Washington's pot consultant: 'Entirely possible' selling marijuana will not be profitable

Washington state many he headed toward a situation where recreational sales of marijuana are not profitable due to heavy taxes, regulations and, most importantly, competition from the untaxed "collective gardens" where the state's medical marijuana is grown, Washington's newly hired pot consultant said last week.

"Any revenue estimate depends on actually having people come to the licit market rather than having them use one of the parallel markets," UCLA professor and author Mark Kleiman commented last week's episode of the Washington-based news program "Inside Olympia." "What if you gave pot legalization and nobody came? It is entirely possible that by the time we finish regulating and taxing this product, it's going to be uncompetitive with what you can get at the collective gardens."

He added that the "brute fact" about legalizing marijuana "or any other activity that forms a bad habit," is that 20 percent of the people who engage in said activity account for 80 percent of the consumption in that sector. "It's true for alcohol," Kleiman said. "The top 20 percent of drinkers consume more than 50 percent of the alcohol produced for the U.S. Or to put it a different way, 46 percent of all drinks in the United States are part of drinking binges. So when the alcohol industry tells you they're a fan of responsible drinking, they must be planning to go out of business, because it isn't responsible drinkers that build breweries. It's drunks."

With marijuana, it's just the same, he explained. "A small number of very heavy users account for most of the marijuana, so the typical marijuana smoker engaged in the discussion is not the average customer of the industry, whether it's legal or illegal." Because of that trend, most of Washington state's heavy marijuana users are already likely acquiring their supply from the collective gardens that have already taken hold across the state.

"The only way to get a lot of revenue is to sell a lot of marijuana. And the only way to sell a lot of marijuana is to sell it to people who smoke a lot of marijuana. And that's not a good thing. You don't want the state to set itself up as dependent on dependent cannabis users any more than you want the state to do what it already has done, which is to set itself up as dependent on addicted gamblers. I don't think anybody in this process wants to see the legal cannabis market go the way of the state lottery, where they've got a state agency that's deliberately fostering disease. Adults want to use a responsible amount of cannabis, I don't think that's a bad thing."

Kleiman, a widely respected expert on drug policy, declared in 2010 that legalization and taxation on a state level is an impossible "pipe dream" without the repeal of the Controlled Substances Act, which makes him and his firm a surprising choice for Washington’s Liquor Control Board, currently in the process of hammering out that very scenario. He's since advocated for a consumer co-op model that avoids creating a state monopoly or multibillion dollar industry, as a sort of middle ground that nullifies the worst effects of industry while protecting state officials whose involvement would otherwise be seen as a crime by the federal government.

This video is from "Inside Olympia," published Friday, March 29, 2013.

Editor's note: A prior version of this story incorrectly stated Kleiman's first name is Robert.