Gambling vs. Marijuana: A Tale of Two “Vices”

It’s been nearly six months since the voters approved Question 4 to legalize and tax recreational marijuana. But we’re still at the starting line, because in December the Legislature pushed back by six months all the timelines that the ballot question had established. The regulatory commission that was supposed to be appointed by March won’t be appointed until September, the review of license applications that was supposed to begin in October won’t start until next April, and so on.

And now it’s possible that the finish line may be moved. There’s a brand new legislative committee that will review the 44 bills that were filed at the start of the new 2017-2018 session responding to the passage of the new law.  With only a few exceptions, the bills are far more wary than enthusiastic. They propose stricter local control over retail marijuana establishments, a reduction in the amount of marijuana that can be grown at home, restrictions on potency (the law, as approved by the voters, provided that such restrictions would be imposed by the regulatory commission), restrictions on advertising, etc., etc.

Which is at least a little odd considering that the Department of Revenue has estimated that marijuana sales could bring in $64 million in new revenue in the first year of the law’s operation, and once again this year the state is digging through the sofa cushions for loose change to fix the perennial hole in the budget.

But before we conclude that our lawmakers are skittish about any new enterprise that may strike some members of the citizenry as morally problematic even as it brings in new revenue, let’s review the launch of the casino law.

At a comparable time (six months after the law was passed), the members of the new Massachusetts Gaming Commission had been appointed and staked to a $15 million line of credit.  The buzz was all about the new jobs that were shortly to arrive and the new revenues that were shortly to replenish our recession-depleted treasury.  (The marijuana law has gotten only a measly $300,000 to cover costs to date.)

The Gaming Commission got the licensing process underway with an award to Penn National Gaming to operate a slots parlor in Plainville. They did so with the rosy understanding that it would bring in as much as $300 million in revenue annually. But whoops. After the first year of operation, the revenue number was $160 million, barely half of the original estimate. What happened?

According to the Commission’s account, which the Globe reported credulously, the initial revenue projections were “extravagant” guesses offered by casino industry consultants. Well, okay, but what about the Commission’s due diligence in investigating that guesstimate? “We thought there was a flaw in their methodology but we couldn’t find it,” Crosby said.

Indeed. The Commission could not find the flaw, even when aided by the research of their own consultants, who also predicted that Plainville’s annual revenues would yield far more than $160 million — and who were rewarded by the state for such prognostications to the tune of a million bucks.

Water under the bridge, apparently. Anyway, now all is well.  The Commission “could not be more pleased” with the Plainridge revenues, which are half of the original estimates and which is totally okay, because we now know the estimates were unrealistic to begin with. Construction has begun on two other casinos, with who knows how many more to follow, as Massachusetts duels Connecticut for supremacy in the gambling wars. Gambling is clearly the Legislature’s favored child, (as compared to marijuana), and even more cossetting may be on the way — the House of Representatives is proposing to let casinos continue to serve alcohol for hours after bars and restaurants must close. Meanwhile, marijuana legalization is in danger of being strangled in its crib.

Did the Legislature ever take note of the discrepancy between revenue expectations and revenue reality in Plainville? No evidence that they did, and if it’s brought to their attention, many seem prepared to laugh it off like Commissioner Crosby did: “we all seemed to be smoking something.”

 

Getting the Marijuana Law Up and Running: It’s Not About the Money

On the first day that it’s legal to possess and grow marijuana in Massachusetts there are some happy faces outside the State House.

But inside the State House, seems it’s a different story.

For example, State Treasurer (and, notably, Question 4 opponent) Deborah Goldberg is troubled because, as she told Politico yesterday, the new law requires her to set up a Cannabis Control Commission to regulate the marijuana industry — and to do it quickly, but she has no idea where the start-up money is going to come from. Eventually, the costs will be paid for by marijuana sales tax revenues, but those are a year or more away. “Tough times moving forward,” she said.

(If you’re wondering why this funding issue wasn’t addressed in Question 4 itself, that’s because ballot questions are not allowed to include any appropriations of money.)

Goldberg is doubtful that that funds will be forthcoming from the state, citing the Governor’s recent mid-year budget cuts as evidence of our currently precarious fiscal situation. She’s also opposed to requesting that funds come from the state’s Rainy Day Fund (even though that’s where the start up costs –$15 million worth — to regulate the nascent gambling industry came from a few years back).

OK, let’s look elsewhere.  How about that $1 billion ( that’s billion with a “b”) economic development bill? Its passage last summer led to much enthusiastic gushing about the many ways it would connect residents to economic opportunities, develop the jobs of tomorrow, unlock economic development priorities, create opportunities for businesses in diverse industries, etc., etc. Surely a little of that money could get this newest industry up and running.  The funds could even be in the form of a loan to be paid back once the sales tax revenues start flowing.

It’s as though the opposition of some of our state leaders to legalizing marijuana in the first place may be giving way to a contrived fatalism that the problem of start-up costs makes implementing the law impossible at present. What happened to that can-do attitude we saw when $150 million appeared, rather magically, to seal the deal to bring General Electric to Boston?  (Oh, and by the way on that subject, the House today today advanced a bill to study the feasibility of a helipad near the new GE headquarters.)

There are lots of possible solutions to this relatively minor problem. Finding one just requires some political will.