ROCKY MOUNTAIN MEDICAL HIGH

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 U.S. 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 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: 13 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.

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 the Sept. 28
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.

State governments, misunderstanding markets and ravenous for
revenues, exaggerate the potential windfall from taxing legalized
marijuana. California thinks it might reap $1.4 billion. But Rosalie
Pacula, a RAND Corporation 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
the $1.4 billion estimate assumes.

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.

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 revenues (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." 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.