Rough Road to Cannabis Legalization Runs Through California

The biggest advocates of legalized cannabis are counting on California voters, who authorized the first use of medical marijuana in the U.S., to be the tipping point for the nationwide end of prohibition.

Two problems with that. First, contrary to the popular imagination, the majority of Californians say they’ve never used cannabis. Second, about one-third of residents say legalization isn’t important.

While seven states are gearing up for legalization votes in November, the focus of attention and campaign spending is California. The state’s 39 million people are a market more than twice the combined size of states that already allow recreational sales. A victory in the Golden State could help elevate the social use of cannabis from a subculture whose consumers and suppliers live in fear, to the mainstream of American life. That, of course, is worth billions of dollars.

“Of all legal cannabis in the whole country, California already makes up more than half,” said Troy Dayton, chief executive of The ArcView Group. The Oakland-based investment firm estimates that California accounts for $2.7 billion of the $5.4 billion in legal marijuana sales nationwide.

The state’s market share “will rise to $6.6 billion by 2020, which would mean that California alone would outstrip the value of the entire current U.S. market,” Dayton said. “California is clearly the biggest prize in November in the whole country, by a long shot.”

Californians turned down the last legalization bid in 2010. This year’s drive will be challenged to develop a sense of urgency among voters, most of whom have no personal experience with cannabis.

The state allows voters to bypass legislators to put an issue to a direct popular vote, so long as they collect enough signatures – in this case, 365,880 by July 5 – to qualify for November’s general election.

While several measures have been trying to get on the ballot, the best-funded political action committee is Californians to Control, Regulate and Tax Adult Use of Marijuana While Protecting Children. Supporters raised $2.25 million by early March, according to state campaign finance records. The group collected 25 percent of the necessary signatures within a month after they began circulating petitions, according to the California Secretary of State’s office.

Their proposal, known as the Adult Use of Marijuana Act or AUMA, would allow anyone age 21 or older to possess up to an ounce of marijuana and grow up to six plants. Non-medical sales would be taxed 15 percent. Cultivation would be taxed at $9.25 per ounce of flowers and $2.75 per ounce of leaves. Analysts for the state legislature predict as much as $1 billion a year in state and local tax revenue.

In the California initiative sweepstakes, money talks. And advocates haven’t raised enough yet.

Donations so far are about half as much as was raised the last time Californians voted on the issue, in 2010. That previous initiative, Proposition 19, would have made California the first state to legalize recreational marijuana. Backers outspent opponents by more than 10-1 and still lost, with just 47 percent of the vote.

Still, cannabis has high-profile backers who might put the initiative over the finish line. Leading the list is Sean Parker. The billionaire former president of Facebook, and co-founder of Napster, has put $1 million into support for AUMA. Forbes magazine estimates Parker’s net worth at $2.4 billion. A spokesman for the Parker Foundation, the $600 million philanthropy through which the donations were funneled, didn’t respond to e-mails from Cannabis Now seeking comment.

Other financial backing includes:

• $500,000 from Drug Policy Action, the political action arm of the Drug Policy Alliance supported by billionaire financier George Soros, who gave $1 million toward the 2010 effort.

• $500,000 from Justin Hartfield’s Weedmaps, a guide to medical marijuana dispensaries, through its political action committee, Californians for Sensible Reform.

• $250,000 from New Approach PAC, formed by the heirs of Progressive Insurance founder Peter Lewis.

Even if advocates do raise the necessary cash, they face another challenge: the mood in California. While a record number of Californians support legalization, they don’t see it as a key issue, likes jobs or education. Most Californians haven’t even tried pot, and only a few have used it in the past year, according to polling by the Public Policy Institute of California, a nonpartisan research group.

On the plus side, Californians’ attitude toward legalization has risen slightly since 2010, when proponents and opponents were statistically tied (49 percent for, 48 percent against).  A statewide survey by the PPIC last May found support among adults had risen to 54 percent.

The same poll, however, found that more than half of California adults, who were assured their responses were confidential, said they’d never tried marijuana – 55 percent. Just 15 percent said they’d used marijuana in the past year, while, 29 percent said they it had been more than a year since they’d tried it.

Perhaps a bigger hurdle is that a plurality of Californians view legalization with a shrug. A PPIC poll in December found only 28 percent described legalization as very important, and 21 percent called it somewhat important. Twenty-one percent said it wasn’t too important and 32 percent said it wasn’t at all important.

If Californians aren’t exactly rising up to fight for legalization, they’re not campaigning against it either. While the 2010 initiative was fought by law enforcement groups and the state Chamber of Commerce, no clear opposition has formed yet. And a few political players have lined up in support.

The initiative has been endorsed by Lieutenant Governor Gavin Newsom, the Marijuana Policy Project of California, the National Organization for the Reform of Marijuana Laws (NORML), the California State NAACP and the California Medical Association, the largest statewide organization of practicing physicians, representing more than 41,000 doctors.

Parker’s backing for the effort may carry weight because of his connections to other politically active Silicon Valley tycoons, such as Facebook founder Mark Zuckerberg, Yahoo CEO Marissa Mayer, and LinkedIn co-founder Reid Hoffman. These are people who spread around a lot of money.

Parker, for his part, pledged $5 million to cancer research in 2012. In 2013, he dropped $4.5 million for his wedding in the coastal redwoods of Big Sur, California. In the state’s 2014 election, Parker gave $1 million to  back propositions to issue bonds for water infrastructure and create a rainy day fund (both won).

California’s legalization effort would not mean a wholesale lifting of controls on cannabis. It would affect small amounts, similar to Colorado, Washington, Alaska, Oregon and the District of Columbia, whose voters legalized recreational use of marijuana in 2012 and 2014. The six other states that will vote on allowing adult social use this year are Arizona, Maine, Massachusetts, Nevada, Rhode Island and Vermont, according to ArcView data.

California has the largest economy in the U.S. If it was a separate country, it would rank eighth in the world, ahead of Russia and Italy. That kind of financial power is bound to be felt in Washington, enough to force the hand of federal officials who still classify marijuana as an illegal substance.

As more states move from prohibition to different forms regulated legal markets, ArcView’s Dayton said, Congress will be under increasing pressure to “pass a law that lets states decide what they want to do, and then at that point, that’ll open the floodgates.” Dayton predicts federal decriminalization as soon as 2020 or 2022.

So will California voters see the need to come out for cannabis? For the average person, it’s not as if the cannabis cops are breathing down their necks.

Since 2010, possession of an ounce or less, formerly a misdemeanor, has been downgraded to an infraction, the same penalty as a parking ticket. In many urban areas, the odor of marijuana on the streets is commonplace, and medical dispensaries are thriving. In some cities such as San Francisco, adult marijuana offenses have been made the lowest law enforcement priority.

“It feels as though cannabis is already legal – it’s easy to get a medical card,” ArcView’s Dayton said. Yet “tens of thousands of people are getting arrested for cannabis in this state. There’s a lot more to California than LA and San Francisco.”

Even if the public recognizes the need to change federal law, “people think that legalization is inevitable,’’ Dayton said. “So they don’t feel particularly motivated to make it happen.’’

Will cannabis legalization come to California this year? Tell us in the comments below.