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STATE OF MAINE

Departments of Administrative and Financial Services &

Department of Agriculture, Conservation, and Forestry

RESPONSE COVER PAGE

RFI# 201707126

Rule-Making for Adult-Use Marijuana Policy Implementation

Lead Point of Contact for Response -

Name/Title: Chris Beals, President & General Counsel

Respondent’s Organization Name: Weedmaps

Tel: E-mail:

Website (if applicable): www.wmpolicy.com and www.weedmaps.com

Street Address: 41 Discovery

City/State/Zip: Irvine, CA 92618

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July 31, 2017 Jake Viola, Policy Analyst & RFI Coordinator Office of the Governor #1 State House Station Augusta, ME 04333-0001 Re: RFI #201707126 Rule-Making for Adult-Use Marijuana Policy Implementation Dear Mr. Viola:

On July 17, we received notice of Maine’s Request for Information (RFI #201707126) regarding rule-

making for adult-use marijuana policy implementation. We recognize that developing a responsible

regulatory framework for the cannabis industry is a major undertaking and commend your work and

efforts to date.

We have reviewed Maine’s RFI and appreciate the opportunity to comment on a number of the pressing

policy challenges you outlined. In the pages that follow, we have provided background on our

organization, responses to your specific questions, and additional information that we hope will inform

the State’s rule-making process as the Administration sets out to design a workable and safe regulatory

regime for Maine’s cannabis market.

Moving forward, Weedmaps’ policy team is committed to working with Maine’s Office of the Governor,

Department of Agriculture, Bureau of Alcoholic Beverages and Lottery Operations, State Legislature, and

other relevant stakeholders to organize comprehensive cannabis policy solutions that accommodate

existing medical cannabis businesses, facilitate a smooth transition to a functioning legal market, enable

industry growth and address public safety, health, tax and community reinvestment goals.

Thank you for the opportunity to provide a formal response to this RFI and contribute to the regulatory

process. We look forward to working with you to create an effective regulatory system for the cannabis

industry.

Respectfully,

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Maine RFI Response Contents Section I. Organization .................................................................................................................................. 5

Section 2. Response to Information Sought ................................................................................................. 8

Question 1. What public health and public safety challenges should the State anticipate (e.g.

intoxicated driving, youth access, organized crime) and how should the State manage or mitigate

these negative externalities? .................................................................................................................... 8

Question 2. How should the enforcement body be designed and balanced among the state, county

and local law enforcement jurisdictions? Should unique divisions be created to oversee the five

license types: cultivators, testing labs, manufacturers, retailers and social clubs? Should the current

alcohol enforcement division absorb marijuana enforcement? How can the State recruit and/or train

enforcement officers to possess the necessary subject matter expertise to begin enforcement on

February 1, 2018? ................................................................................................................................... 12

Question 3. How much will retail marijuana sales cost the State in terms of regulation and

enforcement (e.g., law enforcement, additional employees, etc.)? ...................................................... 14

Question 4. How large is the current illicit market for marijuana in Maine and how large is the

projected market for legal retail sales in the State? ............................................................................... 15

Question 5. How should taxes be assessed (e.g., THC content, weight, sales price) to eliminate the

black market and sustain the costs of the legal program? At what stages – from seed to sale – should

taxes be assessed? How much tax revenue can be expected from retail marijuana sales? ................. 16

Question 6. How have other states established enforcement and oversight capabilities, and which

have been most successful? Please comment with special attention to security requirements for

licensee facilities, banking challenges and diversion of products to other states. ................................ 17

Question 7. What types of contaminants should be tested under the marijuana testing program?

What levels of contaminants are safe for public consumption? ............................................................ 18

Question 8. How should marijuana products be packaged, labeled, advertised and sold in terms of

serving size, potency and consumer safety? .......................................................................................... 19

Question 9. How should the State balance or integrate the existing medical marijuana program with

the adult-use market? ............................................................................................................................. 19

Question 10. Free response – use this opportunity to share any other thoughts or insights you’d like

the State to know. ................................................................................................................................... 20

Appendix A. Weedmaps Company & Government Relations Overview .................................................... 23

Appendix B. Marijuana Myth v. Fact ........................................................................................................... 25

Myth: Marijuana is a “Gateway Drug.” .................................................................................................. 26

Fact: Marijuana use is not a causal factor in use of harder drugs. .................................................. 26

Myth: Marijuana is addictive and more dangerous than cigarettes or alcohol...................................... 27

Fact: Marijuana is safer and less addictive than both cigarettes and alcohol. ................................ 27

Myth: Legalized marijuana will lead to higher youth usage. .................................................................. 29

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Fact: Youth usage does not increase when marijuana is legalized. ................................................. 29

Myth: Legalizing marijuana will empower black market activity. .......................................................... 31

Fact: Effective marijuana regulation can help eliminate black markets. ......................................... 31

Myth: Legalizing marijuana will double traffic fatalities. ........................................................................ 32

Fact: Preliminary data on traffic fatalities is mixed at best. ............................................................ 32

Appendix C. Tax Two-Pager ........................................................................................................................ 34

As Taxes Rise, So Do Illegal Market Levels ............................................................................................... 34

The Compounding Effect of State and Local Taxes: The Case of a State with a 20% Retail Tax Rate ...... 35

Multiplicative Taxation ............................................................................................................................ 35

High Effective Tax Rates above 20% Have Clear Diminishing Returns ..................................................... 35

Appendix D. Minimizing the Size of the Illegal Market Paper .................................................................... 36

Estimations of Current Illegal Market in Selected Cities......................................................................... 36

Factors that Contribute to Illegal Markets .............................................................................................. 36

Policy Recommendations ........................................................................................................................ 38

Illegal Market Table ................................................................................................................................ 42

Appendix E. Residual Solvent Limits per State (PPM) ................................................................................. 43

Appendix F. Pesticide Limits per State (PPM) ............................................................................................. 47

Appendix G. Tobacco Pesticide Limits Internationally (PPM) ..................................................................... 50

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Section I. Organization Founded in 2008, Weedmaps is the oldest and largest cannabis technology company in the world and is

the leading innovator in developing software and platforms that drive the cannabis industry. Our core

platform, weedmaps.com, connects people with local cannabis dispensaries, delivery services, doctors,

deals, brands, lab data and real-time menus. The site directly integrates with labs to collect data and

dispensary point of sale systems to provide product availability. Weedmaps’ full suite of business-to-

business and business-to-consumer software includes lab data integration, point-of-sale and medical

practice management (SEE APPENDIX A FOR ADDITIONAL INFORMATION ON OUR ORGANIZATION AND OVERARCHING

APPROACH TO PUBLIC POLICY).

Beyond providing the software and advertising solutions that underpin the industry, Weedmaps has

been advocating for measured growth and responsible policy to guide the modernization of the industry

for nearly a decade. Weedmaps is working collaboratively with all levels of government and stakeholder

organizations across the United States, Canada, and Europe to encourage reforms and establish

regulatory frameworks capable of ensuring safe and reliable access to cannabis.

Our organization and Government Relations team have a depth of industry knowledge and years of

policy experience.

• Christopher Beals (President & General Counsel): Chris serves as President and General Counsel

and in this capacity helps guide company strategic initiatives and product direction. Prior to

joining Weedmaps, Chris served as a Senior Vice President with Colbeck Capital in New York City

leading work on technology and life sciences financing transactions. Prior to this, Chris was a

legal counsel with the law firms of Davis Polk and Covington & Burling, both in New York,

working in their M%A and technology departments respectively. Chris graduated cum laude and

Order of the Coif from the University of Pennsylvania Law School and received his BSE in

Systems Engineering and BA in Economics from the University of Pennsylvania.

• Dustin McDonald (Vice President of Government Relations): Dustin McDonald is the Vice

President of Government Relations for Weedmaps, where he leads the effort to engage

Congress, the Administration and state and local governments on marijuana policy reforms.

Dustin joined Weedmaps in 2016 after serving for three and a half years as the Director of the

GFOA’s Federal Liaison Center, where he led advocacy on municipal finance issues for the Public

Finance Network, a coalition of state, county and city government associations. At GFOA Dustin

was also lead staff on the GFOA’s Committee on Governmental Debt Management, working

with committee members to develop best practices that promote sound financial practices for

state and local governments. Prior to his work with GFOA, Dustin spent 10 years providing direct

federal advocacy services to local governments and local government agencies from across the

U.S., working as a member of Holland & Knight’s Public Policy and Regulation Group, as well as

the government relations practice of MARC Associates. In this role Dustin led successful

advocacy campaigns on a diverse group of issues, including municipal finance and tax reform,

multi-modal transportation and related infrastructure, housing and economic development,

water and wastewater infrastructure improvements, telecommunications reform and public

safety. Before entering the private sector, Dustin served as a legislative aide in a federal

legislative office in Washington, DC.

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• David O’Brien (East Coast Director of Government Relations): David O’Brien serves as the East

Coast Director of Government Relations for Weedmaps, where he leads the effort to engage

state and local government officials to encourage them to implement sensible marijuana policy

reforms. David has extensive experience leading public engagement and communications

strategies on behalf of presidential, gubernatorial, congressional and local elected officials in

New England and across the U.S.

• Ben Mays (Senior Associate, Government Relations): Ben Mays is a Senior Associate on

Weedmaps’ Government Relations team and focuses on East Coast cannabis policy. Prior to

Weedmaps, he served as a Dukakis Fellow in the Office of Nevada Governor Brian Sandoval and

worked on public policy issues for 5+ years in Washington, DC. He received his MPP from

Harvard’s Kennedy School of Government and BA from Johns Hopkins University.

As the largest technology company servicing the cannabis industry, we have access to more data than

any other group in the industry and leverage this information to inform responsible policymaking. Our

national and international reach also means that we have regular contact with cannabis licensees

operating at all points along the supply chain from seed to sale and within divergent policy landscapes

around the globe. Examples of Weedmaps’ recent policy engagement include:

• Massachusetts: In Massachusetts, Weedmaps played an important role in shaping the

Commonwealth’s recently-passed cannabis legislation. Between June and July 2017, Weedmaps

was in regular communication with several members of the Joint Committee on Marijuana

Policy, including both Co-Chairs who sought our expertise on a range of issues. Weedmaps put

forward several policy recommendations throughout the legislative process, and many of these

were incorporated into the final legislation. We look forward to constructively engaging with the

Commonwealth’s incoming Cannabis Control Commission and are already in regular

communication with staff within the Office of the State Treasurer overseeing rulemaking.

• New Jersey: In New Jersey, Weedmaps provided redlines and amendments to the draft adult-

use legislation and has served to provide research and data to the bill sponsor. The Company

has also been in regular briefings with the lead sponsor of the State’s adult-use legislation and is

currently providing policy briefings to several of the state gubernatorial candidates. Chris Beals,

our President and General Counsel, also delivered public testimony at the legislature’s June

2017 hearing on adult-use cannabis policy and sits on the board of the New Jersey Cannabis

Industry Association.

• California: Weedmaps has been involved in policy discussions with California State lawmakers

and regulators since the State began organizing a medical model under 2015’s Medical Cannabis

Regulation and Safety Act (MCRSA). Since then we have worked directly with State legislators,

the Governor’s office and State regulators to make much-needed modifications to the

framework envisioned by the MCRSA authors so that the model functions and achieves the

States goals related to capturing projected revenue, minimizing the illegal market, protecting

public health and safety and deterring youth from access. This includes working directly with

lawmakers to make modifications to legislation introduced in 2016 and 2017, direct engagement

with the Governor’s office and State regulators to correct deficiencies in their draft medical

market regulations that would have resulted in market failure, and finally working with

regulators as they embark on efforts to merge the State’s medical and adult-use models.

Beyond these efforts we work routinely with industry trade organizations and non-industry

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groups (to include California local government associations and local law enforcement

associations, patient advocacy and public health organizations, and non-profits and NGOs) to

build support for commonsense legislative and regulatory solutions that make the State’s visions

for workable cannabis reform a reality. This work is comprehensive and not insignificant, given

that California is home to the largest cannabis market in the world.

Beyond our state-level work in California, Weedmaps government relations is also heavily

engaged in California’s 482 cities and 58 counties, each of whom were granted autonomy to

organize their own reform models as they see fit by the State’s medical legislation (MCRSA) and

the 2016 adult-use initiative (Prop 64 – The Adult-Use of Marijuana Act). Towards that end

Weedmaps has organized a series of educational seminars for local government elected leaders,

officials and staff across California, to teach policy makers about the fundamental policy building

blocks to achieve local regulatory success. These events are free of charge and simply aim to

provide an overview of new state law that local governments must comply with, along with an

analysis of revenue projections associated with tax rates applied to different licensing

categories, and input from local law enforcement and local government elected officials who

also serve on these panels.

Augmenting these efforts is Weedmaps’ official business partnership with the League of

California Cities, who we are working closely with to provide policy solutions for California cities

ahead of the January 1, 2018 start of the State’s licensing application process.

• Los Angeles: Weedmaps’ Government Relations team has also done an extensive amount of

work to steer the City of Los Angeles toward appropriate policy solutions as the City works to

reform its broken cannabis laws. This work has been challenging, as the City has failed at

organizing workable cannabis policy for a very large number of industry operators for close to a

decade, which has led to broad distrust of the City among industry participants and increased

the level of difficulty in making these much-needed reforms.

The City is wrapping up its legislative comment period on a draft framework that will authorize

the operation of cannabis businesses in Los Angeles, and bring the City into compliance with

State law. In finalizing this proposal the City has a herculean task before it, as it must identify

sufficient space to site thousands of industry operators in LA’s cannabis marketplace, which is

estimated to be the largest market in the world all on its own, and likely over two times the size

of the State of Colorado’s marijuana industry. A 2008 Marijuana Business News survey revealed

that “the sales of the combined marijuana stores in the Los Angeles area (geographically, from

about the 10 Freeway north to the top of the San Fernando Valley) is probably at least $1 billion

to $1.5 billion per year.” This figure does not include the estimated value of retail sales of

marijuana products occurring in the illegal market, which is significant. Weedmaps is working to

navigate the political issues and bridge the policy gap between City lawmakers and the industry

to produce the best model for Angelenos.

• Florida: Weedmaps’ team provided white papers and briefings to key members of the State

legislature during a contentious and difficult legislative session as members of the house and

senate sough to find compromise in the face of overwhelming citizen desire for medical

marijuana legalization. At the request of legislators, Weedmaps provided language that was

subsequently adopted, in whole or conceptually, on issues ranging from patient data privacy to

license quantities.

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Section 2. Response to Information Sought

Question 1. What public health and public safety challenges should the State anticipate

(e.g. intoxicated driving, youth access, organized crime) and how should the State

manage or mitigate these negative externalities? No greater challenge exists in reforming Maine’s cannabis laws than subduing the State’s sizable illegal

market. Only through assembling policy to appropriately address the illegal market will any of the

reforms the State organizes to preserve public health and safety be effective. Nor will any tax revenue

projections envisioned by the State meet expectations without significant attention paid to dramatically

reducing the size of the State’s illegal market. Illegal cannabis markets rob state and local governments

of tax dollars while continuing to drive up policing and incarceration costs, as unregulated market

participants amass large volumes of unbanked revenue. However, the most substantial burden of active

illegal markets falls on the public.

Persistent illegal markets provide an ongoing source of unregulated and untested cannabis products for

public consumption. This creates enormous public challenges for medical and adult-use consumers if

illegal cannabis and cannabis products are easier to obtain at lower prices than legal market products.

Similarly, a robust illegal market provides an unregulated market for youth to access. As such, it is

imperative that Maine work aggressively to adopt policy solutions that establish an inclusive and

comprehensive legal marketplace (SEE APPENDIX D. MINIMIZING THE ILLEGAL MARKET FOR MARIJUANA FOR

ADDITIONAL INFORMATION ON THE MOST OPTIMAL POLICY APPROACHES).

Regarding the experience of other states who have adopted medical and adult-use cannabis reforms,

there has been a fair amount of misinformation presented about the effects of those reforms on youth

access, crime rates, intoxicated driving, and usage of other drugs. While misinformation about cannabis

remains widespread, an increasing number of individuals and organizations have scrutinized existing

evidence and concluded that the actual impact of medical and adult-use cannabis laws deviates

considerably from opponents’ bleak forecasts. As an example, the Cato Institute noted in a recent report

that “state marijuana legalizations have had minimal effect on marijuana use and related outcomes. …

On the basis of available data…we find little support for the stronger claims made by either opponents or

advocates of legalizations. The absence of significant adverse consequences is especially striking given

the sometimes dire predictions made by legalization opponents.”1

Youth Usage Despite wide variations in advertising restrictions, tax rates and dispensary density, there has been no

appreciable increase in youth usage rates in Oregon, Washington or Colorado since legalization. Along

with education programs, addressing the illegal market is the most important action a state can take to

protect public health and safety and deter youth from use. When policies are organized to meet the

various challenges associated with large-scale reform, great benefits can be passed on to the public. For

example, in a state with no regulated cannabis market, unsafe and untested illegal cannabis is widely

available for public consumption by both youth and adults. However national and state-level data make

clear that cannabis legalization does not increase youth usage. Over the past two decades, the United

States has seen a proliferation of state laws legalizing medical and adult-use cannabis, yet youth

cannabis use rates have declined throughout this period. According to data from the Centers for Disease

Control (CDC):

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• Between 1995 and 2015, the percent of high school students who had used marijuana at some

point in their lifetime fell from 42.4 percent to 38.6 percent.

• Between 1995 and 2015, the percent of high school students who had used marijuana at least

once in the past month fell from 25.3 percent to 21.7 percent.2

In a 2014 study published in the peer-reviewed journal, Lancet Psychiatry, the authors analyzed youth

cannabis usage rates over a 24-year period and found “no evidence for an increase of adolescent

marijuana use after passage of state laws permitting use of marijuana for medical purposes.” The

authors concluded, “concerns that increased adolescent marijuana use is an unintended effect of state

medical marijuana laws seem unfounded.”3

While there are fewer years of data available on the impact of adult-use legalization laws on youth

usage rates, initial data shows that these laws have not resulted in increased youth cannabis usage. In

fact, states that have already implemented recreational cannabis laws have seen youth usage rates

decline across the board.

• Colorado: Between 2009 and 2015, the percent of adolescents who have tried marijuana at

least once in their lifetime fell from 43 percent to 38 percent. Over this same period, the percent

of adolescents who reported using marijuana in the past month fell from 25 percent to 21

percent.4

• Alaska: Between 2007 and 2015, the percent of adolescents who have tried marijuana at least

once in their lifetime fell from 44.7 percent to 38.8 percent. Over this same period, the percent

of adolescents who reported using marijuana in the past month fell from 20.5 percent to 19.0

percent.5

• Oregon: Between 2011 and 2015, the percent of 8th graders who reported using marijuana in

the past month fell from 11.1 percent to 8.8 percent. Over this same period, the percent of 11th

graders who reported using marijuana in the past month fell from 20.6 percent to 19.1 percent.

Note that Oregon’s survey of adolescent marijuana use only covers 8th and 11th graders.6

• Washington: Between 2012 and 2016, the percent of 6th, 8th, 10th, and 12th graders who

reported using marijuana at least once in their life or within the past 30 days either remained

constant or declined. At most grade levels, usage rates declined.7

These initial youth usage decreases in states who have reformed their cannabis laws provide strong

evidence that proper regulation of cannabis retail operators (both storefronts and delivery) will

effectively prohibit youth access. Success in this area can be greatly expanded if increased attention is

paid to minimizing the illegal market, which is quickly becoming the priority of these early reform states.

To achieve progress in this area and further decrease youth access, these states are now focused on:

• Expanding the size of their markets to provide an increased number of retail access points (to

include licensing independent delivery service providers to augment existing storefronts) to

improve consumer accessibility and convenience, and bringing illegal market participants into a

legal and regulated marketplace to eliminate the illegal market and increase consumer retail

access points. Minimizing the illegal market is key in this regard, as legal operators who face

fines and loss of licensure for serving minors demonstrate high compliance rates in not serving

youth.

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• Reducing state taxes and fees associated with the licensing and operation of cannabis industry

participants, as these burdens are ultimately passed onto consumers, who are then dissuaded

from accessing the illegal market due to higher price points.

Crime Rates and Organized Crime Marijuana legalization and regulation can be tools to neutralize illegal marijuana sales and associated

crime. As the Institute on Taxation and Economic Policy highlighted in its official testimony before the

Vermont Senate Committee on Finance, “one primary motivation behind legalizing retail marijuana is to

eliminate the illegal black market for marijuana and its social ills.”8 Another recent study on the subject

looked at crime rates in jurisdictions which legalized and found marijuana legalization “did not indicate a

crime exacerbating effect … on any of the Part I offenses. Alternatively, state MML may be correlated

with a reduction in homicide and assault rates, net of other covariates.”9

Both legal and illegal markets for marijuana are driven by consumer demand and, like the markets for

any other good, are influenced by ease of access, price, and product quality. These principles are

supported by the Colorado Department of Revenue, which commissioned a report regarding the market

size and demand for marijuana within the State. The report noted “If the price of regulated marijuana

remains high, as it has in early 2014, black-market production could continue if it could compete with

the regulated market on price, but the regulated market is likely to reduce market share held by the

black market.” The Department also pointed out that if prices between the legal and illegal market are

similar, “consumers would likely shift to the regulated market because the selection, quality, and

product safety is generally much higher at a licensed retail provider.”10

While there is certainly room for improvement, states that regulate medical and adult-use cannabis

have made considerable progress towards reducing the size of the black market. Along with this

reduction comes with a stifling of the flow of money into the hands of criminal enterprises which

currently prey on state prohibition. According to a recent article in The Economist, Colorado's legal

market has captured 70 percent of total cannabis sales.11 In an economic impact analysis commissioned

by the State of Colorado, the Marijuana Policy Group predicts that the black market’s share of total

cannabis sales will eventually fall to a mere 10 percent.12

As governments consider passing medical and adult-use cannabis laws, policy experts forecast major

declines in the size of the illegal market should politicians adopt the appropriate tax and regulatory

levels. In an April 2017 policy brief, C.D. Howe Institute predicted that the passage of adult-use cannabis

laws in Canada could result in the regulated market capturing as much as 90 percent of the country’s

black market.13

Interestingly, a growing body of research demonstrates that marijuana legalization is associated with

crime reduction. As the aforementioned group of researchers from the University of Texas’ Program on

Criminology found in a 2014 study, marijuana legalization is “not predictive of higher crime rates and

may be related to reductions in rates of homicide and assault.”14

Usage of Other Drugs and Opioid Usage While studies have found that those who use marijuana are more likely to use other drugs, these studies

demonstrate correlation not causation. In a seminal 1999 report, the Institute of Medicine found that

marijuana “does not appear to be a gateway drug to the extent that it is the cause or even that it is the

most significant predictor of serious drug abuse.”15 Further, while evidence supporting the gateway

theory is limited, there is a growing body of research indicating that medical cannabis has actually

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served as a substitute for alternative substances like alcohol, prescription drugs, and illicit drugs.16 In

fact, researchers have even found that medical cannabis laws are associated with significant reductions

in prescription medications, opioid pain reliever (OPR) overdose deaths, and OPR hospitalizations.17

More recent studies further undermine the so-called “gateway theory.”

• In a 2006 study published in the American Journal of Psychiatry, researchers found that drug

abuse is not determined by preceding use of marijuana, but rather a user’s individual tendencies

and environmental circumstances.18

• In a 2002 study, RAND’s Drug Policy Research Center concluded that “it is not marijuana use but

individuals' opportunities and unique propensities to use drugs that determine their risk of

initiating hard drugs.”19 Upon the release of this study, Andrew Morral, Associate Director of

RAND’s Public Safety and Justice division asserted, “We have shown that the marijuana gateway

effect is not the best explanation for the link between marijuana use and the use of harder

drugs. While the gateway theory has enjoyed popular acceptance, scientists have always had

their doubts. Our study shows that these doubts are justified.”20

With the passage of medical and adult-use cannabis laws in several states, researchers have begun studying the impact of expanded cannabis access on hard drug use. In a May 2014 National Bureau of Economic Research paper, public health researchers at Emory University found that the implementation of medical marijuana laws had no impact on hard drug use, leading to the conclusion that “the often-voiced concerns about the potential gateway effect of marijuana is not supported by our findings.”21

In short, there is no evidence suggesting that marijuana use in and of itself is a gateway to harder drugs

or drug abuse. On the contrary, regulated cannabis has the potential to reduce abuse of harmful drugs.

Intoxicated Driving With respect to intoxicated driving, states that have legalized medical or adult-use cannabis have seen

traffic collisions involving drivers testing positive for marijuana increase. Opponents of cannabis reforms

often cite these statistics as one of the dangers of normalizing marijuana. Driving while impaired by any

drug is dangerous and should be prohibited, but it is irresponsible to make incorrect inferences from the

limited data.

In exploring potential connections between marijuana use and traffic fatalities, the National Highway

Traffic Safety Administration (NHTSA) cautions that "drug presence does not necessarily imply

impairment."22 Since marijuana can be detected for a period of days or weeks after ingestion, drug

presence remains long after impairment ends. Accordingly, any data associating the passage of medical

and adult-use cannabis legislation with traffic fatalities warrants a degree of scrutiny.

That said, existing studies on marijuana legalization and highway safety are largely inconclusive.

In a recent examination of fatal car accidents, the Cato Institute found no major increase in fatal crashes

following the passage of medical and adult-use cannabis laws in Colorado, Washington, Oregon, and

Alaska.23

The National Highway Traffic Safety Administration (NHTSA) conducted the largest and most

comprehensive study on drug crash risk in the United States. Notably, the study found that after

accounting for variables like age, gender, race/ethnicity, and alcohol consumption, "there was no

significant contribution of drugs to crash risk."24

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Additionally, traffic data from Colorado and Washington is being misinterpreted. The Washington Traffic

Safety Commission (WTSC) released data in 2015 indicating the number of drivers involved in fatal

crashes with active THC in their blood increased from 38 in 2013 to 75 in 2014. However, the reasons for

the increases are not entirely clear. As the Seattle Times reported, “One obvious reason is that state-

regulated pot stores opened in 2014, providing access to legal weed. But the first few stores didn't open

until July, and their supply was scarce.”25 The article went on to say, “What’s more, there were more

marijuana-involved fatal crashes in the first half of 2014, before stores opened, than in the second half

of the year."26 Half of these drivers were also under the influence of alcohol, and the majority of those

were intoxicated. Shelly Baldwin, the spokesperson for the WTSC, acknowledged that the presence of

marijuana in a driver’s system is an important factor to monitor but that it does not necessarily lead to

collisions.27

In Colorado, the number of traffic fatalities has slightly increased since marijuana was legalized. In 2012,

the year Colorado voters legalized recreational marijuana, there were 474 traffic fatalities.28 This figure

increased to 481 In 2013 and 488 in 2014. Traffic fatalities were significantly higher in Colorado in the

years prior to the state establishing any marijuana regulations. Colorado established laws to regulate

medical marijuana in 2009 and voters approved recreational sales in 2012. Between 2009 and 2014 the

average number of traffic fatalities in Colorado was 467.5 compared to an average of 592 traffic

fatalities between 2003 and 2008.29 This does not necessarily suggest that legalizing marijuana is related

to safer roads, but rather that traffic data varies significantly over time, and it is difficult to have

definitive answers without more exhaustive studies. 52 percent of drivers in Colorado who tested

positive for marijuana also tested positive for alcohol and an additional 15 percent tested positive for

other drugs.30 Regarding the available data on marijuana-impaired data Glenn Davis, the Colorado

Department of Transportation’s Highway Safety Manager, said “We really do not have accurate data. I

recognize that marijuana impairment is going to be a challenge for us. Davis added “I would say the

increased availability of marijuana to the driving public has some impact on crashes, but we don’t

know.”31

Question 2. How should the enforcement body be designed and balanced among the

state, county and local law enforcement jurisdictions? Should unique divisions be

created to oversee the five license types: cultivators, testing labs, manufacturers,

retailers and social clubs? Should the current alcohol enforcement division absorb

marijuana enforcement? How can the State recruit and/or train enforcement officers to

possess the necessary subject matter expertise to begin enforcement on February 1,

2018?

How should the enforcement body be designed and balanced among the state, county and local

law enforcement jurisdictions? The law enforcement entities already present in the State will likely continue their respective functions.

Since well-crafted regulations will encourage legal market participants while shrinking the illegal market,

these entities will spend less of their time and taxpayer resources on conducting said activities against

marijuana. The Maine Department of Public Safety, Drug Enforcement Agency, Marshals, Attorney

General Investigations Division, and State Police—among all other involved entities—will still perform

duties associated with detecting, detaining, or interdicting illegal market actors and activities. County

and municipal law enforcement agencies will also need to enforce these laws, as well as aid in enforcing

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local ordinances. However, expenditures will become extremely burdensome and recurrent if policies

are not created in a manner that is designed to specifically shrink the illegal market and thus the need

for enforcement.

Should unique divisions be created to oversee the five license types: cultivators, testing labs,

manufacturers, retailers and social clubs? Unique divisions are not necessary to oversee the five license types. Spreading licensing authority

between several divisions can be cumbersome, increase costs and cause unnecessary delays for both

the industry and the State.

Establishing a single state regulatory body to issue licenses for commercial marijuana activities is much

more efficient. It provides the marijuana industry a clear and single point of contact for license

applications, questions and dialogue. It would also improve enforcement and implementation for the

State.

There is naturally a need for coordination between multiple State entities in cannabis regulation as law

enforcement, tax collection, environmental protection and many other agencies have a role. Having a

single regulatory entity as a point of contact for other state agencies will streamline multi-agency

coordination, help the Legislature and Governor’s Office perform oversight and ensure the State’s

marijuana licensing program is being implemented appropriately.

In April, Michigan centralized all aspects of their medical marijuana regulations within a single entity, the

Bureau of Medical Marihuana Regulation within the Department of Licensing and Regulatory Affairs

(LARA). Shelly Edgerton, Director of LARA, said “Many other states have various licenses and patient

programs spread throughout different departments and agencies. The bureau’s centralized services will

enhance patient protections and make regulations more efficient for business customers.”32

Should the current alcohol enforcement division absorb marijuana enforcement? The current alcohol enforcement division should not absorb marijuana enforcement. While many states

have applied alcohol-style rules to marijuana, like age and zoning restrictions, alcohol enforcement

agencies are not well suited to take on marijuana enforcement. From a business and workflow

standpoint marijuana and alcohol are fundamentally different products. For example, marijuana is not a

homogenized product and marijuana grown in different locations (even if done in a uniform manner)

generally will be of materially varying quality. This contrasts with alcohol where spirits and beer crafted

in different locations can all be sold under a single unified label. Marijuana is significantly more

perishable than alcohol and more layers in the process drastically increase the risk of mishandling.

Additionally, alcohol divisions generally already have a significant workload enforcing alcohol laws.

Commercial marijuana activity does not fit well within existing alcohol regulatory models. For these

reasons, it is best that the enforcement agency that is formed be separate from the alcohol division and

have a sole focus on the marijuana industry.

How can the State recruit and/or train enforcement officers to possess the necessary subject

matter expertise to begin enforcement on February 1, 2018? Colorado has taken a lead on establishing peace officer training for commercial marijuana activities. The

Colorado Peace Officer Standards and Training Board has developed curricula such as Introduction to

Marijuana for Law Enforcement, Introduction to Marijuana for School Resource Officers, Advanced

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Roadside Impaired Driving Enforcement, Standardized Field Sobriety Tests and Drug Recognition

Experts.33

The Washington State Liquor and Cannabis Board has also established an Enforcement and Education

Division, to provide education to cannabis licensed businesses, communities and local law enforcement

agencies. Enforcement operations include premises visits, compliance checks, undercover operations

and complaint investigations, while educational efforts include liquor and marijuana law briefings,

technical assistance visits and "Responsible Alcohol, Cannabis and Tobacco Sales" classes.34

Colorado and Washington officer training standards can serve as a model for Maine. Based on the

standards from these states, law enforcement officers should have a comprehensive understanding of

the legal framework regarding marijuana arrests, summons and search warrants. Training should also

cover:

• Civil liability issues

• Possible defenses

• Investigations

• Home grows

• Traffic stops and searches

• DUID

• Butane Hash Oil labs

• Possession

• Medical marijuana issues and cards35

Regarding recruiting officers, past marijuana use can be a complicated issue that limits opportunities for

hiring peace officers. “Hiring for the 21st Century Law Enforcement Officer,” a recent report by the Office

of Community Oriented Policing Service within the U.S. Department of Justice details some of the

challenges with recruiting police officers and provides strategies for success. The report discusses past

marijuana use and how some police departments are addressing the issue in this changing environment.

Washington D.C., Maryland and Seattle have all taken steps to ease restrictions on past marijuana use

for prospective peace officers.36,37 Baltimore Police Commissioner Kevin Davis said taking these steps

provides “a greater pool of police applicants to consider as we are at a very critical time in our

profession’s history and we want to identify the right people.”38

Question 3. How much will retail marijuana sales cost the State in terms of regulation and

enforcement (e.g., law enforcement, additional employees, etc.)?

In Other Adult-Use States, State Tax Revenue Has Far Exceeded State Enforcement Costs Opponents of medical and adult-use cannabis laws make bold claims about how legalization results in

burdensome regulatory and enforcement costs that outweigh gains in tax revenue. However, these

claims couldn’t be further from the truth. The cannabis industry eagerly awaits a comprehensive, state-

commissioned cost-benefit analysis of adult-use legalization by the Washington State Institute for Public

Policy, which will be released in September 2017. In the meantime, it’s worth noting that tax revenue

has far exceeded state regulatory costs, and reductions in marijuana-related arrests have saved adult-

use states millions of dollars in enforcement, judicial and incarceration costs. As an example, in FY 2015-

16, the State of Colorado generated $157,511,445 in marijuana fees and taxes while the total

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expenditures of the Colorado Department of Revenue’s Marijuana Enforcement Division stood at

$10,163,003.39

Enforcement Cost Savings through Proper Regulation As government officials in Maine consider policies to regulate the adult-use marijuana market, a

framework is required that will enable the legal market to compete with the illegal market on both

access and price, and conversely encourages illegal market operators to enter the regulated system. In

turn, the revenue from legal market operators, who are able to compete with and help shrink the illegal

market due to increased accessibility and competitive prices, will far exceed enforcement costs against

illegal market actors. This yields more tax revenue for State and local governments, and less funds

diverted to illegal market actors. Therefore, the State will receive ample tax proceeds from the market

to address enforcement issues, while simultaneously de-funding illegal market actors who currently are

willing and well-funded enough to immediately reopen.

Los Angeles County Deputy District Attorney Lance Wong stated that “keeping the illegal dispensaries

closed is like playing a game of whack-a-mole, because businesses keep popping back up.”40 The

perpetual need for enforcement is present in states and localities with complete prohibitions, as well as

states and localities that create poorly regulated markets. ‘Whack-a-mole’ is a waste of valuable and

finite taxpayer resources, as well funded illegal market actors will either reopen their physical locations

or create delivery services following a raid. While enforcement activities may shut down one physical

location, the demand for marijuana remains.

As explained below, enforcement activity expenditures shrink in proportion to the size of the illegal

market. To shrink the illegal market, government officials must create thoughtful policies that allow

legal market actors to compete with the availability and price of the illegal market.

Question 4. How large is the current illicit market for marijuana in Maine and how large is

the projected market for legal retail sales in the State? We would estimate that the current illegal market for marijuana in Maine exceeds 60% based on

comparative data with other states. Estimating the size of both the current illegal market and the

projected market for legal retail sales are best accomplished by analyzing comparable data from states

and localities that have already formed legalization and taxation models. The primary driver of

marijuana illegal markets is the combination of: (i) policies which overly restrict the availability and ease

of purchasing marijuana through legal channels, (ii) high effective tax rates and compliance costs on

legal marijuana and (iii) insufficient quantity and quality of legal marijuana for sale in a market. As Maine

moves forward in adjusting its existing marijuana policies, it is critical that marijuana policy reforms be

designed with a goal of reducing illegal markets.

The current medical marijuana tax rate of 5.5% is among the lowest effective tax rates when taken into

comparison with the city data that we have compiled. Thus, the current legal dispensary prices for

marijuana are presumably comparable and competitive with those found on the illegal market.

However, the dispensary density is the lowest when compared to any city we have surveyed. Maine’s

eight current legal access points and population yield a dispensary density of 1/166,375. If all the State’s

allowance of 3,200 caregivers are all operating and assisting the maximum (5) qualifying patients

allowed, then this brings the density to 1 dispensary per 164,375 citizens. Though the tax rate

presumably creates comparable prices between the current legal and illegal market, legal outlets are not

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easily accessible to consumers. As previously stated, accessibility is an extremely important factor in a

consumer’s determination on whether to patronize the legal market, or to purchase easily accessible

marijuana at comparable prices from the illegal market.

Valuable insight can be gained from analyzing the dispensary densities of cities and comparing them to

the dispensary density of Maine. Denver has a dispensary density of 1 per every 2887 citizens and an

aggregate tax rate of 37.15% This dispensary density is among the lowest in the nation. Unfortunately,

the high tax rate translates to lower prices in the illegal market, giving Denver an estimated illegal

market rate of 20-30%. Phoenix, AZ, in contrast, has one of the lowest tax rates in the entire nation at

6.6%, but a dispensary density of 1 per every 45,848 citizens. In these conditions, cannabis is less

accessible, and consumers will favor the more available cannabis, even though the less-accessible legal

market cannabis is priced competitively as a result of the low tax rate. Therefore, Phoenix is estimated

to have an illegal market rate of 58%.

Given data from federal government surveys and Maine’s RFI, we can approximate the illegal market’s

share of total marijuana sales. Maine’s illegal market rate can be captured by considering the number of

medical marijuana patients in comparison to all other marijuana consumers within the State. According

to the federal government’s National Survey on Drug Use and Health (NSDUH), in 2015 there were

157,000 regular marijuana users throughout the State.41 However, the eight medical marijuana

dispensaries and numerous caregivers who provide medical marijuana legally throughout the State

service approximately 37,000 marijuana patients. Comparing these two figures yields a 23.6% legal

market rate and a 76.4% illegal market rate. Given that national survey data typically underreports

actual consumption rates, we believe the illegal market rate is likely much higher. Nonetheless, this

figure provides a conservative estimate of illegal market size and underscores the importance of

tailoring government policies to minimize the size of the illegal market.

Question 5. How should taxes be assessed (e.g., THC content, weight, sales price) to

eliminate the black market and sustain the costs of the legal program? At what stages –

from seed to sale – should taxes be assessed? How much tax revenue can be expected

from retail marijuana sales?

Estimating Tax Revenue Estimating tax revenue in a legalized system is difficult without knowing key factors that determine the

size of the illegal market such as dispensary density, delivery penetration and product selection. We

believe that a reasonable target for Maine’s tax revenue would be the $60.2 million in tax revenue

which Oregon collected in 2016. Only the Western portions of Oregon have legalized marijuana and

these regions have a similar population to the 1.3 million residents which Maine has. Additionally, the

tourism volume is similar in these two regions, and Maine’s estimated consumption rate exceeds that of

Oregon. Although Oregon’s state tax is set at 17%, the state has continued to struggle with illegal

market rates due to uneven dispensary density and unmet wholesale supply. Accordingly, we believe

that if Maine effectively regulates to reduce the illegal market, that meeting or exceeding $60 million is

an achievable target, but it will take 2-3 years of legalization to reach this target.

Appropriate Tax Model The single best model for marijuana taxation at this point is a percentage-based, unified excise tax on

marijuana sales that is only charged at the end point of sale (whether dispensary or delivery). This is the

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favored model which is currently used by Oregon, Washington and Massachusetts. Uncapped tax rates

present difficult challenges for cities and counties in California where high tax rates in jurisdictions are

endangering the legal markets in surrounding regions.

Issues with various other tax structures are as follow:

• Tax by THC Content: Tax by THC is one of the single most flawed tax systems for marijuana

which is why no jurisdiction has adopted such a tax structure. Structures aimed at taxing by THC

content (i) fundamentally misunderstand how marijuana works, (ii) threaten to create a sizeable

illegal market and (iii) can distort product genetics in the market. Unlike alcohol where the

intoxicating effect is directly correlated to proof, there is not a linear relationship between the

THC content in a product and its intoxicating effect. This is because the various other

cannabinoids (e.g. CBD-A, THC-A) and terpenes (e.g. myrcene, limonene) do not have an

intoxicating effect and can upregulate and downregulate the intoxicating effect of marijuana.

So, for example, a marijuana flower product with 28% THC may be less strongly intoxicating than

one with 15% THC. Separately, we have consistently seen that when certain product types such

as concentrates or high dosage products are restricted or taxed at a higher rate, the illegal

market rushes in to fill the gap.

• Tax by weight: Tax by weight is a similarly flawed concept to tax by THC because marijuana

products such as edibles and concentrates can assume so many forms and dosages. Tax by

weight systems also have trouble dealing with how to tax topicals and lotions or concentrates

that are not high purity. Some advocates have argued that tax by weight helps to smooth tax

collection for states as wholesales prices drop, however we note that wholesale price lowering

takes years to achieve and state tax policy can be adjusted as this process occurs.

• Tax at multiple levels of supply chain or up supply chain: Taxation before sale to consumer is

difficult to manage and can easily add multiplicative taxation where the same tax applies

repeatedly as products move to processors, packagers and compounders. In California, for

example, there is a growing concern that net effective tax rates may exceed 50% as state and

local tax rates repeatedly apply as product moves from cultivation to processing to packaging to

filling.

Question 6. How have other states established enforcement and oversight capabilities,

and which have been most successful? Please comment with special attention to

security requirements for licensee facilities, banking challenges and diversion of products

to other states. While no state with medical or adult-use cannabis laws has achieved a completely effective enforcement

model, Colorado has come the closest. In Colorado, the state’s combination of tight enforcement

regulations with forward-thinking policy solutions (e.g. liberal licensing) has produced a legal market

that captures 70% of total marijuana sales.

Regarding enforcement and oversight capabilities, Colorado has housed its Marijuana Enforcement

Division (MED) within the State’s Department of Revenue. MED is responsible for administering

marijuana laws and regulations, including licensing. Overall, Colorado serves as an excellent model on

how to properly structure enforcement and oversight functions.

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Question 7. What types of contaminants should be tested under the marijuana testing

program? What levels of contaminants are safe for public consumption?

Marijuana or marijuana products should not be sold unless a representative sample has been tested by

a licensed testing laboratory.

All testing laboratories performing tests on marijuana should be required to obtain and maintain ISO/IEC

17025 accreditation, which is what most laboratories must hold to be deemed technically competent.

Testing laboratories should be testing for compounds and contaminants.

Compounds The psychoactive effect of marijuana is the result of a complex interplay between the chemical

compounds that make up the plant, cannabinoids and the terpenes, that is commonly referred to as the

“entourage effect.” Testing laboratories should verify the presence and concentration of these

compounds and issue a certificate of analysis that verifies the chemical profile of the sample. The

compounds that should be tested for include:

• Tetrahydrocannabinol (THC)

• Tetrahydrocannabinolic Acid (THCA)

• Cannabidiol (CBD)

• Cannabidiolic Acid (CBDA)

• Terpenes

• Cannabigerol (CBG)

• Cannabinol (CBN)

Contaminants Contaminants that should be tested for include all of the following:

• Residual solvent or processing chemicals

• Foreign material, including, but not limited to, pesticides, hair, insects, or similar or related

adulterant

• Microbiological

When establishing action limits for pesticides and contaminants, it is important to remember that

unnecessarily low limits will cause testing labs to have a backlog, lead to high levels of false-positives

and ultimately raise the legal market’s price premium relative to the illegal market. Oregon spent

months developing their action limits and while encouraging in their approach, the limits resulted in a

six-week backlog of tests and a lack of accredited laboratories. Without a fundamental understanding of

the health risks associated with combusted exposure to pesticides, Oregon set their action limits by

doubling the laboratory limits of quantification for the instruments required to perform the tests. At the

time, there was only one laboratory with the experienced personnel and necessary equipment to

perform the pesticide tests which led to a backlog of over six weeks.

Action levels should be set to mirror the acceptable limits (colony-forming units [CFU]/gram) outlined in

the American Herbal Pharmacopeia Cannabis Inflorescence, Standards of Identity, Analysis and Quality

Control. As an example, Colorado’s mold action level conforms to the AHP limits of 104 CFU per gram.

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Included in the Appendixes are two documents relating to contaminant levels. “RESIDUAL SOLVENT LIMITS

PER STATE (PPM) (APPENDIX G) provides a comparison of current residual solvent limits by state and

“PESTICIDE LIMITS PER STATE (PPM)” (APPENDIX F) provides a comparison of current pesticide limits by state.

Question 8. How should marijuana products be packaged, labeled, advertised and sold in

terms of serving size, potency and consumer safety? Overly-burdensome restrictions on the packaging, labeling, advertising, and marketing of cannabis can

cause a host of challenges for the legal market. As regulated retailers and brands set out to differentiate

their businesses from illegal market operators, flexibility in packaging, labeling, advertising, and

marketing is critical. Without such flexibility, licensees will struggle to establish awareness among

cannabis consumers, and the legal market will struggle to take root. An additional cost of over-

restricting advertising is that businesses have weaker trademark protection and brands that are less

suitable for licensing into other jurisdictions.

In order to provide sufficient flexibility while addressing potential concerns about public nuisance and

youth consumption, we recommend the following:

• Generally look for parity in alcohol and marijuana advertising restrictions. Allow marijuana

brands and dispensaries enough advertising options to create brand recognition for trademark

protection purposes and to differentiate themselves from illegal operators.

• Restrict advertising that depicts people under the age of 21 consuming marijuana or that is

predominantly targeted to children. Adopt a touch and feel approach to advertising rules as

opposed to carte blanche restrictions on the use of cartoon logos or whimsical trademarks.

• Allow dispensaries to have visible storefronts and have signage commensurate with liquor

establishments to force them to compete on store quality, cleanliness and curbside appeal. This

has the added benefit of increasing buildout expenditure by dispensary owners which, in turn,

increases their desire to maintain compliance.

• Follow the federal advisory guidelines for alcohol advertising and only allow advertising in

channels where it is reasonably believed that 71.6% of the viewers are 21 and over. In a 2014

report, the Federal Trade Commission (FTC) asserted that “the Commission commends the

[alcohol] industry for its adoption, in mid-2011, of a 71.6 percent 21+ standard for new

advertising purchases.” We believe this threshold is appropriate for the cannabis industry.

A final point worth mentioning is that despite wildly varying advertising restrictions in Washington,

Oregon, California and Colorado, there are almost no discernable differences in youth usage rates or

similar harm indicators.

As Maine considers regulations for the cannabis industry, we encourage the State to consider packaging,

labeling, and advertising standards comparable to those that exist in Colorado, which serves as an

excellent model on these matters.

Question 9. How should the State balance or integrate the existing medical marijuana

program with the adult-use market? A fair amount of discussion continues on this subject, which is primarily focused on merging existing

state medical models with nascent adult-use models for the purpose of dissuading the U.S. Department

of Justice (USDOJ) from interfering with a state’s policy reforms. This ongoing discussion is fueled by the

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Rohrabacher-Farr amendment to the annual federal Commerce-Justice-Science Appropriations bill,

which protects the 44 states with legal medical cannabis access from unwarranted USDOJ enforcement,

but offers no such similar protection to states with adult-use models. Combining the State’s medical

and adult-use systems is a preferred solution to stave off federal interference, as this approach

comingles supply chains, retail inventory and associated revenues (both industry and State tax).

Combining the medical and adult-use systems will also decrease regulatory burdens on the State as well

as on the State’s licensed industry participants, as regulators will be able to streamline all components

of the licensing process and regulatory oversight for a single/combined model, which will produce cost

savings to the State and licensed industry participants and help create parity between legal and illegal

market prices. The State can also use this exercise to make improvements to its existing medical

system.

Maine should very seriously consider combining its medical and adult-use models, and the State of

Washington provides an excellent example of how not combining medical and adult-use models will

negatively impact the State’s overall cannabis policy reform efforts. While Washington’s 1998 Initiative

692 established a medical cannabis caregiver system, it was not until voter’s 2012 adoption of Initiative

502 that a state system could be created to – (1) provide adult-use access to Washington residents, and

(2) deliver a clear set of rules about not only the operation of the State’s adult-use market, but also

finally address the regulatory failures of Washington’s medical model. This was an important step

because the years prior to regulatory implementation of I-502 were plagued by the rise of a large illegal

market, which was made possible by the shallow regulatory structure devised for the State’s medical

access model, as well as the failure to license an adult-use model.

Organizing only a loose system for medical access enabled a large population of illegal industry

participants in all licensing categories to grow alongside the legal medical industry. Meanwhile failing to

simultaneously license an adult-use market only fueled the growth of the illegal market because

significant demand already existed in the State for adult-use access. Many adult-use consumers were

able to obtain easily accessible supply from the State’s illegal market operators, while other adult-use

consumers gamed the State’s medical program to secure access. The result for the State was the loss of

revenue spent on failed law enforcement strategies to contain a sizable illegal market that could have

been avoided with a policy solution. And the State lost millions of tax dollars that could have been

secured through the licensing of a legal adult-use market. I-502 gave Washington legislators and

regulators the opportunity they needed to unify medical and adult-use access under a single model,

which delivered internal department/agency efficiencies, streamlined the market from seed to sale and

produced millions of dollars in tax revenue.

Question 10. Free response – use this opportunity to share any other thoughts or insights

you’d like the State to know.

Per-plant tagging & Open Access API Maine’s adult-use ballot initiative requires industry licensees to track marijuana throughout the supply

chain to the final point of sale. As such, a seed-to-sale tracking system will become an important feature

of Maine’s regulated cannabis market—much as these systems have in other states with functioning

adult-use markets. That said, poorly constructed systems can result in numerous challenges for the

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regulated market, including overly burdensome requirements and delays that hampered the medical

cannabis program launches in some states.

As the Department of Agriculture and Bureau of Alcoholic Beverages and Lottery Operations approach

drafting rules for a seed-to-sale tracking system we strongly advise that the Administration not require

per-plant tagging. A per-plant method for tracking has several limitations and is not consistent with

existing cultivation best practices. A single plant’s yield can vary due to a number of environmental

factors, and plant count in and of itself is not the best indicator of how much marijuana is being grown

by a cultivator. Yield and volume metrics give a better indication of a cultivator’s footprint and help

monitor for suspicious activity.

There are a variety of tracking systems and technology that are currently being used by hundreds of

cannabis businesses across the US. While businesses will inevitably have to comply with Maine’s

emerging regulatory framework, businesses should have flexibility to innovate and align seed-to-sale

tracking systems with their unique operations. So long as a business can demonstrate compliance with

state and local rules, they should be able to utilize technology and products that best serve their needs

and the needs of their patients and customers.

For example, Washington State selected a specific track and trace software, but allows licensed

marijuana producers, processors and retailers to employ their own inventory tracking software solutions

as long as it allows for the collection and submission of the specific information and reports required by

the seed-to-sale inventory tracking rules for licensees.

The track and trace system Maine procures should be flexible enough to accommodate and integrate

with software and products utilized by cannabis businesses. This can be accomplished by selecting a

track and trace system that supports interoperability with front-end cannabis business software

applications and is tailored to promote the following goals:

• Adheres to best practices with respect to encryption for data as generally utilized by similar

software systems. These best practices include simple configuration; a visual and intuitive

interface; integration with the work process; flexible and powerful reporting features; and

relevance with the work process.

• Provides uniform third party access to collected data to the extent permitted by the state and

local governments.

• Protects personal information of patients.

• Minimizes administrative burden to marijuana businesses and is tailored to collect only that

information which is relevant to State needs.

• To the degree that specific ancillary goods, hardware or software are needed, require an open

standard and the ability to source such goods from third-parties.

• Compatibility with a variety of hardware and software systems, including through an open-

access application program interface (API) (see specifications below).

The track and trace system should allow all licensee-facing system activities to be performed by a secure

open-access API. Qualities of good API include:

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• The API should be well documented. API documentation describes what services an API offers

and how to use those services and is crucial for the development and maintenance of

applications that use the API.

• The API should have a bidirectional integration, which enable data to flow in all directions and

allow two or more separate systems (e.g. two separate track-and-trace programs) to seamlessly

sync data.

• The API should be real time, meaning new data is shared instantly within the system.

• The API should be accessible to any front-end application that has been validated and has

appropriate credentials.

• The API should have version control, which tracks and provides control over changes to source

code. Version control software keeps track of every modification to the code. If a mistake is

made, developers can compare earlier versions of the code to help fix the mistake while

minimizing disruption.

• Adequate notice of API updates should be provided to front-end applications (e.g. at least 6

months) including appropriate specification documents.

• The system should provide a test environment for front-end applications to access that mirrors

the production environment.

• To ensure that limited regulatory resources are spent most productively, the system should

include robust alerts and reporting around any events in the cannabis life-cycle that fall outside

of expected parameters—i.e. if a harvest yields less than expected—some kind of justifying

reason such as crop failure, etc. should be provided along with a record of plant destruction. A

transparent and consistent government regulatory program, including a robust and

comprehensive seed to sale software tracking system helps support a tightly controlled “chain

of custody” model as well as helping prevent diversion and fraud.

Concluding Thoughts and the Importance of Designing a Workable Regulatory Framework As one of the first east coast states to adopt adult-use cannabis legislation, Maine has the potential to

become a leader within an industry that could generate thousands of jobs and tens of millions of dollars

in tax revenue. That said, designing a workable regulatory framework is critical for a functioning legal

market to take root and supplant the illegal market.

Weedmaps is committed to working with Maine to recommend sound, responsible policies that achieve

such a framework while concurrently meeting the State’s public health, public safety, economic

development, and tax revenue generation goals.

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Appendix A. Weedmaps Company & Government Relations Overview Who Weedmaps Is Weedmaps was founded in 2008 on the premise that consumers needed reliable data about marijuana,

its effects and where to legally purchase lab tested products. Since then, Weedmaps has grown to

provide a broad range of technology and advertising services. Weedmaps has over 300 employees and

is headquartered in Irvine, California with offices in Denver, New York City, Toronto, Barcelona, Phoenix

and Berlin. Our central business mission is to enable companies in the industry to meet the regulatory

and competitive needs of a rapidly evolving market through advertising, software and data solutions.

Because Weedmaps has a global footprint, works with participants at all layers of the supply chain, and

does not engage in any business which touches the plant – we believe we have a uniquely broad and

agnostic perspective of what marijuana regulations and laws have worked and have failed. We are

committed to working with lawmakers, regulators, industry participants, non-governmental

organizations and trade groups to organize comprehensive marijuana policy solutions that

accommodate existing marijuana businesses, enable industry growth and address the public safety,

health, tax and community reinvestment goals of legislators and regulators.

What We Do Since our inception in 2008, Weedmaps has been the leading innovator in developing software and

platforms that drive the cannabis industry. Our platform consists of the following main verticals:

• Weedmaps Core: This platform provides advertising services to dispensaries, delivery services and doctors. For dispensaries and delivery services we provide the ability for consumers to browse menus and products as well as reviews.

o Menus: Menus are generated by manual entry or can be updated real-time through integration with third-party point of sale systems. We accept direct menu updates from numerous POS’ and provide an open API for additional POS’ to push menu data.

o Lab Data: Lab data on the platform is only pushed directly from accredited laboratories and we currently receive lab data from over 130 labs with more coming online each month. All lab results expire and have to be refreshed with new data. We recently launched support for full cannabinoid and terpene testing information and are actively working to educate labs, brands and dispensaries that including broader lab testing results is critical for consumer safety and decision-making.

o Photos: We employ over 100 freelance photo and video professionals to populate the site with detailed and informative photos that showcase what products dispensaries carry. This service is provided free to ensure customers get the best data possible.

o Competitors: The primary competitors to Core are Yelp and Google Local. We also face competition from dozens of copycat sites which steal our data and infringe our IP. Simply put, we seek to differentiate ourselves by providing better lab data, learning tools and information to consumers.

• Weedmaps Brands: Launched in February 2017, the Brands platform is revolutionary new product that allows marijuana brands to tell their brand story, showcase their products and surface reliable data on lab testing and where products can be purchased. It also allows consumers to review and discuss products and their effects.

o Anti-Counterfeiting: The Brands platform combats counterfeiting and surreptitious product movement by allowing Brands to review and verify dispensary menu listings claiming to sell their products.

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o Consumer Safety: Consumers can see a verified product mark on dispensary menu items that have been verified by the Brand. Additionally, they can review the applicable product description and consumer reviews for applicable verified product.

o Photos: Like the Core platform, we have spent over a year generating product photos for Brands to ensure that consumers can get a better visual sense of products.

• MMJ Menu & The Green One: These platforms are dispensary point of sale systems with MMJ Menu being used in the U.S. and Canada and The Green One being used in Spain. MMJ Menu is compliant with numerous state reporting systems and is one of the most utilized POS systems in the U.S.

• Safe Access MD (SAMD): SAMD is a cloud-based software solution that allows cannabis doctors to administer and manage prescriptions and patients. The system is currently used by doctors throughout the U.S. and allows them to maintain compliance with state-specific law.

• Marijuana.com/Weedmaps TV: The platforms are the outlet for our news and lifestyle content. Through these platforms we publish content ranging from investigative journalism to product reviews to current event coverage. On our video platform, we provide content that includes medical learning, industry events and lifestyle.

Our Policy The central tenant of our policy is to encourage legalization of marijuana in a reasonably regulated legal

market that minimizes the illegal market for marijuana and doesn’t treat marijuana as if prohibition is

only “half-abolished” while protecting the concerns of citizens. The key planks of our platform include:

• Access: Ensure sufficient access for customers and patients so that they don’t turn to illegal markets or are deprived of a legal source of purchase. Looking at existing illegal market data in legalized markets, we strongly believe that a dispensary densities of at least 1/7,000 people is necessary to prevent oversized illegal markets and enable sufficient patient access.

• Lab Testing: Mandate robust standards for lab testing and requires labs to maintain independence from licensed operators. Periodically review and revise standards as research on cannabis evolves.

• Safety: Continuously seek to improve safety for consumers and minimize negative externalities to the general public. Keep regulations tailored to these needs and seek cost-effective means to accomplish these goals while not breaking marijuana markets. Adopting an iterative and responsive approach to legislation that addresses issues as they arise or seem likely to arise as opposed to over-regulating in the absence of any data.

• Taxation: Keep initial tax rates low and avoid multiplicative layers of taxation across levels of government to minimize the illegal market, encourage customers to use the system and ensure sufficient margins for marijuana businesses to spend on lab testing and infrastructure.

• Efficient Markets: Ensure that the marijuana industry has a chance to succeed by minimizing restrictions on cross-licensure or requirements for unnecessary layers like monopolistic, independent distributors (i.e. Tied House). Ensure requirements for licensing are well tailored to legitimate needs such as public safety, taxation or enforcement.

• Enforcement: Ensure that enforcement efforts against illegal operators is based on an evidentiary approach and that law enforcement or regulators have a clearly tasked mission that protects consumers and clearly delineates the legal market. Accept that law enforcement or regulatory policing are the only means to accomplish these goals and attempts to utilize tax authorities, consumer penalties, advertising restrictions or other circuitous means of enforcement have consistently failed in other industries (e.g. livery cabs, alcohol, home sharing).

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Appendix B. Marijuana Myth v. Fact

Dispelling Myths The Facts About Marijuana Regulation

Opponents of medical and adult-use cannabis laws often make bold claims about the negative impact

marijuana will have on individuals and communities. Examples of these claims include arguments that

marijuana is a “gateway drug,” that legalization will double traffic fatalities, or that cannabis use results

in increased levels of drug abuse and addiction.

Establishing effective marijuana laws and regulations is a complicated process, made more difficult

when elected leaders and voters lack accurate information. The following paper addresses potential

sources of misinformation using the growing body of research that has emerged since the passage of

state-level cannabis laws. Through a review of government publications, academic articles, third party

studies, and other resources, this paper examines the five most common arguments against marijuana

legalization to separate MYTH from FACT.

MYTH: Marijuana is a “gateway drug.”

FACT: Marijuana use is not a causal factor in use of harder drugs.

MYTH: Marijuana is addictive and more dangerous than cigarettes or alcohol.

FACT: Marijuana is safer and less addictive than both cigarettes and alcohol.

MYTH: Legalized marijuana will lead to higher youth usage.

FACT: Youth usage does not increase when marijuana is legalized.

MYTH: Legalizing marijuana will empower black market activity.

FACT: Effective marijuana regulation can help eliminate black markets.

MYTH: Legalizing marijuana will double traffic fatalities.

FACT: Preliminary data on traffic fatalities is mixed at best.

While misinformation about cannabis remains widespread, an increasing number of individuals and

organizations have scrutinized existing evidence and concluded that the actual impact of medical and

adult-use cannabis laws deviates considerably from opponents’ bleak forecasts. As an example, the Cato

Institute noted in a recent report “that state marijuana legalizations have had minimal effect on

marijuana use and related outcomes…..On the basis of available data…we find little support for the

stronger claims made by either opponents or advocates of legalizations. The absence of significant

adverse consequences is especially

striking given the sometimes dire

predictions made by legalization

opponents.”42

We believe that policymakers and voters

will reach similar conclusions when

provided with accurate information.

“Our conclusion is that state marijuana legalizations have had minimal effect on marijuana use and related outcomes….The absence of significant

adverse consequences is especially striking given the sometimes dire predictions made by legalization

opponents.” – Cato Institute, 2016

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Myth: Marijuana is a “Gateway Drug.” Fact: Marijuana use is not a causal factor in use of harder drugs.

While studies have found that those who use marijuana are more likely to use other drugs, these studies

demonstrate correlation not causation. In a

seminal 1999 report, the Institute of

Medicine found that marijuana “does not

appear to be a gateway drug to the extent

that it is the cause or even that it is the most

significant predictor of serious drug abuse.”43

More recent studies further undermine the so-called “gateway theory.”

➢ In a 2006 study published in the American Journal of Psychiatry, researchers found that drug

abuse is not determined by preceding use of marijuana, but rather a user’s individual tendencies

and environmental circumstances.44

➢ In a 2002 study, RAND’s Drug Policy Research Center concluded that “it is not marijuana use but

individuals' opportunities and unique propensities to use drugs that determine their risk of

initiating hard drugs.”45 Upon the release of this study, Andrew Morral, Associate Director of

RAND’s Public Safety and Justice division asserted, “We have shown that the marijuana gateway

effect is not the best explanation for the link between marijuana use and the use of harder

drugs. While the gateway theory has enjoyed popular acceptance, scientists have always had

their doubts. Our study shows that these doubts are justified.”46

With the passage of medical and adult-use cannabis laws in several states, researchers have begun studying the impact of expanded cannabis access on hard drug use. In a May 2014 National Bureau of Economic Research paper, public health researchers at Emory University found that the implementation of medical marijuana laws had no impact on hard drug use, leading to the conclusion that “the often-voiced concerns about the potential gateway effect of marijuana is not supported by our findings.”47

While evidence supporting the gateway theory is limited, there is a growing body of research indicating

that medical cannabis has actually served as a substitute for alternative substances like alcohol,

prescription drugs, and illicit drugs.48 In fact, researchers have even found that medical cannabis laws

are associated with significant reductions in prescription medications, opioid pain reliever (OPR)

overdose deaths, OPR hospitalizations.49

In short, there is no evidence suggesting that marijuana use in and of itself is a gateway to harder drugs

or drug abuse. On the contrary, regulated cannabis has the potential to reduce abuse of harmful drugs.

“While the gateway theory has enjoyed popular acceptance, scientists have always had their

doubts. Our study shows that these doubts are justified.” – Andrew Morral (RAND, 2002)

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Myth: Marijuana is addictive and more dangerous than cigarettes or alcohol. Fact: Marijuana is safer and less addictive than both cigarettes and alcohol.

While marijuana dependence is a serious issue, the addiction rate for marijuana is much lower than that

of other illegal and legal substances. In a comprehensive

analysis of data from the National Comorbidity Survey,

researchers from Johns Hopkins University and the

University of Michigan found that marijuana has one of

the lowest dependency rates among ten of the most

widely used substances in the US. Whereas 9.1 percent

of marijuana users develop dependency on marijuana,

addiction rates stand at 31.9 percent for tobacco users,

23.1 percent for heroin users, 16.7 percent for cocaine

users, and 15.4 percent for alcohol users.50

The Institute of Medicine also concluded that few

marijuana users develop dependence, particularly when

compared to other drugs. The Institute acknowledges

that, though rare, marijuana users can develop

dependence, but marijuana users “appear to be less

likely to do so than users of other drugs (including

alcohol and nicotine), and marijuana dependence appears to be less severe than dependence on other

drugs.”51

The health costs and risks associated with marijuana are also substantially lower than those associated

with alcohol and nicotine. In a review of the direct health care costs associated with the use of certain

substances, researchers in Canada found that the direct annual health care costs per user stood at

$20.50 for cannabis, $165.11 for alcohol, and $822.26 for tobacco.52 In a separate study, researchers

conducted a comparative risk assessment of ten substances and, based on these assessments,

categorized both alcohol and tobacco as “high risk” and cannabis as “low risk.” The researchers

concluded that “the risk of cannabis may have been overestimated in the past” and the low risk levels

associated with cannabis “suggest a strict legal approach rather than the current prohibition

approach.”53

While some have raised concerns that smoking marijuana may have an adverse impact on the lungs, a

20-year study on marijuana use published in The Journal of the American Medical Association found “no

evidence that increasing exposure to marijuana adversely affects pulmonary function.”54 A 2006 study

on the potential connection between marijuana smoking and lung and upper aerodigestive tract cancers

found no such connection and concluded that “the association of these cancers with marijuana, even

long-term or heavy use, is not strong and may be below practically detectable limits.”55

In 1995, the World Health Organization (WHO) published a comprehensive report on the health risks

associated with marijuana and concluded that “these risks are small to moderate in size.” The report

added that “In aggregate they are unlikely to produce public health problems comparable in scale to

those currently produced by alcohol and tobacco….on even the most worst-case scenario, it is unlikely

that the public health effect of cannabis use would approach those of alcohol or tobacco use.”56 WHO

also made the following findings:

3.7%

4.9%

7.5%

9.1%

9.2%

11.2%

15.4%

16.7%

23.1%

31.9%

0% 5% 10% 15% 20% 25% 30% 35%

Inhalants

Psychedelics

Analgesics

Cannabis

Anxiolytics

Stimulants

Alcohol

Cocaine

Heroin

Tobacco

Substance Dependence Rates

Data from the National Comorbidity Study (Anthony et al., 1994).

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➢ “Tobacco smoking is associated with a wide variety of other chronic health conditions for which

cannabis smoking has not so far been implicated. These include cancer of the cervix, stomach,

bladder and kidney, coronary heart disease, peripheral vascular disease, and stroke, as well as

cataracts and osteoporosis.”

➢ “There is good evidence that chronic, heavy alcohol use increases the risk of premature

mortality from accidents, suicide and violence. There is no comparable evidence for chronic

cannabis use.”

➢ “In large doses alcohol can cause death by asphyxiation, alcohol poisoning, cardiomyopathy and

cardiac infarct. There are no recorded cases of overdose fatalities attributed to cannabis, and

the estimated lethal dose for humans extrapolated from animal studies is so high that it cannot

be achieved by recreational users.”

➢ “A major difference between [alcohol and cannabis] is that withdrawal symptoms are either

absent or mild after dependent cannabis users abruptly stop their cannabis use, whereas the

abrupt cessation of alcohol use in severely dependent drinkers produces a well-defined

withdrawal syndrome which can be potentially fatal.”57

These findings led Philip M. Boffey,

the former science and health editor

of The New York Times, to conclude

that there is a “vast gap between

antiquated federal law enforcement

policies and the clear consensus of

science that marijuana is far less

harmful to human health than most

other banned drugs and is less

dangerous than the highly addictive

but perfectly legal substances known as alcohol and tobacco. Marijuana cannot lead to a fatal overdose.

There is little evidence that it causes cancer. Its addictive properties, while present, are low, and the

myth that it leads users to more powerful drugs has long since been disproved.”58

“[This] neatly illustrates the vast gap between antiquated federal law enforcement policies and the

clear consensus of science that marijuana is far less harmful to human health than most other banned drugs

and is less dangerous than the highly addictive but perfectly legal substances known as alcohol and

tobacco.” –Philip M. Boffey (The New York Times, 2014)

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Myth: Legalized marijuana will lead to higher youth usage. Fact: Youth usage does not increase when marijuana is legalized.

National and state-level data make clear that marijuana legalization does not increase youth usage of

marijuana. Over the past two decades, the United States has seen a proliferation of state laws legalizing

medical and adult-use marijuana, yet youth marijuana usage rates have declined throughout this period.

According to data from the CDC:

➢ Between 1995 and 2015, the percent of high school students who had used marijuana at some

point in their lifetime fell from 42.4 percent to 38.6 percent.

➢ Between 1995 and 2015, the percent of high school students who had used marijuana at least

once in the past month fell from 25.3 percent to 21.7 percent.59

In a 2014 study published in the peer-reviewed journal, Lancet Psychiatry, the authors analyzed youth

marijuana usage rates over a 24-year period and found “no evidence for an increase of adolescent

marijuana use after passage of state laws permitting use of marijuana for medical purposes.” The

authors concluded, “concerns that increased adolescent marijuana use is an unintended effect of state

medical marijuana laws seem unfounded.”60

While there are fewer years of data available on the impact of adult-use legalization laws on youth

usage rates, initial data shows that these laws have not resulted in increased youth marijuana usage. In

fact, states that have already implemented recreational marijuana laws have seen youth usage rates

decline across the board.

➢ Colorado: Between 2009 and 2015, the percent of adolescents who have tried marijuana at least

once in their lifetime fell from 43 percent to 38 percent. Over this same period, the percent of

adolescents who reported using marijuana in the past month fell from 25 percent to 21

percent.61

➢ Alaska: Between 2007 and 2015, the percent of adolescents who have tried marijuana at least

once in their lifetime fell from 44.7 percent to 38.8 percent. Over this same period, the percent

of adolescents who reported using marijuana in the past month fell from 20.5 percent to 19.0

percent.62

➢ Oregon: Between 2011 and 2015, the percent of 8th graders who reported using marijuana in

the past month fell from 11.1 percent to 8.8 percent. Over this same period, the percent of 11th

graders who reported using marijuana in the past month fell from 20.6 percent to 19.1 percent.

Note that Oregon’s survey of adult marijuana use only covers 8th and 11th graders.63

➢ Washington: Between 2012 and 2016, the percent of 6th, 8th, 10th, and 12th graders who

reported using marijuana at least once in their life or within the past 30 days either remained

constant or declined. At most grade levels, usage rates declined.64

Despite initial concerns that youth access to marijuana will increase following the passage of legalization

laws, the CDC found that the perceived availability of marijuana among adolescents has declined

considerably in recent years. Between 2002 and 2014, the percent of adolescents reporting that

marijuana is either "very easy" or "fairly easy" to obtain fell from 55.0 percent to 47.8 percent.65

As more states pass medical and adult-use marijuana laws, the United States has also seen a decline in

marijuana use disorders among adolescents. In a June 2016 article published in the Journal of the

American Academy of Child & Adolescent Psychiatry, researchers at the Washington University School of

Medicine analyzed data from the National Survey on Drug Use and Health. Overall, the study found that

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marijuana use disorders among adolescents declined 24 percent between 2002 and 2013.66 The study

also found noteworthy decline in the number of teenagers with marijuana-related issues; enjoying a

drop in disciplinary issues with both parents and schools, and a seemingly diminished interest in getting

high.

State-Level Youth Marijuana Usage Rate Data

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Myth: Legalizing marijuana will empower black market activity. Fact: Effective marijuana regulation can help eliminate black markets.

Marijuana legalization and regulation can be tools to neutralize illegal marijuana sales. As the Institute

on Taxation and Economic Policy highlighted in its official testimony before the Vermont Senate

Committee on Finance, “one primary motivation behind legalizing retail marijuana is to eliminate the

illegal black market for marijuana and its social ills.”67

Both legal and illegal markets for marijuana are driven by consumer demand and, like the markets for

any other good, are influenced by ease of access, price, and product quality. These principles are

supported by the Colorado Department of Revenue, which commissioned a report regarding the market

size and demand for marijuana within the State. The report noted “If the price of regulated marijuana

remains high, as it has in early 2014, black-market production could continue if it could compete with

the regulated market on price, but the regulated market is likely to reduce market share held by the

black market.” The Department also pointed out that if prices between the legal and illegal market are

similar, “consumers would likely shift to the regulated market because the selection, quality, and

product safety is generally much higher at a licensed retail provider.”68

While there is certainly room for improvement, states that regulate medical and adult-use cannabis

have made considerable progress towards reducing the size of the black market. According to a recent

article in The Economist, Colorado's legal market has captured 70 percent of total cannabis sales.69 In an

economic impact analysis commissioned by the State of Colorado, the Marijuana Policy Group predicts

that the black market’s share of total cannabis sales will eventually fall to a mere 10 percent.70

As governments consider passing medical and adult-use cannabis laws, policy experts forecast major

declines in the size of the illegal market should politicians adopt the appropriate tax and regulatory

levels. In an April 2017 policy brief, C.D. Howe Institute predicted that the passage of adult-use cannabis

laws in Canada could result in the regulated market capturing as much as 90 percent of the country’s

black market.71

Prohibition is not an effective means of eliminating illegal markets for marijuana. Unlike other illegal

drugs, consumer feelings about marijuana have changed and progressed significantly over time. Over

the years, public polling by Pew Research Center has found that 57 percent of American adults are in

favor of marijuana legalization, 49 percent of Americans have tried marijuana, 69 percent of Americans

believe alcohol is more harmful to a person’s health than marijuana, and 63 percent believe alcohol

would still be more harmful to society if marijuana were legalized.72

In light of existing consumer attitudes toward marijuana, prohibition in and of itself will not eliminate

demand. In the absence of an effective regulatory framework, patients and consumers have few options

other than the black market.

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Myth: Legalizing marijuana will double traffic fatalities. Fact: Preliminary data on traffic fatalities is mixed at best.

In states that have legalized recreational or medical marijuana, traffic collisions involving drivers testing

positive for marijuana have increased. Opponents of legalization often site these statistics as one of the

dangers of normalizing marijuana. Driving while impaired by any drug is dangerous and should be

prohibited, but it is irresponsible to make incorrect inferences from the limited data.

In exploring potential connections between marijuana use and traffic fatalities, the National Highway

Traffic Safety Administration (NHTSA) cautions that "drug presence does not necessarily imply

impairment."73 Since marijuana can be detected for a period of days or weeks after ingestion, drug

presence remains long after impairment ends. Accordingly, any data associating the passage of medical

and adult-use cannabis legislation with traffic fatalities warrants a degree of scrutiny.

That said, existing studies on marijuana legalization and highway safety are largely inconclusive.

In a recent examination of fatal car accidents, the Cato Institute found no major increase in fatal crashes

following the passage of medical and adult-use cannabis laws in Colorado, Washington, Oregon, and

Alaska.74

The National Highway Traffic Safety Administration (NHTSA) conducted the largest and most

comprehensive study on drug crash risk in the United States. Notably, the study found that after

accounting for variables like age, gender, race/ethnicity, and alcohol consumption, "there was no

significant contribution of drugs to crash risk."75

Additionally, traffic data from Colorado and Washington is being misinterpreted. The Washington Traffic

Safety Commission (WTSC) released data in 2015 indicating the number of drivers involved in fatal

crashes with active THC in their blood increased from 38 in 2013 to 75 in 2014. However, the reasons for

the increases are not entirely clear. As the Seattle Times reported, “One obvious reason is that state-

regulated pot stores opened in 2014, providing access to legal weed. But the first few stores didn't open

until July, and their supply was scarce.”76 The article went on to say, “What’s more, there were more

marijuana-involved fatal crashes in the first half of 2014, before stores opened, than in the second half

of the year."77 Half of these drivers were also under the influence of alcohol, and the majority of those

were intoxicated. Shelly Baldwin, the spokesperson for the WTSC, acknowledged that the presence of

marijuana in a driver’s system is an important factor to monitor but that it does not necessarily lead to

collisions.78

In Colorado, the number of traffic fatalities has slightly increased since marijuana was legalized. In 2012,

the year Colorado voters legalized recreational marijuana, there were 474 traffic fatalities.79 This figure

increased to 481 In 2013 and 488 in 2014. Traffic fatalities were significantly higher in Colorado in the

years prior to the state establishing any marijuana regulations. Colorado established laws to regulate

medical marijuana in 2009 and voters approved recreational sales in 2012. Between 2009 and 2014 the

average number of traffic fatalities in Colorado was 467.5 compared to an average of 592 traffic

fatalities between 2003 and 2008.80 This does not necessarily suggest that legalizing marijuana is related

to safer roads, but rather that traffic data varies significantly over time, and it is difficult to have

definitive answers without more exhaustive studies. 52 percent of drivers in Colorado who tested

positive for marijuana also tested positive for alcohol and an additional 15 percent tested positive for

other drugs.81 Regarding the available data on marijuana-impaired data Glenn Davis, the Colorado

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Department of Transportation’s Highway Safety Manager, said “We really do not have accurate data. I

recognize that marijuana impairment is going to be a challenge for us. Davis added “I would say the

increased availability of marijuana to the driving public has some impact on crashes, but we don’t

know.”82

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Appendix C. Tax Two-Pager

The Importance of Proper State and Local Cannabis Tax Rates Issue: Establishing stable tax policy is a key component of state and local cannabis regulatory efforts. In an effort to maximize tax revenue, state and local governments often propose high tax rates on cannabis businesses, but the result of this will be (i) an increased illegal market, (ii) failure to attract high quality operators and (iii) ironically, significantly lower tax revenues for state and local governments. Tax policy may be the single biggest factor determining whether state and local governments can successfully generate tax revenue, stand up a stable regulated market and police the illegal market for marijuana.

Solutions:

• State and local governments should set tax rates at levels that appropriately balance tax revenue generation and illegal market reduction. Research shows that effective tax rates (inclusive of state, local, and supply chain taxes) exceeding 20% have diminishing returns for tax revenue generation but significantly increase the size of the illegal market.83

• Taxes should generally only be placed on the final point of sale to consumers to avoid multiplicative taxation through the supply chain.

• To the extent that state and local governments seek to generate revenue from up-supply chain operators (e.g. lab testing facilities, cultivators, manufacturers, and processors), a flat annual licensing fee model as opposed to a taxation model should be adopted for these operators. Data from cities across the US shows a strong correlation between inflated effective tax levels on these operators and outsized illegal markets. Keep such fees at $15/sq.ft. or less for cultivators and large manufacturers and $25/sq.ft. or less for processors or manufacturers. Allow such fees to be paid quarterly.

• Review tax and fee amounts frequently and adjust to the extent enforcement costs are rising rapidly, the illegal market rate is spiking or businesses are opting for nearby jurisdictions.

As Taxes Rise, So Do Illegal Market Levels There is a growing body of research highlighting 1) that consumers in the legalized cannabis market are

strongly price sensitive, 2) that taxes significantly increase the legal market’s price premium, and 3) that

once this premium exceeds a certain threshold, consumers will shift their purchases from the legal to

illegal market. As such, high effective tax rates can create a permanent and sizable illegal market on the

state and local levels that police enforcement fails to adequately curb. The Washington Cannabis

Consumption Survey found if the cost of legal marijuana sold for $4 more per gram, legal sales would

make up less than half of the total market.95 The charts below demonstrate this effect in both cannabis

and tobacco.

City Est. Illegal MJ Market

Stores per Person84

Est. Net Effective Tax Rate

Portland, OR

35%85 1/4688 20%86

Denver, CO

20-30%87 1/288788 37.15%89 (35.05% prior to July 2017)

Boulder, CO

20-30%90 1/412691 38.5%92 (36.4% prior to July 2017)

Seattle, WA

50-60%93 1/10695 47.1%94

Source: Tax Foundation. Cigarette Taxes and Cigarette Smuggling by State, 2014 (published January 2017).

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The Compounding Effect of State and Local Taxes: The Case of a State with a 20% Retail Tax Rate Before any local taxes are assessed, marijuana products sold at dispensaries will be charged a baseline

20.00% state retail tax rate. A conservative local tax rate set at 2% of gross receipts for cultivation and

retail sales increases the effective tax rate to 24.44%. An aggressive local tax rate at 10% of gross

receipts for cultivation, retail sales, and distribution and a 10% retail excise tax increases the effective

tax rate to 69.4%. The figure below demonstrates effective tax rates at different local taxes levels.

Multiplicative Taxation One danger with gross revenue taxes on manufacturers, cultivators and processors is that these taxes

multiplicatively add to product cost (i.e. as those products move through the supply chain, additional

taxes now tax the already taxed amount). So, for instance, a 5% tax on upstream businesses can

become a 27.6% net effective tax (without factoring in state, county and local sales and excise taxes) if

product were to go from a grower, to a processor, to a manufacturer, to a distributor, and then to a

retailer. If the processor uses a third party to fill vape cartridges or pre-process products intended for

edibles, you can add even additional layers. For this reason, gross percentage taxes are disfavored up

the supply chain.

High Effective Tax Rates above 20% Have Clear Diminishing Returns Research by think tanks like the RAND Corporation and C.D. Howe Institute emphasizes that high

effective tax rates increase the legal market’s price premium and drive consumers into the illegal

market. In fact, RAND’s analysis of data from the Washington Cannabis Consumption Survey found that

even modest price premiums for regulated cannabis can contribute to a large illegal market.96

Moreover, the C.D. Howe Institute’s analysis highlights that once effective tax rates exceed 20%, there

are clear diminishing returns for tax revenue generation while the illegal market continues to grow

considerably. Beyond reduced tax revenue generation, high illegal market rates have the added

downside of increased enforcement costs for state and local governments. Finally, there is a growing

body of evidence that when illegal market rates approach 40-50%, law enforcement efforts become

futile and slowly cease as police move on to more gainful enforcement efforts.

20.00%

State Retail Tax Rate

24.44%

2% Local Cultivation & Retail

29.01%

2% Local Cultivation, Distribution, Retail Excise & Retail

31.25%

5% Local Cultivation & Retail

43.33%

5% Local Cultivation, Distribution, Retail Excise & Retail

54.00%

10% Local Cultivation, Retail Excise & Retail

69.40%

10% Local Cultivation, Distribution, Retail Excise & Retail

Source: C.D. Howe Institute. “With Legal Weed the Government Must Choose Revenue or Regulated Market, Not Both,” in Intelligence Memos, April 2017.

Source: Caulkins et. al (RAND). Considering Marijuana Legalization, 2015, p. 127.

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Appendix D. Minimizing the Size of the Illegal Market Paper

Minimizing the Illegal Market for Marijuana Recreational and medical marijuana legalization in the United States has served to reduce the size of

illegal markets in legalized jurisdictions. However, despite these reductions, a very sizeable illegal

market for marijuana continues to thrive in every legalized jurisdiction and undermines the benefits

which legalized marijuana offers. Illegal markets for marijuana rob state and local government of tax

dollars while continuing to drive up policing and incarceration costs as unregulated market participants

amass large volumes of unbanked revenue. Additionally, there is ample evidence in cities throughout

North America that when illegal markets exceed low levels, policing efforts consistently fail to remedy

the situation (see, e.g. San Jose, Santa Ana, Detroit, Toronto). The primary driver of marijuana illegal

markets is the combination of: (i) policies which overly restrict the availability and ease of purchasing

marijuana through legal channels, (ii) high effective tax rates and compliance costs on legal marijuana

and (iii) insufficient quantity and quality of legal marijuana for sale in a market.

As elected officials, regulators and voters move towards more defined legalization on a state and local

level, it is critical that marijuana policy reforms be designed with a goal of reducing illegal markets.

Estimations of Current Illegal Market in Selected Cities The table in Appendix A illustrates for comparison some of the current estimated illegal market levels in

other cities and corresponding data on dispensary density, pricing and taxation. Estimations of illegal

market rates range from 30% in Denver, Boulder and Colorado Springs where dispensary density ranges

from 1/2887 to 1/4126 and effective tax rates historically hovered above 30% to 50-60% in Seattle

where dispensary density is roughly 1/10695 and the effective tax rate is 47.1%. In each of the cities we

reviewed, illegal market pricing generally ranged significantly lower than that of legal market pricing

with the trend being more exaggerated in those markets where higher illegal market rates persist.

Factors that Contribute to Illegal Markets Low Dispensary Density: Restrictive caps and zoning rules impede access and inflate costs, often forcing

consumers to turn to illegal marijuana markets. While more data needs to be compiled, initial studies

have found that density of marijuana dispensaries is unrelated to property and violent crimes.97

Limitation to In-State or In-City Operators or Employees: Prohibiting actors from outside the applicable

jurisdiction to either own, operate or finance marijuana businesses immediately either (i) drives these

operators to operate in the illegal market or (ii) forces them to utilize handshake deals, licensing or

management agreements or other marked up services to extract de facto ownership economics. Both

outcomes lead to a loss of control for the jurisdiction. Washington State has some of the most

restrictive out-of-state ownership and lending rules and this has made it extremely difficult for small

operators to access expansion or startup capital. We have also had discussions with multiple operators

in California and Oregon who “shadow own” large operations in Washington through a variety of

mechanisms.

Well-Funded Incumbents Losing Licensing: Artificially limiting the number of licenses at the state or

local level could effectively force otherwise compliant, safe, and experienced businesses outside of the

legal market. Many of these operators are well funded and, in many cases, have been paying taxes in an

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attempt to achieve legitimacy. These operators will have the capital and the experience to quickly open

legal operations.

Constrictions on Accessing Capital (Debt or Equity): Inability to access capital to either start legalized

operations or expand and professionalize increases illegal operators and hurts the compliance levels of

legal operators. Capital constrictions commonly happen due to the following: (i) limitations on lenders

or investors from outside the jurisdiction, (ii) requirements that lenders or minority investors go through

rigorous qualification as a license owner, and (iii) rules that would prohibit lenders from taking control of

assets in the event of a bankruptcy or insolvency.

Strong Desire by Incumbents to Remain: In informal discussions with numerous dispensary, cultivation

and processing operators, there has been a consistent theme that (i) overly restrictive regulation may

take away their only source of livelihood and (ii) operators who are left without licensing will continue to

attempt to operate in whatever manner possible.

High Effective Tax Rate: High effective tax rates place the legal market at a significant competitive

disadvantage relative to the illegal market. Recognizing the relationship between high effective tax rates

and the strength of the illegal market, states such as Washington and Oregon have moved to reduce tax

rates on the industry, and ballot initiatives across the nation have adopted lower tax rates as well.98 If

tax levels are not appropriately set and narrowly tailored, the price of legal marijuana will dramatically

increase as will the incentive for consumers to turn to the illegal market.

Over-Restriction of Advertising: There is a need for advertising limits to reduce public nuisance and to

ensure advertising isn’t attempting to target children; however, many states’ advertising restrictions go

too far and make it difficult for legal operators to differentiate themselves from illegal operators while

hurting the ability to build consumer trust and awareness around safe, lab tested brands. Advertising

restrictions that broadly limit advertising on certain mediums (e.g. billboards, radio) or having

professional store signage provide limited public benefit while forcing operators to appear more like

speakeasies than licensed shops. Additionally, despite wildly varying advertising restrictions in

Washington, Oregon, California and Colorado, there are almost no discernable differences in youth

usage rates or similar harm indicators – which only underscores the limited benefit of these ad

restrictions.

Lower Supply Quality: Experienced operators with expertise with specific industry sectors or products

should be allowed to enter the legal market. Established brands with lab testing and consumer loyalty

are a natural combatant to illegal market sales. Marijuana consumers have traditionally shown a

willingness to buy the best product regardless of source.

Constraints on Supply: Most top brands are not currently operated by dispensary owners. Without

licensing independent cultivators, manufacturers and processors, supply levels will drop and price levels

will rise as most existing dispensary licensees lack the expertise and facilities to provide sufficient

marijuana products to meet estimated market demand.

Lack of Lounge or Social Consumption Venues: In Barcelona and Amsterdam, marijuana social lounges

have both prevented public nuisance and reduced illegal markets by allowing legal points of sale to

justify higher costs with a social meeting space and not permitting the consumption of products bought

outside the premises. Denver is now moving forward with the same model. Reducing, eliminating, or

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not considering these spaces removes one of the key areas in which legal cannabis retailers can gain a

competitive advantage over their illegal counterparts.

Policy Recommendations To reduce and ultimately eliminate illegal markets, five key objectives should form the basis of

marijuana regulatory policy:

1. Ensuring Sufficient Access: The number of marijuana businesses needs to create sufficient levels of access via dispensary density, hours of operation and delivery service such that legal access is reasonably convenient. Some local governments restrict the points of purchase for marijuana below that of any other consumer or pharmaceutical good while others have adopted complete bans.

➢ Policy Recommendations:

• Zoning rules that ensure a ratio of at least one dispensary or delivery service per every 7000 residents.

• Set strong health and consumer protection standards while allowing for broad participation within the regulatory framework. Welcoming all businesses that can demonstrate compliance with the law to participate provides consumers greater access to safe and licensed marijuana.

• Limitations should not be placed on operators or managers living in the jurisdiction; or if needed, should only apply to 25% or less of such individuals.

• Those who have been subject to criminal conviction solely for the manufacturing, cultivation or sale of marijuana should not be disqualified from receiving permits.

• Applications for permits should be reviewed and permits be issued within 30 to 90 days. Correspondingly, attempts to shut down existing operators should be commenced only after the issuance of the new licenses to avoid encouraging additional illegal operators.

• There should be enough testing labs to meet the needs of local marijuana business, and guidelines for responsible lab operations should be developed.

• Finally, local governments should authorize dispensaries to have on-site consumption lounges to reduce public nuisance and encourage purchase from legal sources.

2. Tailored Taxation Models: Tax policies should be established with ample flexibility to be adjusted upward and downward quickly based on illegal market conditions, and tax proposals should only be made with a full understanding of how the resulting effective tax rate would contribute to either fueling or subduing the illegal market.

➢ Policy Recommendations:

• State and local governments should set tax rates at levels that appropriately balance tax revenue generation and illegal market reduction. Research shows that effective tax rates (inclusive of state, local, and supply-chain taxes) exceeding 20% have diminishing returns for tax revenue generation but significantly increase the size of the illegal market.99

• Taxes should generally only be placed on the sale to consumer to avoid multiplicative taxation through the supply chain.

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• To the extent that state and local governments seek to generate revenue from up-supply chain operators (e.g. lab testing facilities, cultivators, manufacturers and processors), a flat annual licensing fee model as opposed to a taxation model should be adopted for these operators. Data from cities across the US shows a strong correlation between inflated effective tax levels on these operators and outsized illegal markets. Additionally, due to the federal 280E rules, legislators should be mindful that these businesses already have inflated tax rates.

• In the case of the annual licensing fee for cultivators, consider setting the fee on a price per square foot of cultivation space model with such fee not to exceed $15.00 per square foot.

• State and local regulatory agencies should review and adjust tax rates annually based on several factors including illegal market levels.

3. Providing for Safe and Diverse Supply: Limits in regulated marijuana supply can cause legal marijuana prices to skyrocket while illegal markets can find alternative sources more fluidly. Despite this, the effect of price differences can be mitigated if there are higher quality products and desired brands being sold through legal channels. To accomplish this, there should be a trend towards more cultivation and processing licenses to ensure robust competition to create premium products and sufficient supply to legal points of sale.

➢ Policy Recommendations:

• Do not limit the number of cultivation, processing, manufacturing and distribution permits. Instead use zoning rules that are narrowly tailored to ensure that there are low barriers to entry to the legal market, which—unlike the unregulated market—is subject to inspection, monitoring and taxation rules. Cities can create a thriving export business to other parts of the State as well as enable operators to become innovators and leading operators within the industry.

• Allow co-location and sublicensing of cultivation, processing and manufacturing permits on compliant premises to ensure that the hundreds of brands and companies operating can deal with possibly limited space for operation without resorting to the illegal market.

• Provide permits for processing using both volatile and non-volatile solvents. Consumer taste for concentrate products overwhelmingly leans towards BHO and other products utilizing volatile solvents. Additionally, there is a growing body of evidence that the products made using these extraction methods have a more diverse set of therapeutic uses including for the treatment of PTSD and opioid dependence. Failure to permit and allow for processing using volatile solvents will drive a massive underground market.

• Mandate an open-source Seed-to-Sale tracking system to monitor inventories and movement and enable identification of any suspicious patterns; such system could be the same as that mandated by the State.

• Ensure the ability to conduct spot audits during regular business hours on marijuana products at any point in the supply chain to carry out lab testing or look for safety issues.

• Allow cultivators, processors and manufacturers to obtain lab testing and directly distribute their products to retail points of sale.

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4. Effective Advertising Policies That Are Analogous to Alcohol: The rush by jurisdictions to place draconian advertising laws can thwart the move to reduce illegal operations while providing little social benefit. The end result is legalization that appears like “half legalization” and legal operators choosing other jurisdictions where they can operate their businesses in a normalized professional manner. The other side cost of over-restricting advertising is that businesses have weaker trademark protection and brands that are less suitable for licensing into other jurisdictions.

➢ Policy Recommendations:

• Generally look for parity in alcohol and marijuana advertising restrictions. Allow marijuana brands and dispensaries enough advertising options to create brand recognition for trademark protection purposes and to differentiate themselves from illegal operators.

• Restrict advertising that depicts people under the age of 21 consuming marijuana or that is predominantly targeted to children. Adopt a touch and feel approach to advertising rules as opposed to carte blanche restrictions on the use of cartoon logos or whimsical trademarks.

• Allow dispensaries to have visible storefronts and have signage commensurate with liquor establishments to force them to compete on store quality, cleanliness and curbside appeal. This has the added benefit of increasing buildout expenditure by dispensary owners which, in turn, increases their desire to maintain compliance.

• Follow the federal advisory guidelines for alcohol advertising and only allow advertising in channels where it is reasonably believed that 71.6% of the viewers are 21 and over.

5. Ensuring Access to Capital: Failure to ensure sufficient access to capital creates a less professionalized industry and leaves illegal operators without the means to enter the legal market. Additionally, more open access to capital can help ensure that business ownership is not just limited to high net worth individuals and encourage local small business owners.

➢ Policy Recommendations:

• Only place ownership restrictions and registration requirements on persons who own 20% or more of the applicable business.

• Do not place in-state ownership or lending requirements, or if there is a feeling such policies are needed, only have such rules apply to a percentage of the licenses.

• Ensure that lenders have the ability to take control and operate licenses in the event of a bankruptcy or insolvency. Provide an accelerated path for lenders to liquidate and transfer licenses to purchasers who have been approved by the applicable regulatory authority.

• Allow for the free transfer of licenses in the secondary market subject to approval of the purchaser by the licensing authority.

• Set aside a portion of state tax revenue for a financing fund to provide startup financing for minority or women-owned license operators.

6. Ability to Reactively Adjust Policy: The legal marijuana market is still in its early stages of development and continues to evolve rapidly. Accordingly, policy should enable regulators to

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adjust density and operation of marijuana businesses to quickly respond to spikes in illegal market usage.

➢ Policy Recommendations:

• Organize a dedicated marijuana regulatory agency that is authorized to increase the number of operators on a rolling schedule based on several factors including illegal market operating levels, and has the ability to offer licensing in regions where data shows illegal markets remain high.

• Review tax rates and distribution of marijuana points of sale and adjust to minimize remaining illegal market levels.

7. Efficient Data, Monitoring and Safety: The illegal market for marijuana is poorly understood in most jurisdictions. Regulators must be given robust and real-time data to quickly adjust marijuana policy to effectively undercut illegal markets before they become rooted. At the same time, the data collected must be well tailored to avoid driving up already high administrative and compliance costs for operators.

➢ Policy Recommendations:

• Regulators at the state and local level should be required to review data and adjust the foregoing to meet a series of criteria including illegal market levels.

• Marijuana regulatory agencies and local governments should prepare annual reports on the estimated illegal market levels in the city which identifies key causes and geographic areas where illegal sales are a concern. Licensing, zoning, taxation and other rules should be reviewed and adjusted considering these findings.

• All marijuana businesses should be required to provide periodic data to the marijuana regulatory bodies that includes volume and tracking data from the Seed-to-Sale systems as well as retail data from point of sale systems.

• To the extent on-site consumption is permitted, dispensaries should be liable for intoxicated patrons after they leave the establishment in the same manner as bars.

• Marijuana businesses should be required to have security measures which are at least commensurate with those for alcohol and pharmaceutical products. These security requirements should not place crippling cost or administration requirements on the businesses but should be at least sufficient to enable accurate monitoring and control by law enforcement.

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Illegal Market Table Updated July 24, 2017100

Jurisdiction Estimated Illegal Market Level

Points of Sale per Person in Region (legal and grey)101

Delivery Services Estimated Effective Tax Rate (aggregate)

Estimated Legal Market Price per Ounce/Eighth (Excluding Tax)102

Estimated Illegal Market Price per Ounce/Eighth103

Los Angeles, CA (under Prop D) 70-80% 1/28870104 Mixed 15105 260-300/35-50 150-200/20-35

Los Angeles, CA (350 points of sale)

Proj. 45-55% 1/11097 Yes – from bricks and mortar Est. 40-45106

Denver, CO 20-30%107 1/2887108 No 37.15109 170-250/20-40 150-200/20-35

Boulder, CO 20-30%110 1/4126111 No 38.5112 165-200/28-40 150-180/20-45

Seattle, WA 50-60%113 1/10695 No 47.1114 280-420/30-55 160-200/20-45

San Francisco and Oakland

TBD 1/9792 Yes 8.5115 280-360/40-60 220-260/20-40

Santa Ana, CA 55%116 1/15192 Not specified 230-400/35-60 150-240/35-45

San Jose, CA 80%117 1/49926 Yes – only 2 licensed delivery services. 118

18.75119 (>45 under Prop 64)

270-320/35-55 200-250/25-40

Anaheim, CA TBD 1/10147120 Dispensaries prohibited, deliveries not addressed in city ordinance.

250-330/30-40 150-240/35-45

Long Beach, CA121 (under Measure MM)

50-60%122 1/14669 Deliveries will be allowed by licensed dispensaries.

15.75123 (>45 under Prop 64)

260-360/30-60 200-320/25-55

Long Beach, CA TBD 1/4941124 Dispensaries prohibited, deliveries are not addressed in the city ordinance.125

260-360/30-60 200-320/25-55

Portland, OR 35%126 1/4688 Yes127 20128 160-260/25-55 140-190/20-30

Las Vegas, NV TBD 1/16147129 Yes 36.25130 240-325/30-55 170-270/30-50

Phoenix, AZ 58%131 1/45848132 Not covered in city ordinance.133 8.6134 200-360/35-55 160-240/25-45

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Appendix E. Residual Solvent Limits per State (PPM) Residual Solvents (A-Z) CO MA NV OR WA CAS No.

Acetic acid

5,000 64-19-7

Acetone

5,000

5,000

50 67-64-1

Acetonitrile

410

410 75-05-8

Anisole

5,000 100-66-3

Benzene

2

2

0 71-43-2

Butanes

5,000

500

5,000

500

n-Butane

5,000

1 106-97-8

Iso-Butane

1 75-28-5

1-Butanol

5,000 71-36-3

2-Butanol

5,000 78-92-2

Butyl acetate

5,000 123-86-4

Tert-Butylmethyl ether

5,000 1634-04-4

Chlorobenzene

360 108-90-7

Chloroform

60

1 67-66-3

Cumene

70

70 98-82-8

Cyclohexane

3,880

3,880

4 110-82-7

1,2-Dichloroethene

1,870 156-59-2

Dichloromethane

600

600

6 75-09-2

1,2-Dimethoxyethane

100 110-71-4

N,N -Dimethylacetamide

1,090 121-44-8

N,N -Dimethylformamide

880

Dimethyl sulfoxide

5,000 67-68-5

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Residual Solvents (A-Z) CO MA NV OR WA CAS No.

1,4-Dioxane

380

380 123-91-1

Ethanol

5,000 64-17-5

2-Ethoxyethanol

160

160 110-80-5

Ethyl acetate

5,000

5,000

500 141-78-6

Ethylene glycol

620

620 107-21-1

Ethyl ether

5,000

5,000 60-29-7

Ethyl formate

5,000 109-94-4

Ethylene oxide

50 75-21-8

Formamide

220 75-12-7

Formic acid

5,000 64-18-6

Heptanes

500

5,000

500

5,000

500 142-82-5

Hexane

290

290

290

3 110-54-3

Isobutyl acetate

5,000 110-19-0

Isopropyl acetate

5,000

5,000 108-21-4

Isopropyl alcohol

100 67-63-0

Methanol

3,000

3,000

300 67-56-1

2-Methoxyethanol

50 109-86-4

Methyl acetate

5,000 79-20-9

3-Methyl-1-butanol

5,000 123-51-3

Methyl butyl ketone

50 591-78-6

Methylcyclohexane

1,180 108-87-2

Methyl ethyl ketone

5,000 78-93-3

Methylene chloride 75-09-2

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Residual Solvents (A-Z) CO MA NV OR WA CAS No.

Methyl isobutyl ketone

5,000 108-10-1

2-Methyl-1-propanol

5,000 78-83-1

N-Methylpyrrolidone

530 872-50-4

Naphtha 8030-30-6

Nitromethane

50 75-52-5

Pentane

5,000

5,000

500 109-66-0

1-Pentanol

5,000 71-41-0

Petroleum ether 8032-32-4

Propane

1

500

5,000

500 74-98-6

1-Propanol

5,000 71-23-8

2-Propanol

5,000 67-63-0

Propyl acetate

5,000 109-60-4

Pyridine

200 110-86-1

Sulfolane

160 126-33-0

Tetrahydrofuran

720

720 109-99-9

Tetralin

100 119-64-2

Toluene

890

890

890 108-88-3

1,1,2-Trichloroethylene

1

80 79-01-6

Xylene

2,190

2,170

2,170

2 1330-20-7

Total Solvents 10 59 5 24 16 Notes: 1) Hawaii is currently establishing their regulations for residual solvent action limits. 2) New Mexico requires producers to determine, on the basis of the solvent residue test results, whether the quantity of

solvent residue contained within a concentrated cannabis product poses a health risk to consumers. References: 1) Colorado Code of Regulations. Division 212-2. Section M-712. Medical Marijuana Testing Facilities: Sampling and

Testing Program. https://www.sos.state.co.us/CCR/GenerateRulePdf.do?ruleVersionId=7094&fileName=1%20CCR%20212-1

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2) Massachusetts Department of Public Health. "Protocol for Sampling and Analysis of Finished Medical Marijuana Products and Marijuana-Infused Products for Massachusetts Registered Medical Marijuana Dispensaries." Exhibit 7 (a). Concentration Limits for Residual Solvents. http://www.mass.gov/eohhs/docs/dph/quality/medical-marijuana/lab-protocols/finished-mmj/final-exhibit-7-residual-solvent-limits.pdf

3) Nevada Revised Statutes. Chapter 453A. Section 654. Required quality assurance tests. https://www.leg.state.nv.us/nac/nac-453a.html

4) New Mexico Administrative Code. Title 7. Chapter 34. Part 4. Medicinal Use of Cannabis. Licensing Requirements for Producers, Couriers, Manufacturers, and Laboratories. http://164.64.110.239/nmac/parts/title07/07.034.0004.pdf

5) Oregon Administrative Rules. Chapter 333. Division 7. Section 0410. Exhibit A: Table 4. List of solvents and their action levels. http://www.oregon.gov/oha/PH/DISEASESCONDITIONS/CHRONICDISEASE/MEDICALMARIJUANAPROGRAM/Documents/rules/333-007-0410-Exhibit-A-eff-05-31-17.pdf

6) University of Hawaii. "Act 230 Medical Marijuana Legislative Oversight Working Group." Web. http://www.publicpolicycenter.hawaii.edu/projects-programs/act230.html

7) Washington Administrative Code. Title 314. Chapter 314-55. Section 102. Quality assurance testing. http://apps.leg.wa.gov/wac/default.aspx?cite=314-55-102

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Appendix F. Pesticide Limits per State (PPM)

Pesticide (A-Z) CAS number States

(#) OR WA NV MA

Other not allowed pesticides Not applicable 0.1

abamectin 71751-41-2 3 0.5 0.5 0.05

acephate 30560-19-1 2 0.4 0.4

acequinocyl 57960-19-7 3 2 2 4

acetamiprid 135410-20-7 2 0.2 0.2

aldicarb 0116-06-03 2 0.4 0.4

azoxystrobin 131860-33-8 2 0.2 0.2

bifenazate 149877-41-8 4 0.2 0.2 15 0.01

bifenthrin 82657-04-03 4 0.2 0.2 0.05 0.01

boscalid 188425-85-6 2 0.4 0.4

Captan 0133-06-02 1 0.05

carbaryl 63-25-2 2 0.2 0.2

carbofuran 1563-66-2 2 0.2 0.2

chlorantraniliprole 500008-45-7 2 0.2 0.2

Chlordane 12789-03-06 0

chlorfenapyr 122453-73-0 2 1 1

chlorpyrifos 2921-88-2 2 0.2 0.2

chlorthal-dimethyl (DCPA, dacthal) 1861-32-1 0

clofentezine 74115-24-5 2 0.2 0.2

cyfluthrin (and beta-cyfluthrin) (Baythroid) 68359-37-5 4 1 1 4 0.01

cypermethrin 52315-07-08 3 1 1 0.05

daminozide (Alar) 1596-84-5 3 1 1 0.05

dichlofluanid 1085-98-9 2 0.1 0.1

dichlorvos (DDVP) 62-73-7 2 0.2 0.2

dimethoate 60-51-5 2 0.2 0.2

dimethomorph 110488-70-5 1 60

ethoprophos 13194-48-4 2 0.2 0.2

etofenprox 80844-07-01 2 0.4 0.4

etoxazole 153233-91-1 4 0.2 0.2 7 0.01

Fenhexamid 126833-17-8 1 30

fenoxycarb 72490-01-08 2 0.2 0.2

fenpyroximate 134098-61-6 2 0.4 0.4

fipronil 120068-37-3 2 0.4 0.4

fludioxonil 131341-86-1 3 0.4 0.4 0.02

flonicamid 158062-67-0 3 1 1 7

hexythiazox 78587-05-0 2 1 1

imazalil 35554-44-0 4 0.2 0.2 3 0.01

imidacloprid 138261-41-3 4 0.4 0.4 0.05 0.01

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Pesticide (A-Z) CAS number States

(#) OR WA NV MA

kresoxim-methyl 143390-89-0 2 0.4 0.4

malathion (USP sums with Malaoxon) 121-75-5 2 0.2 0.2

metalaxyl 57837-19-1 2 0.2 0.2

methiocarb 2032-65-7 2 0.2 0.2

Methomyl 16752-77-5 2 0.4 0.4

methyl parathion 298-00-0 2 0.2 0.2

MGK-264 (N-Octyl bicycloheptene dicarboximide) 113-48-4 2 0.2 0.2

myclobutanil (systhane) 88671-89-0 4 0.2 0.2 9 0.01

naled 300-76-5 2 0.5 0.5

oxamyl 23135-22-0 2 1 1

paclobutrazol 76738-62-0 3 0.4 0.4 0.05

pentachloronitrobenzene (quintozene) 82-68-8 1 0.2

permethrins (sum of cis and trans) 52645-53-1 2 0.2 0.2

Phosmet 0732-11-6 2 0.2 0.2

piperonyl butoxide 51-03-6 3 2 2 2

prallethrin 23031-36-9 2 0.2 0.2

propiconazole 60207-90-1 2 0.4 0.4

propoxur (baygon) 114-26-1 2 0.2 0.2

pyrethrins (sum of pyrethrin 1, cinerin 1 and jasmolin 1) 8003-34-7 3 1 1 1

Pyridaben 96489-71-3 2 0.2 0.2

spinetoram 187166-40-1 1 1.7

spinosad 168316-95-8 3 0.2 0.2 1.7

spiromesifen 283594-90-1 3 0.2 0.2 0.01

spirotetramat 203313-25-1 2 0.2 0.2

spiroxamine 118134-30-8 2 0.4 0.4

tebuconazole 80443-41-0 2 0.4 0.4

thiacloprid 111988-49-9 2 0.2 0.2

thiamethoxam 153719-23-4 3 0.2 0.2 0.02

Thiophanate-methyl 23564-05-08 1 2

trifloxystrobin 141517-21-7 4 0.2 0.2 11 0.01 Notes: 1) The Colorado Department of Agriculture has adopted rules that set forth the criteria by which pesticides are allowed for

use in the cultivation. Generally, any pesticide registered with the Colorado Department of Agriculture (CDA) may be used in accordance with its label or labeling directions for the cultivation of cannabis in the State of Colorado. CDA provides a list for both pesticides that are allowed and prohibited for use on cannabis. The current lists are available on the CDA website: www.colorado.gov/agmain.

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2) The Bureau of Cannabis Control, within the California Department of Consumer Affairs, is currently drafting regulations regarding pesticide use on Cannabis. More information on the California regulatory process is available at www.bmcr.ca.gov

References: 1) Oregon Administrative Rules. Chapter 333. Division 7. Marijuana Labeling, Concentration Limits and Testing.

http://www.oregon.gov/oha/PH/DISEASESCONDITIONS/CHRONICDISEASE/MEDICALMARIJUANAPROGRAM/Documents/rules/333-007-complete-rules-eff-05-31-17.pdf

2) Oregon Administrative Rules. Chapter 333. Division 7. Section 0400. Exhibit A: Table 3. Pesticide analytes and their action levels. http://www.oregon.gov/oha/PH/DISEASESCONDITIONS/CHRONICDISEASE/MEDICALMARIJUANAPROGRAM/Documents/rules/333-007-0410-Exhibit-A-eff-05-31-17.pdf

3) Massachusetts Department of Public Health. "Protocol for Sampling and Analysis of Finished Medical Marijuana Products and Marijuana-Infused Products for Massachusetts Registered Medical Marijuana Dispensaries." 1 Jan 2017. https://s3.amazonaws.com/media.wbur.org/wordpress/15/files/2015/05/State-rules-on-marijuana-testing1.pdf

4) Nevada Department of Agriculture. "The Nevada Pesticide Applicator Act prohibits use of a pesticide in a manner inconsistent with tht product labeling per NRS 586.335." Letter. 9 Jan 2017. http://agri.nv.gov/uploadedFiles/agrinvgov/Content/Plant/Environmental_Compliance/MME%20Pesticide%20list-%2001-09-2017%20Updated.pdf

5) Washington Administrative Code. Title 314. Chapter 314. Section 55. Pesticide Action Levels. http://apps.leg.wa.gov/wac/default.aspx?cite=314-55-108

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Appendix G. Tobacco Pesticide Limits Internationally (PPM) Pesticide (A-Z) CORESTA USDA Germany Italy Spain

acephate 0.1 1.5

acetamiprid 3

alachlor 0.1

aldicarb 0.5 10 3 5

aldrin and dieldrin (sum of) 0.02 0.1

azinphos-ethyl 0.1

azinphos-methyl 0.3

bifenthrin 3

bromophos-ethyl 0.04

Captan 0.7

carbaryl 0.5 3 3 0.1

carbofuran 0.5 20 0.1 10

chlorantraniliprole 10

Chlordane 0.1 3

chlofenvinphos 0.04

chlorpyrifos 0.2 0.05

chlorpyriphos-ethyl 0.5

chlorpyriphos-methyl 0.2

chlorthal-dimethyl (DCPA, dacthal) 0.5

cyfluthrin (and beta-cyfluthrin) (Baythroid) 2

cyhalothrin 0.5

cypermethrin 1 3.0 (sum

w/ permet

hrin)

DDT (sum of all isomers) 0.2 0.4

deltamethrin 1

diazinon 0.1 1 0.02

dichlorvos (DDVP) 0.1

dimethoate 0.5

dimethomorph 2

dithiocarbamates (expressed as CS2) 5

endosulfan (sum of isomers and endosulfan sulphate) 1 20 1

endrin 0.05 0.1

ethoprophos 0.1

fenitrothion 0.1

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Pesticide (A-Z) CORESTA USDA Germany Italy Spain

fenvalerate (pydrin) 1

Heptachlor (sum of heptachlor, cis-heptachlorepoxide and trans-heptachlorepoxide) 0.02 0.1

Hexachlorobenzene 0.02 0.1

imidacloprid 5 50 5

Lindane (gamma-hexachlorocyclohexane) 0.05

malathion (USP sums with Malaoxon) 0.5 3 0.5 0.5

metalaxyl 2 1 3

methamidophos 1

methidathion 0.1 1

methiocarb 0.2

Methomyl 1 2

methoxychlor 0.05 0.1

methyl parathion 0.1

mirex 0.08

monocrotophos 0.3

oxamyl 0.5

parathion-ethyl and paraoxon-ethyl (sum of) 0.06

parathion-methyl + paraoxon-methyl 0.1

pendimethalin 5 0.05 0.05

permethrins (sum of cis and trans) 0.5

3.0 (sum

w/ cypermethrin)

phosalone 0.1

piperonyl butoxide 3

pirimiphos-methyl (sum of pirimiphos-methyl and N-desethyl-pirimiphos-methyl) 0.1

profenophos (profenofos) 0.1

propoxur (baygon) 0.1

pyrethrins (sum of pyrethrin 1, cinerin 1 and jasmolin 1) 0.5

thiamethoxam 5 References: 1) Coresta. "Coresta Guide Number 1. The Concept and Implementation of CPA Guidance Residue Levels." Jul 2016.

https://www.coresta.org/sites/default/files/technical_documents/main/Guide-No01-GRLs4th-Issue-July16.pdf

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References 1 Dills, Angela, Sietse Goffard, and Jeffrey Miron. Dose of Reality: The Effect of State Marijuana Legalizations. Publication no. 799. Washington, DC: Cato Institute, 2016. Print. 2 Center for Disease Control, Division of Adolescent and School Health. Trends in the Prevalence of Marijuana, Cocaine, and Other Illegal Drug Use National YRBS: 1991-2015 https://www.cdc.gov/healthyyouth/data/yrbs/pdf/trends/2015_us_drug_trend_yrbs.pdf. 3 Hasin, Deborah S. et al. "Medical marijuana laws and adolescent marijuana use in the USA from 1991 to 2014: results from annual, repeated cross-sectional surveys." The Lancet Psychiatry 2.7 (2015): 601-08. 4 Colorado Department of Public Health and Environment. Healthy Kids Colorado Survey, Marijuana Use Among Youth in Colorado, 2015. 5 Alaska Department of Health and Social Services. 2015 Youth Risk Behavior Survey Results, p. 10. 6 Oregon Health Authority. 2011 Oregon Healthy Teens Survey (8th and 11th Grade Survey Data), p. 48 and 53; Oregon Health Authority. 2013 Oregon Healthy Teens Survey, p. 58; and Oregon Health Authority. 2015 Oregon Healthy Teens Survey, p. 56-59. 7 Washington State. Healthy Youth Survey, Youth Marijuana Use in Washington State, 2012; Washington State. Healthy Youth Survey, Youth Marijuana Use in Washington State, 2014; and Washington State. Healthy Youth Survey, Youth Marijuana Use in Washington State, 2016. 8 Carl Davis and Richard Phillips (Institute on Taxation and Economic Policy). Tax Policy Issues Associated with Legalized Retail Marijuana: Testimony before the Vermont Senate Committee on Finance, January 19, 2016. 9 Morris, Robert G. et al. “The Effect of Medical Marijuana Laws on Crime: Evidence from State Panel Data, 1990-2006.” Ed. Joseph A. Keating. PLoS ONE 9.3 (2014). 10 Colorado Department of Revenue (Provided by the Marijuana Policy Group). Market Size and Demand for Marijuana in Colorado, 2014, p. 27. 11 Staff. "Legalising Cannabis: Reeferegulatory Challenges," in The Economist, February 13, 2016. 12 Marijuana Policy Group. The Economic Impact of Marijuana Legalization in Colorado, October 2016, p. 6. 13 Rosalie Wyonch. “With Legal Weed the Government Must Choose Revenue or Regulated Market, Not Both,” in Intelligence Memos, April 10, 2017, p. 1. 14 See Note 9. 15 Institute of Medicine. Marijuana and Medicine: Assessing the Science Base, 1999, p. 101. http://www.nap.edu/read/6376/chapter/2#6 16 Amanda Reiman. “Cannabis as a Substitute for Alcohol and Other Drugs,” in Harm Reduction Journal, December 2009, p. 1. 17 Ashley C. Bradford. “Medical Marijuana Laws Reduce Prescription Medication Use in Medicare Part D,” in Health Affairs, July 2016, Vol. 35, No. 7, p. 1230; Marcus A. Bachhuber et al. “Medical Cannabis Laws and Opioid Analgesic Overdose Mortality in the United States, 1999,2010,” in Journal of the American Medical Association, October 2014; and Yuyan Shi. “Medical Marijuana Policies and Hospitalizations Related to Marijuana and Opioid Pain Reliever,” in Drug and Alcohol Dependence, February 2017, p. 148. 18 Ralph E. Tarter et al. “Predictors of Marijuana Use in Adolescents before and after Licit Drug Use: Examination of the Gateway Hypothesis,” in American Journal of Psychiatry, December 2006, Vol. 163, No. 12, p. 2139. 19 RAND Drug Policy Research Center. “Using Marijuana May Not Raise the Risk of Using Harder Drugs,” in Research Briefs, 2002, p. 2. 20 Andrew R. Morral et al. “Reassessing the Marijuana Gateway Effect,” in Psychology Society Bulletin, Fall 2003, Vol. 1, No. 1, 2003, p. 63. 21 Hefei Wen et al. “The Effect of Medical Marijuana Laws on Marijuana, Alcohol, and Hard Drug Use,” in NBER Working Paper Series, May 2014, p. 25. 22 US Department of Transportation, National Highway Traffic Safety Administration. Results of the 2013-2014 National Roadside Survey of Alcohol and Drug Use by Drivers, February 2015, p. 2. 23 Angela Dills, Sietse Goffard, and Jeffrey Miron (Cato Institute). Dose of Reality: The Effects of State Marijuana Legalizations, September 2016, p. 18. 24 US Department of Transportation, National Highway Traffic Safety Administration. Drug and Alcohol Crash Risk: A Case-Control Study, December 2016, p. 5. 25 Bob Young. "More Pot Use Found in Fatal Crashes, Data Says," in The Seattle Times, August 19, 2015. 26 Bob Young. "More Pot Use Found in Fatal Crashes, Data Says," in The Seattle Times, August 19, 2015. 27 Bob Young. "More Pot Use Found in Fatal Crashes, Data Says," in The Seattle Times, August 19, 2015. 28 Colorado Department of Transportation. Drugged Drivers Involved in Car Crashes, 2014. 29 Colorado Department of Transportation. Drugged Drivers Involved in Car Crashes, 2014.

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30 Rocky Mountain High Intensity Drug Trafficking Area. The Legalization of Marijuana in Colorado: The Impact, September 2015. 31 Peter Hecht. "What Stoned Driving Looks Like and How California Might Regulate It," in The Sacramento Bee, September 16, 2016. 32 Michigan Department of Licensing and Regulatory Affairs. Medical Marihuana Regulation Centralized in New Bureau. <http://www.michigan.gov/lara/0,4601,7-154-79571-409429--,00.html>. 13 Apr. 2017. 33 "Marijuana Training for Law Enforcement." Colorado Peace Officer Standard and Training Board. <https://www.coloradopost.gov/training/marijuana-training-law-enforcement>. 34 "Enforcement and Education." Washington State Liquor and Cannabis Board. <http://lcb.wa.gov/enforcement/enforcement-and-education> 35 “Introduction to Marijuana for LE.” Colorado Peace Officer Standard and Training Board. <https://www.coloradopost.gov/training/marijuana-training-law-enforcement/introduction-marijuana-le>. 36 United States Department of Justice. Office of Community Oriented Policing Services. Hiring for the 21st Century Law Enforcement Officer. 2017. 37 Kaminsky, Jonathan . "Seattle Police Department Loosens Rules On Marijuana Use For Recruit." Web log post. Huffington Post. 19 Dec. 2012. Web. <http://www.huffingtonpost.com/2012/12/19/seattle-police-marijuana-rules_n_2333912.html>. 38 Rector, Kevin. "Maryland regulators ease restrictions on past marijuana use by prospective police officers." Baltimoresun.com. 19 Apr. 2017. Web. <http://www.baltimoresun.com/news/maryland/crime/bs-md-ci-police-marijuana-rule-20170419-story.html>. 39 As an example, in FY 2015-16, the State of Colorado generated $157,511,445 in marijuana fees and taxes while the total expenditures of the Colorado Department of Revenue’s Marijuana Enforcement Division stood at $10,163,003. Colorado Department of Revenue, Enforcement Division. Report to the Joint Budget Committee and House and Senate Finance Committees of the Colorado General Assembly Pursuant to Subsection 12-43.4-104(6), C.R.S, April 2017. Drug Policy Alliance. So Far, So Good: What We Know about Marijuana Legalization in Colorado, Washington, Alaska, Oregon and Washington, D.C., October 2016, p. 4-5. 40 Susan Abram. “Keeping LA County’s Illegal Medical Pot Shops Closed Is Like a Game of ‘Whack-A-Mole,’” in Los Angeles Daily News, April 18, 2017. 41 SAMHSA, Center for Behavioral Health Statistics and Quality, National Survey on Drug Use and Health, 2014 and 2015. 42 Angela Dills, Sietse Goffard, and Jeffrey Miron (Cato Institute). Dose of Reality: The Effects of State Marijuana Legalizations, 2016, p. 1. 43 Institute of Medicine. Marijuana and Medicine: Assessing the Science Base, 1999, p. 101. http://www.nap.edu/read/6376/chapter/2#6 44 Ralph E. Tarter et al. “Predictors of Marijuana Use in Adolescents before and after Licit Drug Use: Examination of the Gateway Hypothesis,” in American Journal of Psychiatry, December 2006, Vol. 163, No. 12, p. 2139. 45 RAND Drug Policy Research Center. “Using Marijuana May Not Raise the Risk of Using Harder Drugs,” in Research Briefs, 2002, p. 2. 46 Andrew R. Morral et al. “Reassessing the Marijuana Gateway Effect,” in Psychology Society Bulletin, Fall 2003, Vol. 1, No. 1, 2003, p. 63. 47 Hefei Wen et al. “The Effect of Medical Marijuana Laws on Marijuana, Alcohol, and Hard Drug Use,” in NBER Working Paper Series, May 2014, p. 25. 48 Amanda Reiman. “Cannabis as a Substitute for Alcohol and Other Drugs,” in Harm Reduction Journal, December 2009, p. 1. 49 Ashley C. Bradford. “Medical Marijuana Laws Reduce Prescription Medication Use in Medicare Part D,” in Health Affairs, July 2016, Vol. 35, No. 7, p. 1230; Marcus A. Bachhuber et al. “Medical Cannabis Laws and Opioid Analgesic Overdose Mortality in the United States, 1999,2010,” in Journal of the American Medical Association, October 2014; and Yuyan Shi. “Medical Marijuana Policies and Hospitalizations Related to Marijuana and Opioid Pain Reliever,” in Drug and Alcohol Dependence, February 2017, p. 148. 50 James C. Anthony, Lynn A. Warner, and Ronald C. Kessler. "Comparative Epidemiology of Dependence on Tobacco, Alcohol, Controlled Substances, and Inhalants: Basic Findings from the National Comorbidity Survey," in Experimental and Clinical Psychopharmacology, 1994, Vol. 2, No. 3, p. 251. 51 Janet E. Joy et. al. (Institute of Medicine). Marijuana and Medicine: Assessing the Science Base, 1999, p. 98. 52 Gerald Thomas and Chris Davis. “Cannabis, Tobacco, and Alcohol Use in Canada: Comparing Risks of Harm and Costs to Society,” in Visions: BC’s Mental Health and Addictions Journal, Vol. 5, No. 4, 2009, p. 13. 53 Drik W. Lachenmeier and Jurgen Rehm. “Comparative Risk Assessment of Alcohol, Tobacco, Cannabis, and Other Illicit Drugs Using the Margin of Exposure Approach,” in Scientific Reports, January 2015, p. 4 and 6. 54 Mark P. Pletcher et al. “Association Between Marijuana Exposure and Pulmonary Function over 20 Years,” in The Journal of the American Medical Association, January 2012, Vol. 307, No. 2., p. 177. 55 Mia Hashibe et al. “Marijuana Use and the Risk of Lung and Upper Aerodivestive Tract Cancers: Results of a Population-Based Cast-Control Study,” in Cancer Epidemiology, Biomarkers, & Prevention, October 2006, Vol. 15, No. 10, p. 1829.

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56 World Health Organization, Project on Health Implications of Cannabis Use. A Comparative Appraisal of the Health and Psychological Consequences of Alcohol, Cannabis, Nicotine and Opiate Use, August 1995. 57 World Health Organization, Project on Health Implications of Cannabis Use. A Comparative Appraisal of the Health and Psychological Consequences of Alcohol, Cannabis, Nicotine and Opiate Use, August 1995. 58 Philip M. Boffey. “What Science Says about Marijuana,” in The New York Times, July 30, 2014. 59 US Centers for Disease Control. Trends in the Prevalence of Marijuana, Cocaine, and Other Illegal Drug Use National YRBS: 1991-2015. 60 Hasin et. al. “Medical Marijuana Laws and Adolescent Marijuana Use in the USA from 1991 to 2014: Results from Annual, Repeated Cross-Sectional Surveys,” in Lancet Psychiatry, 2015, 2, p. 607. 61 Colorado. Health Kids Colorado Survey, Marijuana Use Among Youth in Colorado, 2015. 62 Alaska Department of Health and Social Services. 2015 Youth Risk Behavior Survey Results, p. 10. 63 Oregon Health Authority. 2011 Oregon Healthy Teens Survey (8th and 11th Grade Survey Data), p. 48/53; Oregon Health Authority. 2013 Oregon Healthy Teens Survey, p. 58; and Oregon Health Authority. 2015 Oregon Healthy Teens Survey, p. 56-59. 64 Washington State. Healthy Youth Survey, Youth Marijuana Use in Washington State, 2012; Washington State. Healthy Youth Survey, Youth Marijuana Use in Washington State, 2014; and Washington State. Healthy Youth Survey, Youth Marijuana Use in Washington State, 2016. 65 Centers for Disease Control and Prevention. National Estimates of Marijuana Use and Related Indicators — National Survey on Drug Use and Health, United States, 2002–2014, September 2016, p. 1-25. 66 Richard Grucza et al. "Declining Prevalence of Marijuana Use Disorders Among Adolescents in the United States, 2002 to 2013," in Journal of the American Academy of Child & Adolescent Psychiatry, 55.6, June 2016. 67 Carl Davis and Richard Phillips (Institute on Taxation and Economic Policy). Tax Policy Issues Associated with Legalized Retail Marijuana: Testimony before the Vermont Senate Committee on Finance, January 19, 2016. 68 Colorado Department of Revenue (Provided by the Marijuana Policy Group). Market Size and Demand for Marijuana in Colorado, 2014, p. 27. 69 Staff. "Legalising Cannabis: Reeferegulatory Challenges," in The Economist, February 13, 2016. 70 Marijuana Policy Group. The Economic Impact of Marijuana Legalization in Colorado, October 2016, p. 6. 71 Rosalie Wyonch. “With Legal Weed the Government Must Choose Revenue or Regulated Market, Not Both,” in Intelligence Memos, April 10, 2017, p. 1. 72 Abigail Geiger (Pew Research Center). “Support for Marijuana Legalization Continues to Rise,” in FactTank, October 12, 2016; and Seth Motel (Pew Research Center). “6 Facts about Marijuana,” in FactTank, April 14, 2015. 73 US Department of Transportation, National Highway Traffic Safety Administration. Results of the 2013-2014 National Roadside Survey of Alcohol and Drug Use by Drivers, February 2015, p. 2. 74 Angela Dills, Sietse Goffard, and Jeffrey Miron (Cato Institute). Dose of Reality: The Effects of State Marijuana Legalizations, September 2016, p. 18. 75 US Department of Transportation, National Highway Traffic Safety Administration. Drug and Alcohol Crash Risk: A Case-Control Study, December 2016, p. 5. 76 Bob Young. "More Pot Use Found in Fatal Crashes, Data Says," in The Seattle Times, August 19, 2015. 77 Bob Young. "More Pot Use Found in Fatal Crashes, Data Says," in The Seattle Times, August 19, 2015. 78 Bob Young. "More Pot Use Found in Fatal Crashes, Data Says," in The Seattle Times, August 19, 2015. 79 Colorado Department of Transportation. Drugged Drivers Involved in Car Crashes, 2014. 80 Colorado Department of Transportation. Drugged Drivers Involved in Car Crashes, 2014. 81 Rocky Mountain High Intensity Drug Trafficking Area. The Legalization of Marijuana in Colorado: The Impact, September 2015. 82 Peter Hecht. "What Stoned Driving Looks Like and How California Might Regulate It," in The Sacramento Bee, September 16, 2016. 83 C.D. Howe Institute. Intelligence Memos: With Legal Weed the Government Must Choose Revenue or Regulated Market, Not Both, April 10, 2017 https://www.cdhowe.org/sites/default/files/blog_Rosalie_0410.pdf. 84 Number of dispensaries determined by the 2013 Census population figure divided by the number of listings on Weedmaps (unless otherwise noted). 85 Iboshi, Kyle. "Legal pot businesses struggle to compete with black market." KGW Portland. February 24, 2017. Accessed May 8, 2017. http://www.kgw.com/news/investigations/legal-pot-businesses-struggle-to-compete-with-black-market/413653533. 86 This number is calculated by adding the 17 percent state marijuana excise tax and the 3 percent Portland marijuana sales tax. City of Portland Oregon. “Portland Marijuana Tax,” Accessed July 24, 2017. https://www.portlandoregon.gov/revenue/article/620894. 87 David Downs. "The Economist: pot legalization is crushing black market in Colorado." SF Gate. February 17, 2016. Accessed May 8, 2017. http://blog.sfgate.com/smellthetruth/2016/02/17/economist-pot-legalization-is-crushing-black-market-in-colorado/. 88 Data generated from Weedmaps’ databases and Colorado Marijuana Enforcement Division.

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89 This number is calculated by adding the 15 percent state marijuana excise tax, the 15 percent state marijuana tax, the 3.65 percent Denver general sales tax, and the 3.5 percent Denver special tax. Colorado Department of Revenue, Taxpayer Service Division. Excise 23: Excise Tax on Retail Marijuana, June 2016 https://www.colorado.gov/pacific/sites/default/files/Excise23.pdf; Colorado Department of Revenue, Taxation Division. “Sales Tax Rates,” June 2017 https://www.colorado.gov/pacific/tax/sales-tax-rates; and City of Denver. City and County of Denver, Colorado Tax Guide, Topic No. 95: Marijuana—Medical and Retail, April 2015 https://www.denvergov.org/content/dam/denvergov/Portals/571/documents/TaxGuide/Marijuana-Medical_and_Retail.pdf. 90 David Downs. "The Economist: pot legalization is crushing black market in Colorado." SF Gate. February 17, 2016. Accessed May 8, 2017. http://blog.sfgate.com/smellthetruth/2016/02/17/economist-pot-legalization-is-crushing-black-market-in-colorado/. 91 Data generated from Weedmaps’ databases and Colorado Marijuana Enforcement Division. 92 This number is calculated by adding the 15 percent state marijuana excise tax, the 15 percent state marijuana tax, and the 3.5 percent Boulder city excise sales and use tax, and the 5 percent Boulder city excise tax on cultivation. Colorado Department of Revenue, Taxpayer Service Division. Excise 23: Excise Tax on Retail Marijuana, June 2016 https://www.colorado.gov/pacific/sites/default/files/Excise23.pdf; Colorado Department of Revenue, Taxation Division. “Sales Tax Rates,” June 2017 https://www.colorado.gov/pacific/tax/sales-tax-rates; and City of Boulder Colorado. “Recreational Marijuana Businesses,” (accessed June 2017) https://bouldercolorado.gov/tax-license/recreational-marijuana-businesses. 93 Washington State provides mid-range and high-end estimates for the overall market value of their cannabis industry of $1.33 billion and $1.61 billion, respectively. Unlike Washington State, we estimate that the actual market size was over $2bn based on comparison of its population to those in parts of California and the consumption rate in those regions. In FY 2016, sales from licensed marijuana dispensaries totaled $786.4 million. We estimate, as does Washington State, that remaining sales went to illegal and gray market operators. Washington State Liquor and Cannabis Board. “Marijuana Dashboard: Sales and Excise Tax Totals,” https://data.lcb.wa.gov/stories/s/WSLCB-Marijuana-Dashboard/hbnp-ia6v/; and BOTEC. Estimating the Size of the Medical Cannabis Market in Washington State, December 2015, p. 2. 94 This number is calculated by adding the 37 percent state marijuana excise tax and the 10.1% Seattle sales and use tax. Washington State Department of Revenue. “Taxes due on marijuana,”. August 26, 2016. Accessed May 8, 2017. http://dor.wa.gov/Content/FindTaxesAndRates/marijuana/Default.aspx; and Washington State Department of Revenue. “Local Sales and Use Tax Rates by City/County, Tax Rates Effective July 1 – September 30, 2017,” Accessed July 24, 2017 http://dor.wa.gov/Docs/forms/ExcsTx/LocSalUseTx/LocalSlsUseFlyer_17_Q3_alpha.pdf. 95 Jonathan P. Caulkins et al. Considering Marijuana Legalization: Insights for Vermont and Other Jurisdictions, 2015, p. 126. 96 Jonathan P. Caulkins et al. Considering Marijuana Legalization: Insights for Vermont and Other Jurisdictions, 2015, p. 127. 97 Freisthler, Bridget, William R. Ponicki, Andrew Gaidus, and Paul J. Gruenewald. "A micro-temporal geospatial analysis of medical marijuana dispensaries and crime in Long Beach, California." Addiction 111, no. 6 (2016): 1027-035. doi:10.1111/add.13301. 98 Henchman, Joseph, and Morgan Scarboro. "Marijuana Taxes: Lessons from Colorado and Washington." Tax Foundation. February 16, 2017. Accessed June 01, 2017. https://taxfoundation.org/marijuana-taxes-lessons-colorado-washington/. 99 C.D. Howe Institute. Intelligence Memos: With Legal Weed the Government Must Choose Revenue or Regulated Market, Not Both, April 10, 2017 https://www.cdhowe.org/sites/default/files/blog_Rosalie_0410.pdf. 100 101 Number of dispensaries determined by the 2013 Census population figure divided by the number of listings on Weedmaps. 102 Data generated from Weedmaps’ databases. 103 Data generated from average of data points on craigslist and market survey during the period of July 2016. 104 Assumes population of 3.88 million and 135 dispensaries. 105 9% sales tax rate in LA county plus 6% marijuana gross receipt tax rate. 106 Los Angeles tax estimate includes state taxes imposed by Proposition 64 (15 percent retail excise tax, $9.25 tax per dry-weight ounce of cannabis flower, and $2.75 per dry-weight ounce of cannabis leaves), Los Angeles sales tax (8.75 percent), and local cannabis taxes authorized by Measure M. 107 Downs, David. "The Economist: pot legalization is crushing black market in Colorado." SF Gate. February 17, 2016. Accessed May 8, 2017. http://blog.sfgate.com/smellthetruth/2016/02/17/economist-pot-legalization-is-crushing-black-market-in-colorado/. 108 Data generated from Weedmaps’ databases and Colorado Marijuana Enforcement Division. 109 This number is calculated by adding the 15 percent state marijuana excise tax, the 15 percent state marijuana tax, the 3.65 percent Denver general sales tax, and the 3.5 percent Denver special tax. Colorado Department of Revenue, Taxpayer Service Division. Excise 23: Excise Tax on Retail Marijuana, June 2016 https://www.colorado.gov/pacific/sites/default/files/Excise23.pdf; Colorado Department of Revenue, Taxation Division. “Sales Tax Rates,” June 2017 https://www.colorado.gov/pacific/tax/sales-tax-rates; and City of Denver. City and County of Denver, Colorado Tax Guide, Topic No. 95: Marijuana—Medical and Retail, April 2015

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https://www.denvergov.org/content/dam/denvergov/Portals/571/documents/TaxGuide/Marijuana-Medical_and_Retail.pdf. 110 Downs, "The Economist: pot legalization is crushing black market in Colorado." 111 Data generated from Weedmaps’ databases and Colorado Marijuana Enforcement Division. 112 This number is calculated by adding the 15 percent state marijuana excise tax, the 15 percent state marijuana tax, the 3.5 percent Boulder city sales and use tax, and the 5 percent Boulder city excise tax on cultivation. Colorado Department of Revenue, Taxpayer Service Division. Excise 23: Excise Tax on Retail Marijuana, June 2016 https://www.colorado.gov/pacific/sites/default/files/Excise23.pdf; Colorado Department of Revenue, Taxation Division. “Sales Tax Rates,” June 2017 https://www.colorado.gov/pacific/tax/sales-tax-rates; and City of Boulder Colorado. “Recreational Marijuana Businesses,” (accessed June 2017) https://bouldercolorado.gov/tax-license/recreational-marijuana-businesses. 113Washington State provides mid-range and high-end estimates for the overall market value of their cannabis industry of $1.33 billion and $1.61 billion, respectively. Unlike Washington State, we estimate that the actual market size was over $2bn based on comparison of its population to those in parts of California and the consumption rate in those regions. In FY 2016, sales from licensed marijuana dispensaries totaled $786.4 million. We estimate, as does Washington State, that remaining sales went to illegal and gray market operators. Washington State Liquor and Cannabis Board. “Marijuana Dashboard: Sales and Excise Tax Totals,” https://data.lcb.wa.gov/stories/s/WSLCB-Marijuana-Dashboard/hbnp-ia6v/; and BOTEC. Estimating the Size of the Medical Cannabis Market in Washington State, December 2015, p. 2. 114 This number is calculated by adding the 37 percent state marijuana excise tax and the 10.1% Seattle sales and use tax. Washington State Department of Revenue. “Taxes due on marijuana,” August 26, 2016. Accessed May 8, 2017. http://dor.wa.gov/Content/FindTaxesAndRates/marijuana/Default.aspx; and Washington State Department of Revenue. “Local Sales and Use Tax Rates by City/County, Tax Rates Effective July 1 – September 30, 2017,” Accessed July 24, 2017 http://dor.wa.gov/Docs/forms/ExcsTx/LocSalUseTx/LocalSlsUseFlyer_17_Q3_alpha.pdf. 115 Downs, David. "San Francisco Dispensaries' Annual Sales Estimate: $41 Million." East Bay Express. February 24, 2017. Accessed May 8, 2017. http://www.eastbayexpress.com/LegalizationNation/archives/2012/01/31/san-francisco-dispensaries-annual-sales-estimate-41-million. 116 Staggs, Brooke Edwards, and Jessica Kwong. "Santa Ana’s black market for pot: The city has twice as many unlicensed marijuana shops as legal ones." Orange County Register. March 29, 2016. Accessed May 8, 2017. http://www.ocregister.com/2016/03/29/santa-anas-black-market-for-pot-the-city-has-twice-as-many-unlicensed-marijuana-shops-as-legal-ones/. 117 Survey of local market participants. 118 Kendall, Marissa. "San Jose lifts ban on cannabis delivery, allowing startup to start up." The Cannifornian. April 12, 2017. Accessed May 08, 2017. http://www.thecannifornian.com/cannabis-business/san-jose-lifts-ban-cannabis-delivery-allowing-startup-start/. 119 Includes 8.75 percent San Jose sales tax and 10 percent Marijuana Business Tax and Prop 64 estimate includes state taxes imposed by Proposition 64 (15 percent retail excise tax, $9.25 tax per dry-weight ounce of cannabis flower, and $2.75 per dry-weight ounce of cannabis leaves). 120 Based on roughly 30-40 delivery services currently listing that they operate in the region. 121 Long Beach is implementing Measure MM, approved by voters in November, 2016. Though the city currently bans dispensaries, estimates are based off 32 licensed dispensaries allowed pursuant to Measure MM. 122 While Long Beach is lifting a ban on dispensaries, the 32 dispensaries allowed under Measure MM will likely not be sufficient to meet patient demand. The illegal market estimate is based of illegal market rates in similar jurisdictions. 123 Includes 9.75 percent Long Beach sales tax rate and 6 percent marijuana tax as authorized by Measure MM and Prop 64 estimate includes state taxes imposed by Proposition 64 (15 percent retail excise tax, $9.25 tax per dry-weight ounce of cannabis flower, and $2.75 per dry-weight ounce of cannabis leaves). 124 Based on roughly 90-100 delivery services currently listing that they operate in the region. 125 City of Long Beach Municipal Code. Title 5, Chapter 5.89 (repealed by Measure MM). https://www.municode.com/library/ca/long_beach/codes/municipal_code?nodeId=TIT5REBUTRPR_CH5.90MEMABU. 126 Iboshi, Kyle. "Legal pot businesses struggle to compete with black market." KGW Portland. February 24, 2017. Accessed May 8, 2017. http://www.kgw.com/news/investigations/legal-pot-businesses-struggle-to-compete-with-black-market/413653533. 127 City of Portland, Oregon Charter, Code, and Policies. Title 14, Chapter 14B.130. https://www.portlandoregon.gov/citycode/69071. 128 This number is calculated by adding the 17 percent state marijuana excise tax and the 3 percent Portland marijuana sales tax. City of Portland Oregon. “Portland Marijuana Tax,” Accessed July 24, 2017. https://www.portlandoregon.gov/revenue/article/620894. 129 Certified Medical Marijuana Dispensaries. Nevada Division of Public and Behavioral Health. March 15, 2017. Accessed May 8, 2017. http://dpbh.nv.gov/uploadedFiles/dpbhnvgov/content/Reg/MedMarijuana/OpenDispensaryList25.pdf. 130 This number is calculated by adding the 15% state wholesale excise tax, the 10% state retail excise tax, the 8.25% state/local sales tax, and the Clark County business license fee of up to 3% of gross sales. Clark County. “FAWs for Retail

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Marijuana,” June 29, 2017. Accessed July 24, 2017 http://www.clarkcountynv.gov/business-license/announcements/Pages/FAQs-for-Retail-Marijuana.aspx. 131 Estimated black market provided by Weedmaps survey, based on 74 responses. 132 Per the Arizona Department of Health Services, City of Phoenix, and data from Weedmaps there are roughly 13 delivery services and 20 licensed dispensaries. 133 City of Phoenix, Arizona. Ordinance G-6151. May 9, 2016. Accessed May 8, 2017. https://www.phoenix.gov/pddsite/Documents/G-6151.pdf 134 Arizona Department of Health Services. “Medical Marijuana FAQs – Qualifying Patients,” Accessed July 24, 2017 http://www.azdhs.gov/licensing/medical-marijuana/index.php#faqs-patients; and State of Arizona Department of Revenue. “Tax Rate Details,”