Will Ohio Legalize Marijuana on Tuesday?

Please note: There are references throughout this article. I tried to make sure the sources were reputable and very little opinion is involved in this piece until the end where my own speculation comes in to play.

There is a lot of propaganda surrounding Ohio Issue 3.  First allow me to summarize the issue as it is written on the ballot, free of the spin.

Issue 3: Grants a monopoly for the commercial production and sale of marijuana for recreational and medical Purposes.

The word ‘monopoly’ is not one that is used lightly.  In fact, Responsible Ohio, the organization behind Issue 3 was very displeased with the use of the word when the Ohio Ballot Board decided to include it back in August.

Is it a monopoly?
It really doesn’t matter if it is or not. Public perception says that Issue 3 is restrictive against competition. Ian James form Responsible Ohio is quick to point out that in 4 years, if demand is not being met, that additional grow sites would be allowed.  However, there is little information about the size or production capacity of these sites.  Also, there is little information about the pricing structure or government oversight related to pricing marijuana grown at these 10 facilities.

Issue 2
Issue 2 was put in place to effectively block Issue 3 due to fears by Ohio Politicians that the popularity of marijuana and belief it should be legalized by a sizable number of Ohio Citizens could lead to the measure passing.  (New Poll Shows Ohio majority favors legal marijuana).  What is somewhat concerning about Issue 2 is that despite the fact that Issue 3 took millions of dollars, tens of thousands of hours of grassroots signature collection and PR efforts, the government could easily get something on the ballot without the approval of the public or any signatures at all.  This clearly demonstrates that the leadership in Ohio does not find legalizing marijuana politically favorable.

Even Conservative’s are speaking out against Issue 2.

 “Maurice Thompson, executive director of the 1851 Center for Constitutional Law, a conservative, nonprofit legal center, said Issue 2 would hamper future citizen-driven ballot initiatives, including those seeking tax reforms.” -From the Columbus Dispatch (reference)

Issue 2 was a clever way for lawmakers to allow opponents of Issue 3 that support alternate paths to legalization to vote to possibly make it harder for future grass-roots efforts to do so.

Pros and Cons of Issue 3 Passing

Pros:  

Reduced Arrests
According to the NORML web site (reference), in 2012 over 18,000 people in Ohio were arrested for marijuana related offenses.  According to findings by the ACLU (reference), marijuana arrests are 3.73 times more likely to be black people than white people.  This means that of the 18,000 folks arrested for pot in Ohio, roughly 14,000 of them, were black…. This is concerning because the Washington Post reported in 2013 that nearly as many white people smoke marijuana as black people (reference). Were Issue 3 to be passed these arrests would not take place under the same context.  It is not to say that black people wouldn’t continue to be arrested for marijuana related crimes (selling marijuana is still illegal under Issue 3 unless you have a commercial facility to do so) but it is less likely that they would be busted for possession.

Taxpayer Savings
It is no secret that arresting and prosecuting criminals is expensive.  The state of Ohio is estimated to spend nearly $1 Billion dollars annually arresting and prosecuting non-violent marijuana offenses (reference). This does not include the cost of eradicating marijuana growing operations.  According to an investigation by Dayton TV Station WHIO, the state of Ohio spends $500,000 annually just pulling pot plants out of the ground (reference).

Tax Revenue
It is hard to get any realistic number of what tax revenues could be with the legalization of recreational marijuana.  it is also unfair to compare what Ohio is proposing with what Colorado is doing. Their legalization was much less controlled and they have hundreds of grow sites as opposed to the 10 proposed by Issue #3.  Let’s look at Washington state.  Washington legalized in marijuana in December 0f 2012 but didn’t see its first shop open until July of 2014.  In the six months of marijuana being legal for recreational  use, the state of Washington had 99 licensed marijuana retail stores that generated  $64 million in sales and $16 million in tax revenues (reference).  The numbers in Colorado are much stronger but the plan for legalization in Ohio is pretty close to in between the plan Colorado and Washington put in place.

Estimates by Responsible Ohio claim that tax revenues would exceed $554 million once the industry became established.  This number is a wild estimate considering Colorado only realized $70 million in tax revenue with a much wider and available platform for selling and growing marijuana. What would be a more realistic way to estimate the tax revenue, since Colorado also levies a 15% tax as does the plan for Ohio’s Issue #3, is to look at how Marijuana Tax revenues exceeded alcohol sales revenue in Colorado.

In the state of Colorado in one year, marijuana generated $70 million and alcohol sales generated $41 million (reference). Ohio, in the same time period generated over $98 million in tax revenue from the sale of alcohol (reference).  If marijuana tax revenue exceeded alcohol sales revenue in the same was in Ohio as it did in Colorado, we would see an estimated $167 million in tax revenue in the first year. This is a good number, but nowhere NEAR the estimated $554 million that an ‘established’ industry would generate according to RO.  It pales in comparison to the $815 million that was collected for excise taxes on cigarettes by the State during that same time period.

Under Issue #3, tax revenue would be distributed as follows: 55 percent to a fund for municipal and township governments, 30 percent to a fund for county governments and 15 percent to operate the Ohio Marijuana Control Commission.

Job Creation
Another Pro would be new job creation with the passing of issue #3 in Ohio. The industry employs roughly 10,000 people in the state of Colorado (reference). Estimates for job creation for Ohio is over 30,000 according to proponents on the issue (reference). Considering again, that Colorado’s industry includes hundreds of grow sites and over one thousand retail outlets, it’s 10,000 jobs makes sense.  Considering that each grow facility would only employ about 300  people who comes out to just 3,000 jobs from the industry of growing marijuana in Ohio.  If Ohio did see 1,000 retail facilities open, each would have to employ 27 workers in order for the numbers that Responsible Ohio is touting to be accurate.  It is hard to estimate what jobs would be created from marijuana tourism, but it is likely this is estimated into the 30k RO is talking about.

Funding Shift for Law Enforcement to eradicate narcotics
Ohio is dealing with a full-blown heroin epidemic.  If marijuana were to become legalized the state would be able to relocate funds that previously were used to fund marijuana related law enforcement activities to fight harder drugs like cocaine, pills, heroin and other deadly narcotics.

Cons:

Economic Effects of a Monopoly 
Monopolies do not face competition and can change price at their own discretion based on desired profits.  They can also use their proceeds to invest in campaigns that eliminate any potential competitors. Without pricing oversight, monopolies can offer and inferior product and change prices based on personal interest. (reference) The only competition that would remain for Responsible Ohio’s investors would be the black market. To get a better idea of the perils of monopolistic business take a look at Ohio cable companies.

Safety of Children
Opponents of issue 3 claim that the amendment would allow the production of marijuana infused candies, such as gummie bears, lollipops and other treats that could be very dangerous to young children.

Marijuana Commission Will Be Overburdened
This is probably the biggest legitimate concern. The amendment states that a 7 member commission will be responsible for overseeing all aspects of the marijuana industry in Ohio. This includes tracking marijuana sales from germination to final consumer sale. This is a tiny fraction of the amount that work in the overseeing of alcohol in the state.

I searched and searched for other cons but they were mostly without any concrete evidence or support to prove their case.

MY OPINIONS: (based on all this research and my knowledge of economics)

1.) Issue #3 Will Go Down in Flames

Primarily because the Government of the State of Ohio has done a great job partnering with grass-roots marijuana activists to decry issue #3.  In the recent poll mentioned at the beginning of this article, 52% of Ohioans support legalizing marijuana.  If part of that group opposes this initiative it will never stand a chance when old white hairs and hippies alike are voting against it.  The people who blindly want marijuana legalized just don’t turn out to vote.

2.)  I support issue 3

Here is why.  There simply are not enough cons to Issue #3.  Marijuana is long overdue in being legalized. Without the millions of dollars it takes to get it on the ballot, it may be years and years before we see our chance again. In the meantime, someone you know and love will either not have access to marijuana as medicine, or be arrested or imprisoned for a marijuana related offense.  Economically it is a no brainer, the cost of marijuana being legalized under issue #3 is minuscule compared to the cost of marijuana remaining prohibited.

3.)  I Do not support issue #2

Issue #2 is blindly being supported by those opposed to issue #3.  This is a perfect example of people being uneducated and allowing politicians that DO NOT have your best interests in mind to create yet another road block to grass-roots democracy.

Who are the backer’s of Responsbile Ohio?

Alan Mooney- Founding member of RO and a Worthington, Ohio-based financier

Rick Kirk-a Columbus developer

Dr. Suresh Gupta-a Dayton anesthesiologist

Jennifer Doering- general manager with the Chas. Seligman Distributing Co., a Walton, Ky., beer and wine distributor.

Nanette Lepore- a Youngstown native and New York fashion designer

Barbara and James Gould- Cincinnati, Ohio James is a sports agent and his sister is Barbara.

Paul Heldman- Cincinnati attorney and former general counsel for the Kroger Company

Woody and Dudley Taft- Woody Taft is a private equity investor, vice president of development at Taft Broadcasting Co. his brother Dudley is a blues guitarist and graduate of the Berklee College of Music, has several albums to his credit, including Left for Deadand Skin and Bone.

Frank “Bo” Wood- chief executive officer of Secret Communications, a Cincinnati investment firm.

Oscar Robertson- former All-American basketball player at the University of Cincinnati

William J. Foster- owner of A-1 Quality Logistical Solutions, a Cincinnati warehousing company.

Bobby George- Managing member of Corporate Management Group of Lakeside, a restaurant, real-estate and private-equity firm.

David Bruno- A businessman from Wellsville, Ohio who owns Sterling China USA and other companies.

David Bastos- A Cincinnati real-estate developer and partner with Capital Investment Group Inc.

Ben Kovler- Chicago investment banker who created a business called Green Thumb Industries to sell lighting, fertilizers and other items to marijuana-growing farms in Illinois, where medical marijuana is legal.

Brian Kessler- president of Maui Toys Inc., of Youngstown, one of the world’s largest toy manufacturers.

Nick Lachey- from the 90’s boy band 98 Degrees. He is from Harlan, Kentucky and currently owns a bar in Cincinnati.

John Humphrey- Texarkana, Texas, is involved in the payday-loan business as part-owner of CashMAX.

William “Cheney” Pruett- President and chief executive officer of DMP Investments. His father, Dwight Pruett, is also an investor.

Keith Orr, a friend of the Pruetts, owns auto dealerships in Shreveport and Stonewall, La., and Paris and Texarkana, Texas.

Read more about the investors and RO staff here >>http://www.dispatch.com/content/stories/local/2015/09/02/investors-in-legal-pot-are-diverse-lot.html

 

 

 

Matt Ward Written by:

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