ROCKY MOUNTAIN HIGH

DENVER -- Inside the green neon sign, which is shaped like a
marijuana leaf, is a red cross.

The cross serves the fiction that most transactions in the store --
which is what it really is -- involve medicine.

The Justice Department recently announced that federal laws against
marijuana would not be enforced for possession of marijuana that
conforms to states' laws. In 2000, Colorado legalized medical marijuana.

Since Justice's decision, the average age of the 400 persons a day
seeking "prescriptions" at Colorado's multiplying medical marijuana
dispensaries has fallen precipitously. Many new customers are college students.

Customers -- this, not patients, is what most really are -- tell
doctors at the dispensaries that they suffer from insomnia, anxiety,
headaches, premenstrual syndrome, "chronic pain," whatever, and pay
nominal fees for "prescriptions." Most really just want to smoke pot.

So says Colorado's attorney general, John Suthers, an honest and
thoughtful man trying to save his state from institutionalizing such
hypocrisy. His dilemma is becoming commonplace: Thirteen states have,
and 15 more are considering, laws permitting medical use of marijuana.

Realizing they could not pass legalization of marijuana, some people
who favor that campaigned to amend Colorado's Constitution to
legalize sales for medicinal purposes.

Marijuana has medical uses -- e.g., to control nausea caused by
chemotherapy -- but the helpful ingredients can be conveyed with
other medicines.

Medical marijuana was legalized but, Suthers says, no serious regime
was then developed to regulate who could buy -- or grow -- it.
(Caregivers? For how many patients? And in what quantities, and for
what "medical uses?")

Today, Colorado communities can use zoning to restrict dispensaries
or can ban them because, even if federal policy regarding medical
marijuana is passivity, selling marijuana remains against federal
law. But Colorado's probable future has unfolded in California, which
in 1996 legalized sales of marijuana to persons with doctors' "prescriptions."

Fifty-six percent of Californians support legalization, and Roger
Parloff reports ("How Marijuana Became Legal" in a September issue of
Fortune) that they essentially have this. He notes that many
California "patients" arrive at dispensaries "on bicycles, roller
skates or skateboards." A Los Angeles city councilman estimates that
there are about 600 dispensaries in the city. If so, they outnumber
the Starbucks stores there.

The councilman wants to close dispensaries whose intent is profit
rather than "compassionate" distribution of medicine.

Good luck with that: Privacy considerations will shield doctors from
investigations of their lucrative 15-minute transactions with "patients."

Colorado's medical marijuana dispensaries have hired lobbyists to
seek taxation and regulation, for the same reason Nevada's brothel
industry wants to be taxed and regulated by the state: The Nevada
Brothel Association regards taxation as legitimation and insurance
against prohibition as the booming state's frontier mentality recedes.

State governments, misunderstanding markets and ravenous for revenue,
exaggerate the potential windfall from taxing legalized marijuana.
California thinks it might reap $1.4 billion.

But Rosalie Pacula, a Rand Corp. economist, estimates that
prohibition raises marijuana production costs at least 400 percent,
so legalization would cause prices to fall much more than the 50
percent assumed by the $1.4 billion estimate.

Furthermore, marijuana is a normal good in that demand for it varies
with price.

Legalization, by drastically lowering price, will increase
marijuana's public health costs, including mental and respiratory
problems, and motor vehicle accidents.

States attempting to use high taxes to keep marijuana prices
artificially high would leave a large market for much cheaper illegal
- -- unregulated and untaxed -- marijuana.

So revenue (and law enforcement savings) would depend on the price
falling close to the cost of production. In the 1990s, a mere $2 per
pack difference between U.S. and Canadian cigarette prices created
such a smuggling problem that Canada repealed a cigarette tax increase.

Suthers has multiple drug-related worries. Colorado ranks sixth in
the nation in identity theft, two-thirds of which is driven by the
state's $1.4 billion annual methamphetamine addiction. He is loath to
see complete legalization of marijuana at a moment when new methods
of cultivation are producing plants in which the active ingredient,
THC, is "seven, eight times as concentrated" as it used to be.
Furthermore, he was pleasantly surprised when a survey of nonusing
young people revealed that health concerns did not explain nonuse.

The main explanation was the law: "We underestimate the number of
people who care that something is illegal."

But they will care less as law itself loses its dignity. By mocking
the idea of lawful behavior, legalization of medical marijuana may be
more socially destructive than full legalization.