THE ROCKY MOUNTAIN MEDICAL HIGH

DENVER -- Inside the green neon sign, which is shaped like a marijuana
leaf, is a red cross. The cross serves the fiction that most
transactions in the store -- which is what it really is -- involve
medicine.

The U.S. Justice Department recently announced that federal laws
against marijuana would not be enforced for possession of marijuana
that conforms to states' laws. In 2000, Colorado legalized medical
marijuana.

Since Justice's decision, the average age of the 400 people a day
seeking "prescriptions" at Colorado's multiplying medical marijuana
dispensaries has fallen precipitously. Many new customers are college
students.

Customers -- this, not patients, is what most really are -- tell
doctors at the dispensaries that they suffer from insomnia, anxiety,
headaches, premenstrual syndrome, "chronic pain," whatever, and pay
nominal fees for "prescriptions." Most really just want to smoke pot.

So says Colorado's attorney general, John Suthers, an honest and
thoughtful man trying to save his state from institutionalizing such
hypocrisy. His dilemma is becoming commonplace: 13 states have, and 15
more are considering, laws permitting medical use of marijuana.

Realizing they could not pass legalization of marijuana, some people
who favor that campaigned to amend Colorado's Constitution to legalize
sales for medicinal purposes. Marijuana has medical uses -- e.g., to
control nausea caused by chemotherapy -- but the helpful ingredients
can be conveyed with other medicines.

Today, Colorado communities can use zoning to restrict dispensaries,
or can ban them because, even if federal policy regarding medical
marijuana is passivity, selling marijuana remains against federal law.
But Colorado's probable future has unfolded in California, which in
1996 legalized sales of marijuana to people with doctors'
"prescriptions."

Fifty-six percent of Californians support legalization, and Roger
Parloff reports ("How Marijuana Became Legal" in the Sept. 28 Fortune)
that they essentially have this. He notes that many California
"patients" arrive at dispensaries "on bicycles, roller skates or
skateboards." A Los Angeles city councilman estimates that there are
about 600 dispensaries in the city. If so, they outnumber the
Starbucks stores there.

The councilman wants to close dispensaries whose intent is profit
rather than "compassionate" distribution of medicine. Good luck with
that: Privacy considerations will shield doctors from investigations
of their lucrative 15-minute transactions with "patients."

Colorado's medical marijuana dispensaries have hired lobbyists to seek
taxation and regulation, for the same reason Nevada's brothel industry
wants to be taxed and regulated by the state: The Nevada Brothel
Association regards taxation as legitimation and insurance against
prohibition as the booming state's frontier mentality recedes.

State governments, misunderstanding markets and ravenous for revenues,
exaggerate the potential windfall from taxing legalized marijuana.

California thinks it might reap $1.4 billion. But Rosalie Pacula, a
RAND Corp. economist, estimates that prohibition raises marijuana
production costs at least 400 percent, so legalization would cause
prices to fall much more than the 50 percent the $1.4 billion estimate
assumes.

Furthermore, marijuana is a normal good in that demand for it varies
with price. Legalization, by drastically lowering price, will increase
marijuana's public health costs.

States attempting to use high taxes to keep marijuana prices
artificially high would leave a large market for much cheaper illegal
- -- unregulated and untaxed -- marijuana. So revenues (and law
enforcement savings) would depend on the price falling close to the
cost of production.

Suthers has multiple drug-related worries. Colorado ranks sixth in the
nation in identity theft, two-thirds of which is driven by the state's
$1.4 billion annual methamphetamine addiction. He is loath to see
complete legalization of marijuana at a moment when new methods of
cultivation are producing plants in which the active ingredient, THC,
is "seven, eight times as concentrated" as it used to be.

Furthermore, he was pleasantly surprised when a survey of nonusing
young people revealed that health concerns did not explain nonuse. The
main explanation was the law: "We underestimate the number of people
who care that something is illegal."

But they will care less as law itself loses its dignity. By mocking
the idea of lawful behavior, legalization of medical marijuana may be
more socially destructive than full legalization.