Legalization, Medical Marijuana, and Alcohol Taxes Go Before State Voters Nov. 2

A marijuana-legalization question on the California ballot has better than a puncher's chance of passage on Nov. 2, and voters will go to the polls in Arizona and South Dakota to decide whether to allow medical use of the drug. The alcohol industry, meanwhile, is trying to strangle new impact and mitigation fees in California and roll back an alcohol tax passed in Massachusetts just last year.

This actually is a rather quiet year for alcohol, tobacco and other drug-related ballot initiatives, with the National Conference of State Legislatures (NCSL) counting just eight such citizen-initiated measures nationally, including:

• Massachusetts' Question 1 to appeal the state sales tax on alcoholic beverages;
• Washington's Initiative 1100 and 1105 differ slightly, but both call for the end of the Prohibition-era state liquor store system and the legalization of private liquor sales;
• California's Proposition 19 to legalize, tax and regulate marijuana;
• Arizona's Proposition 203 to legalize medical marijuana;
• South Dakota's Initiated Measure 13 to legalize medical marijuana;
• Oregon's Measure 74 to amend the current state medical-marijuana law to allow the drug to be sold from regulated dispensaries;
• South Dakota's Referred Law 12, a challenge to a state law banning smoking in casinos, restaurants, bars and liquor stores.

Alcohol

Alcoholic beverages were among the very few products exempt from state sales taxes in Massachusetts until last year, when state lawmakers lifted the exemption and began charging 6.25 percent sales tax on alcohol purchases. With part of the new revenues directed toward paying for addiction-related services, the move was hailed by the treatment and prevention community but abhorred by the alcohol industry.

After failing to get enough repeal votes in the legislature earlier this year, alcohol retailers succeeded in getting a tax-rollback question on the statewide ballot. Massachusetts' Question 1 asks voters to restore the sales-tax exemption for alcohol, with proponents arguing that the tax encourages state residents to buy alcohol tax-free in neighboring New Hampshire and costs Massachusetts money and jobs.

Opponents of the measure counter that the alcohol industry doesn't deserve a special tax break, and state voters seem to agree. (Watch a video from No on 1 Campaign)

A Boston Globe poll conducted in late September found that while 46 percent of likely voters support Question 3 — which would cut the overall state sales-tax rate from 6.5 percent to 3 percent — 50 percent opposed the Question 1 tax rollback for alcohol.

California's Proposition 26 is not an alcohol measure per se, but backers of the measure calling for restrictions on new government-imposed fees and changes include alcohol industry groups that want to block the state and local governments from imposing so-called “mitigation” fees that seek payback for harm caused by their products. Currently, state and local lawmakers can pass such fees by a simple majority, but Proposition 26 would require a two-thirds majority in the statehouse and for two-thirds of voters to approve such fees proposed by local governments.

Proposition 26 supporters are framing the question as a bid to end “hidden taxes” and “protecting the right to vote on local taxes,” but environmental groups, alcohol prevention organizations and other industry critics say the measure is really an attempt by Big Oil, Big Alcohol and Big Tobacco to dodge accountability.

Environmental groups have taken the lead on the anti-26 advocacy campaign, urging voters not to protect polluters by “making it more difficult to pass fees on industries that pollute our air, dirty our water, and endanger our health.”

“We think the public is not going to fall for it,” said Bruce Livingston, executive director and CEO of the Marin Institute, which has backed statewide and local (San Francisco) campaigns for “Charge for Harm” fees on alcohol companies. “Not that fees are popular, but these are things that businesses should pay for,” not taxpayers, he said.

“We'll either win big or lose big on this. If we win, we will have alcohol mitigation fees in California,” Livingston predicted.

Washington's Initiative 1100 has been dubbed the “Costco Initiative” because the Issaqiuah-based warehouse retailing giant is one of the leading backers of the plan to take liquor sales out of the hands of the state and allow private retailers to sell hard liquor.

The measure also would eliminate the state's 51.9 percent markup on all liquor sales, and allow big-box retailers like Costco to directly purchase alcohol from producers (cutting alcohol wholesalers out of the process) and seek out volume discounts when purchasing beer, wine and liquor.

The similar Washington Initiative 1105 is sponsored by a group called Washington Citizens for Liquor Reform: it, too, would see the state get out of the retailing business but calls for strict regulation of alcohol sales and would retain the liquor-wholesaler system. This measure also would temporarily repeal the state's existing alcohol tax while a new regulation and taxation scheme is developed by the legislature.

Not surprisingly, the state's alcohol wholesalers are among the leading opponents of these measures. The Washington Beer and Wine Wholesalers Association and the Washington Association for Substance Abuse and Violence Prevention are both members of a group called Protect Our Communities, which opposes both Initiative 1100 and the similar Initiative 1105 on the grounds that they will cost the state tax revenue, cause a “massive expansion of liquor stores,” and hurt compliance with laws governing alcohol sales to minors.

“Through our current system, liquor sales generate consistent revenue for state and local programs, help local Washington businesses like wineries, breweries and distilleries thrive, and does the best job of all 50 states preventing underage kids from purchasing alcohol,” Protect Our Communities said.

“The major difference between [1100 and 1105] is their treatment of how liquor would be distributed and taxed,” according to an analysis by the Washington Policy Center, which endorsed Initiative 1100. “While both measures effectively end the state's liquor monopoly, Initiative 1100 offers more market freedom because it would end the Prohibition-era distribution requirements and quantity discount restrictions for retailers,” according to the Center's analysis. “This has the potential to lead to fierce competition in the marketplace to the benefit of consumers.”

As for voters, recent polls have found weak backing for 1100 and 1105 among Washington voters, with large numbers of undecideds who — according to convention wisdom — are more likely to oppose than support such referenda.

Marijuana

Many state-level ballot initiatives have been overshadowed during this year of Tea Parties and candidates who may or may not be witches, but California's Proposition 19 — which would legalize, tax and regulate the sale of marijuana — has garnered national attention, especially when polls started showing that a majority of state residents were supporting the measure.

As the NCSL noted: “Initiatives that get their start in California have a tendency to spread eastward. Consider a similar issue — medical marijuana: California voters approved it in 1996 (it was approved in Arizona that year too, but flaws in the drafting of the Arizona initiative prevented it from ever being implemented). In 1998, similar measures were approved in Alaska, Nevada, Oregon and Washington. To date, it's been on the ballot in nine states.”  

“There's already talk in at least two states — Colorado and Nevada — of bringing a legalization initiative to the ballot in 2012 if Prop. 19 is approved this November,” according to the NCSL. “The hope is that it would mobilize young voters in those states, who may also vote for Democratic candidates while they're casting their votes on legalizing marijuana.”

The law-enforcement community and alcohol industry have both been involved in the No on 19 campaign, which argues that allowing legal use of marijuana will lead to more impaired-driving crashes and tragedies and create a regulatory and enforcement nightmare. The measure also is opposed by current Gov. Arnold Schwarzenegger, Democratic gubernatorial candidate Jerry Brown, and Republican candidate Meg Whitman. Law-enforcement groups, drug-prevention groups, MADD and DARE, and even some medical-marijuana organizations have joined the No on 19 campaign.

Proposition 19 backers contend that the measure will generate massive tax revenues for California and provide better control of the drug, which is widely available on the unregulated black market. Oakland medical-marijuana entrepreneur Richard Lee has supplied major funding for the campaign, which is coordinated by the Drug Policy Alliance and has also attracted donations from some of the founders of Facebook and adult-entertainment tycoon Phil Harvey, among others. 

Recently, the Obama administration, which has followed a hands-off policy regarding medical marijuana, has vowed to enforce federal drug laws in California if Prop 19 becomes law. The latest polls indicate that voters now oppose the measure by a slim margin — 49 percent to 44 percent — the Los Angeles Times reported Oct. 20. 

Ethan Nadelmann, founder and executive director of the Drug Policy Alliance, said that some voters have been scared off by the details of implementing Prop 19, and said passage may come down to the strength of the youth vote in November. “There's strong support among young voters, and not just Democrats but also independents and even some Republicans,” he said. “It seems to be more of an age issue than a party issue.”

“Win or lose, this initiative has transformed and elevated the national discussion,” added Nadelmann. “It's become not so much whether we should do this but what the details are.”

In Arizona, Gov. Jan Brewer opposes the medical-marijuana measure on the November ballot, but polling suggests that voters will approve Proposition 203 by a wide margin. The state has had a medical-marijuana law on the books since 1996 but it was never enacted because the U.S. Drug Administration threatened to punish doctors who wrote prescriptions for the drug. The 2010 measure only requires a recommendation from a doctor, not a prescription, in order for patients to get marijuana for legal medical use.

A 2006 medical-marijuana ballot initiative was narrowly defeated by South Dakota voters, but the issue is back on the ballot in 2010 in the form of the South Dakota Safe Access Act, a.k.a. Measure 13. Unlike in 2006, however, there's very little money being spent on either side of the issue, so the question may be whether shifting national attitudes toward medical marijuana are enough to sway South Dakota voters to push the measure over the top this time around.

Oregon's Measure 74 calls for medical marijuana to be sold from nonprofit dispensaries, with mandatory background checks for operators and employees and fees to pay for regulation of the system. Oregon voters approved a medical-marijuana law in 1998, but the measure didn't establish a legal means for distributing the drug to patients, meaning users still had to buy the drug on the black market.