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Washington Dispensary Owners Against Marijuana Legalization

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WASHINGTON MARIJUANA
A marijuana grower shows plants he is growing with some friends in Montevideo, Uruguay, Wednesday, Nov. 14, 2012. (AP Photo/Matilde Campodonico) | AP

As voters in Washington state this month legalized marijuana for recreational use, they overrode the concerted lobbying of a conspicuous interest group: The dispensaries that already had the right to sell marijuana for medical use, and who now risk relinquishing that lucrative marketplace to new competitors.

Though one might assume that legalization would be opposed primarily by law enforcement and social conservatives, nearly all of the money donated to fight the ballot measure in Washington came not from such groups but rather from the existing medical marijuana industry, according to state campaign contribution filings.

The main group formed to oppose the legalization ballot measure, "No on I-502," was directed by Steve Sarich, a patients' rights advocate who runs a local dispensary or "access point," as he calls it. He says neither he nor his campaign's contributors opposed the measure for financial reasons. "There may be a few that are making some money," he told HuffPost Monday, "but most of them are just paying the rent."

The "No on I-502" campaign has argued that the ballot measure inappropriately makes marijuana users vulnerable to prosecution under the initiative's DUID ("Driving Under the Influence of Drugs") provision -- an assertion that others have challenged.

But some involved in the fight suggest a more direct motive for the opposition: Those who already have the right to sell marijuana in Washington -- the medical use industry -- were reluctant to surrender the market to a new crop of competitors, a development likely to send prices plummeting while generating as much as $606 million in tax revenue next year, according to widely cited estimates.

"Clearly these are just folks who are trying to keep the status quo in place because it's working for them right now," said Allen St. Pierre, executive director of the National Organization for the Reform of Marijuana Laws (NORML). "Charging $150 to $400 for an ounce of marijuana is only possible under prohibition. You just can't get that much money for dried vegetable matter if the product is actually legal."

The cannabis industry wasn’t the only place this election cycle where existing players sought to fend off new entrants in an attempt to preserve virtual monopolies. In Maryland, much of the financial opposition to a ballot initiative expanding casino operations in-state came from competing casino owners at a nearby complex in West Virginia who spent millions on attack ads and helped promote religious opposition to the measure. It's an approach with considerable historical precendent, as Matthew Yglesias explains in Slate:

But “you’re hurting our West Virginia business” isn’t a very persuasive argument in a Maryland referendum. The resulting dynamic is an instance of Bruce Yandle’s “Baptists and Bootleggers” model of regulation. Bootleggers benefitted financially from alcohol prohibition, but as states pondered the relegalization of alcohol following the end of the federal ban, bootleggers couldn’t invoke their own financial interests to halt legal liquor. What was needed was a tactical alliance with booze-hating Baptist preachers.

A similar dynamic has played out in California's so-called Emerald Triangle -- Mendocino, Humboldt and Trinity, a cluster of northwestern counties specializing in pot cultivation since the mid-'70s -- where growers and sellers largely opposed an in-state marijuana legalization initiative in 2010. The implicit reasoning was that industry-style mass production would damage the local economy, as marijuana is the lifeblood crop for thousands of residents in the area.

That initiative, Prop. 19, ultimately failed. But not before a study by the nonprofit RAND Corporation found that legalizing the production and distribution of marijuana in California could cut the price of the drug by as much as 80 percent, even as it increased consumption. (Beau Kilmer, the study's lead author and a policy researcher at RAND, cautions that those numbers cannot be extrapolated out to Washington state, but allowed that prices there are expected to drop off dramatically as well.)

In Washington, marijuana proponents outspent opponents 400 to 1, as Mike Riggs noted recently in The New Republic. That's thanks, in part, to George Soros and Progressive Insurance chairman Peter Lewis, who helped legalization advocates raise roughly $6 million to their opponents' $16,000.

It was under these unfavorable conditions that opponents opted to take what is perhaps the only remaining course of action available to them: they filed a lawsuit on Nov. 14, a week after the election, arguing that due to a defective ballot title that "failed to mention I-502's new draconian DUI provisions," the voters were not fairly informed of what they were voting for.

The lawsuit doesn't mention how the law would affect the medical marijuana industry. But earlier this year Michael Lick, whose Washington dispensary Urban Roots has had more than 1,000 patients since opening in April, did, telling the Seattle Stranger's Dominic Holden that he opposes I-502 because he fears it would quash the industry and thinks cannabis should be treated like medicine, not a recreational drug. He did not return a call from HuffPost seeking further comment.

Heather Houghton, a manager with Evergreen Holistic Center, denied contributing money against I-502 for financial reasons, saying the initiative's driving provision, which creates a cutoff for drivers who have more than 5 nanograms of active THC per milliliter of blood, could put patients at risk of prosecution.

Marijuana remains illegal under federal law. The Obama administration has yet to say whether it plans to intervene to challenge the voter initiative in Washington, and another in Colorado, which legalize the drug for recreational use.

"I don't see how they're going to get around it being illegal [at the federal level],” Houghton said.

Trek Hollnagel, a spokesman for the Conscious Care Cooperative in Northern Seattle, also dismissed the notion that his dispensary fought the measure out of self-interest, saying that while the law does take away some patient "rights" -- he again cited the provision on driving -- he added it's a victory to a certain extent, because there will be some form of arrest protection for everybody.

"I would say it’s kind of a mixed emotion," Hollnagel said.

Hollnagel continued that the new law might be good for business, because it would make patients feel more comfortable about seeking help.

"In my professional opinion I think this will be beneficial for the cannabis industry as far as the dispensaries and all aspects of business go," he said.

NORML's Allen St. Pierre isn't buying it.

"They're moonshiners," he said of the dispensaries opposing the measure. "It's a tiny group of people who don't comport."

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