PPIC Logo Independent, objective, nonpartisan research
Press Release · April 6, 2016

If Recreational Marijuana is Legalized, State Should Develop Tightly Controlled Market

Lessons for California in the Regulatory Approaches of Washington, Colorado

SAN FRANCISCO, April 6, 2016—If California legalizes recreational marijuana, the state should develop a single highly regulated marijuana market—for medical and recreational uses. This is among the key findings of a report released today by the Public Policy Institute of California (PPIC). It analyzes the regulatory approaches taken by Washington and Colorado—the first two states to legalize recreational marijuana—so that California can learn from their experiences.

The PPIC report does not address the wisdom of marijuana legalization but looks at how to design regulations that reconcile important but differing policy goals: limiting the impact of the illegal market, reducing harm to public health and safety, and raising revenue for the state.

To protect the environment, structure the market, and prevent diversion to other states or minors, the PPIC report recommends a regulatory structure that would tightly document and control cultivation, production, processing, and sale of legal marijuana. This approach would limit the number of licenses, restrict the scale of production, and impose strict testing requirements. It would satisfy current US Department of Justice guidelines but could be modified in the future.

“California should err on the side of more restrictive regulation,” said Patrick Murphy, coauthor of the report and research director at PPIC. “The fundamental fact is, from a political perspective, it would be easier to loosen a tight market than tighten a loose one.”

The report urges limiting recreational marijuana use to those age 21 and older and imposing limits on the quantity sold. It also recommends that marijuana be available only in stores established specifically to sell it. Penalties for selling to minors should be significant, including possible license forfeiture.

If recreational marijuana is legalized, California will need to act decisively to reinforce the prevention and deterrence of drugged driving. The state should ensure that enforcement of drugged driving laws is consistent and effective—which would require training of law enforcement officers and development of an accurate, practical test for marijuana that can withstand court scrutiny.

Very little is known about California’s illegal marijuana market and surprisingly little information is available on the legal medical market—even though it has been in existence for nearly 20 years. For this reason, California should build in a strong and transparent reporting system to collect data on the marijuana market and evaluate the consequences of use. The state should also approach legalization with an eye toward flexibility. Both Colorado and Washington significantly adjusted regulation in the first year after legalization.

The report notes that both Washington and Colorado have designed mechanisms to track legal cultivation and production, reducing the diversion of marijuana to the illegal market. Both states also tax marijuana transactions and have collected millions of dollars in revenue. Neither overall marijuana use nor use by young people appears to have risen dramatically in the two states. But, as in California, levels of use were already higher there than in the rest of the nation.

Both states have established legal definitions of drugged driving and both have seen increasing numbers of people charged with driving under the influence. But it is not known whether these increases mean drugged driving has increased or law enforcement is more vigorous.

The report is titled Regulating Marijuana in California. The coauthor is John Carnevale, president of Carnevale Associates, LLC, a public policy firm that offers guidance to governments, organizations, and communities.


PPIC is dedicated to informing and improving public policy in California through independent, objective, nonpartisan research on major economic, social, and political issues. The institute was established in 1994 with an endowment from William R. Hewlett. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it endorse, support, or oppose any political parties or candidates for public office.