PROPOSITION POT

What Happens If 19 Passes?

SOUTH LAKE TAHOE, Calif. -- In 1913, California became the first state
in the U.S. to make marijuana illegal. And in less than a week, it
could be the first to reverse course.

On Tuesday, voters will decide whether to approve the Regulate,
Control and Tax Cannabis Act of 2010, known as Proposition 19.

The possibility has attracted international attention, criticism from
federal officials and debate around the country about the merits and
drawbacks of legal marijuana.

But the people with the decision to make are California
voters.

The Proposition 19 will allow the possession, transportation and
sharing of an ounce or less of marijuana by recreational users 21
years and older and legalize cultivation on 25 square feet of private
property, subject to the property owner's approval.

The act does not legalize sales, consumption in public places,
consumption by the operator of a vehicle or consumption where minors
are present, and would task local lawmakers with deciding whether to
allow sales or license businesses to permit on-premises
consumption.

The text of the proposition notes roughly 100 million Americans have
used marijuana, 15 million in the past month.

"Cannabis consumption is simply a fact of life for a large percentage
of Americans," according to the proposition.

But whether marijuana's prevalence translates into a victory at the
polls is unclear.

Although the act was favored by a majority of prospective voters as
recently as September, the most recent poll by the Public Policy
Institute of California, released last week, shows support for the
proposition slipping.

The poll found 44 percent of likely voters plan to vote for
Proposition 19, while 49 percent plan to vote against it, with 7
percent undecided.

The findings are based on a telephone survey of 2,002 California adult
residents. The numbers represent an eight-point drop in support since
September when 52 percent of voters planned to vote yes, 41 percent
planned to vote no and 7 percent were undecided.

For and Against

Opponents of the proposition contend its approval would damage
neighborhoods by allowing widespread cultivation, increase vehicle
accidents, and could negatively impact business.

"If this measure were approved, employers, including the state of
California, would be faced with the burden of proving that an employee
who tests positive for marijuana is ‘actually impaired' from
performing the job before taking any adverse action against the
employee," according to a position statement from CalChamber.

Federal grants for both schools and businesses could also be at risk
because employees could not effectively enforce the drug-free
workplace requirements, according to the California Public Safety
Institute's "No on 19" campaign.

Proponents have said the proposition's approval will save millions of
dollars by focusing police attention on violent crime, protect
employers' rights to maintain safe workplaces and maintain criminal
penalties for driving under the influence, while increasing penalties
for selling marijuana to minors.

Proposition's Effect on Revenues Unclear

Supporters of the proposition have also promoted the legalization of
marijuana as a potential boon for a state that was only able to fill a
$19 billion budget gap this month after a more-than-three-month budget
impasse.

Taxing of an estimated $15 billion in illegal marijuana transactions
in the state each year will generate "billions of dollars in annual
revenues for California," according to the text of the
proposition.

But studies place doubt on the potential benefit to state
government.

The California Board of Equalization previously found a $50 per ounce
fee on the retail sale of marijuana in the state would generate $1.4
billion in tax revenue. The analysis was done for Assembly Bill 390,
which failed to gain legislative support in January, and does not
provide a direct correlation to Proposition 19.

"Proposition 19 does not contain specific provisions at the state
level governing taxation or retail sale," according to the board's
most recent analysis. "Local jurisdictions are free to choose to
impose licensing fees or implement differing tax schemes or rates."

The analysis of the proposition also says the board is unable to
estimate the potential rise in consumption and drop in price if
marijuana is legalized.

The results of a RAND Corporation study released in July found the
untaxed retail price of high quality marijuana could drop from about
$375 to $38 per pound if Proposition 19 passes.

While that's good news for consumers, the slashed prices could cut
into any projected benefits to the state budget. Potential revenue
will fluctuate based on the level of taxation, the amount of tax
evasion and the response by the federal government, according to the
study.

"There is considerable uncertainty about the impact that legalizing
marijuana in California will have on consumption and public budgets,"
said Beau Kilmer, the study's lead author and a policy researcher at
RAND, in a statement. "No government has legalized the production and
distribution of marijuana for general use, so there is little evidence
on which to base any predictions about how this might work in
California."

Medical Marijuana Advocates Are Split

The uncertainty about what the federal government may do in response
to the legalization of marijuana for recreational use also means
Proposition 19 might not change much regarding three medical marijuana
dispensaries in South Lake Tahoe, at least not for now.

Owners of each of the dispensaries say they would still require
medical recommendations to purchase marijuana if Proposition 19 passes.

City of Angels 2 Collective owner Gino DiMatteo said he is "totally
opposed" to Proposition 19.

"I don't believe that marijuana is for recreational use," DiMatteo
said. "I believe it is a medicine and should remain a medicine."

Patient to Patient Collective co-owner Matt Triglia said that even
though the 1,700 number of customers could probably triple if
Proposition 19 passes, he will stay medical. The move is largely
motivated by the threat of a federal raid, Triglia said.

Tahoe Wellness Collective owner Cody Bass said statements by Attorney
General Eric Holder Jr. will keep him from selling to recreational
users if Proposition 19 passes. He said he would consider opening the
doors to recreational users in several years if the proposition
passes, the city permits such sales and unanswered legal questions are
clarified.

In March 2009, the Obama administration signaled it would not go after
medical marijuana suppliers as long as they adhere to state law, but
Holder said this month the administration will not be as tolerant of
recreational use.

"We will vigorously enforce the (Controlled Substances Act) against
those individuals and organizations that possess, manufacture or
distribute marijuana for recreational use, even if such activities are
permitted under state law," Holder wrote in letter to former U.S. Drug
Enforcement Agency administrators earlier this month.

Aside from the threats of increased scrutiny from federal authorities,
medical marijuana advocates are also divided about whether to support
Proposition 19.

Even though the proposition is "not perfect," Bass said he supports
its passage because defeat would give marijuana opponents evidence
that the public is against marijuana.

"I really feel no one should be a criminal for smoking pot or growing
pot," Bass said during a Proposition 19 debate at Tahoe Wellness
Collective Monday.

"Please vote yes on it and continue the movement," Bass
said.

South Lake Tahoe City Council candidate and medical marijuana advocate
Steve Kubby agreed, saying the defeat of Proposition 19 will set
progress on marijuana law reform backward. He said there's no
guarantee a similar proposition will be on a future ballot.

"If it loses, it's going to make things worse for patients, worse for
dispensaries, worse for medical marijuana," Kubby said.

But medical marijuana advocate and South Lake Tahoe City Council
candidate Elizabeth Hallen said the proposition's passage will only
benefit large corporate growers and not the "mom and pop" operations
that have flourished in California.

Bass disagreed, saying a connoisseur's market will develop similar to
the wine industry, where enthusiasts will pay for higher quality or
specialty marijuana, if Proposition 19 passes.

But federal law enforcement could go "overboard" and negatively affect
medical users who rely on the federal government's tolerance of state
laws, Hallen contended.

"I think we're going against everything we've gone for in medical
marijuana for the past 10 years," Hallen said.

She said would not vote for or against the measure.

"We've worked so long to have it finally be accepted," Hallen said.