces all market entry by raising application costs and requirements. Not only can this reduce economic opportunities, but by preventing a legal market from developing, the black market will continue to be the chief supplier of recreational marijuana--fundamentally undermining the goals of legalization.

1 Carpenter II, Dick M. et al. "License to Work." The Institute for Justice. May 2012. Allie Howell

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In the U.S., only nine states and Washington D.C. have legalized recreational marijuana, and marijuana businesses are legal in seven (Maine, Vermont, and D.C. do not have laws in place for legal sales). In the states with regulations for legal sales to take place (Alaska, California, Colorado, Massachusetts, Nevada, Oregon, and Washington), starting a business that cultivates, distributes, or sells retail marijuana requires a state-issued license (see appendix for specific licensing regulations for these states).

Licensing for marijuana businesses is presented as necessary for public safety by ensuring those involved in the new industry meet high standards of safety and quality. Requiring licenses makes it easier for the state to regulate the marijuana industry and limit the supply of marijuana.2 Fees to start a marijuana business, in addition to taxes, are an incentive for states to implement a legal recreational market as well.

It is important to realize, however, that all government regulations and licensure processes come with a cost. All state and local license applications must be approved or denied by government employees. In California, the Bureau of Cannabis Control had 102 positions authorized for FY 2017?2018 and 215 have been approved for FY 2018?2019.3 The Bureau's budget proposal states that if only half of the proposed licensing staff had been approved, "The Bureau will not be able to issue licenses in a timely manner. This may encourage prospective licensees to remain in the illegal market."4

It is important to realize, however, that all government regulations and licensure processes come with a cost.

2 Murphy, Patrick and John Carnevale. "Regulating Marijuana in California." Public Policy Institute of California. April 2016.

3 Budget Request. Bureau of Cannabis Control. State of California. ; email correspondence with the Bureau of Cannabis Control.

4 Budget Request. Bureau of Cannabis Control.

Allie Howell | Occupational and Business Licensing of Recreational Marijuana

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