The green (and winding) road: it's been a year since Colorado and Washington legalized recreational marijuana, and not all that was predicted has come to pass--with some surprises along the way.

• Author: Weiss, Suzanne
• Position: MARIJUANA

Shortly after 8 a.m. on New Year's Day 2014, amid a throng of reporters and photographers from across the nation, a 32-year-old former Marine named Sean Azzariti walked into a small shop just north of downtown Denver and purchased 3.5 grams of Bubba Kush cannabis and a bag of pot-infused chocolate truffles.

With that $59 transaction, Colorado's first-in-the-world commercial marijuana market was up and running.

One year (and roughly $280 million in sales) later, the Centennial State's experiment with legalized pot remains very much a work in progress, as does the more-limited commercial marijuana market in Washington, which was launched in mid-2014.

Both Colorado and Washington have wrestled with a variety of unanticipated problems, which have been amplified by the close scrutiny the two states are under.

"We aren't jumping to any conclusions about how we're doing--the issues are too complex, and there's not enough data," says Andrew Freedman, who was appointed by Governor John Hickenlooper to coordinate Colorado's marijuana policies. "We believe this is a five- to 10-year conversation."

Time Will Tell

Representative Jonathan Singer (D), one of only two legislators who endorsed the legal-pot initiative approved by Colorado voters in 2012, feels the state has, so far, done a good job of handling a major shift in public health and social policy.

"Only time will tell, but at this point I would give us a B-plus," Singer says, while conceding that, "there were things we didn't focus enough on to start out with that I wish we had."

The biggest misstep, by most accounts, was a lack of attention to regulating the potency and packaging of edible cannabis, a large and fast-growing segment of the commercial pot market, says Singer. He notes that establishing a coherent set of regulations for edible products is high on the agenda of both parties in the 2015 legislative session.

Other problems that have emerged range from flawed tax-revenue projections, to the fact that growers and sellers are dealing almost exclusively in cash because of banks' reluctance to accept money from the sales of a drug still classified as illegal under federal law.

The most recent headache is a lawsuit filed in December by the attorneys general of two neighboring states, Nebraska and Oklahoma. It claims that Colorado "has created a dangerous gap in the federal drug control system," and the drugs flowing through that gap "undermine plaintiff states' own marijuana bans and place stress on their criminal justice systems."

The challenges Colorado faces are to be expected, says House Minority Leader Brian DelGrosso (R). "We can't point to other states and say this or that hasn't worked out for them. We're breaking new ground. I don't think many of us are happy we're in this position, but we are. And we've got to figure it out."

Building From Scratch

As for Washington, legalization has been hampered by a host of logistical and policy problems. While Colorado used its highly regulated, 12-year-old medical marijuana system as a guide for its new recreational market, Washington decided to build its market from scratch, which took more than six months. And when a regulatory framework finally was in place, it did not include the network of dispensaries that had been serving medical marijuana patients--with little state oversight--for more than a decade.

"We need to take a whole new look at this in the 2015 session," says Senator Jeanne Kohl-Welles (D). "Right now, we have a legal system in place for recreational use, but we have really no legal system for medical marijuana growing, processing and selling. So we're left in a bit of a mess."

Kohl-Welles has introduced a bill that would incorporate unregulated dispensaries into the system that has been created for recreational customers.

Her bill is also designed to address another emerging challenge: unexpected and widening opposition at the local level. During the past year, nearly half of Washington's municipalities have enacted bans on retail marijuana outlets. The primary reason: Local communities do not get a cut of the hefty 25 percent state excise tax imposed at each of three levels--growing, processing and retail sales. So, to them, the cost of licensing and regulating startup cannabis growers and sellers, while also ensuring public safety, is an added burden with few benefits.

Kohl-Welles' proposal calls for cutting marijuana taxes, consolidating them into a single levy collected at the retail level, and allowing cities and counties a share of the revenue.

Half the Tax

The financial windfall to be reaped from commercial marijuana sales was a major selling...