THE MEDICAL DILEMMA ON MARIJUANA

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. Medical marijuana was legalized but,
Suthers says, no serious regime was then developed to regulate who could
buy - or grow - it. (Caregivers? For how many patients? And in what
quantities, and for what "medical uses.")

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, including mental and respiratory
problems, and motor vehicle accidents.

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.

In the 1990s, a mere $2 per pack difference between U.S. and Canadian
cigarette prices created such a smuggling problem that Canada repealed a
cigarette tax increase.

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.