There are three important distinctions between California’s initiative and the earlier medical marijuana statues discussed in section 1.2.1. First, since the law stated that patients needed a doctor’s “recommendation” — not “prescription” — for medicinal marijuana, physicians did not need to violate federallaw to qualify their patients.9 Second, unlike the state medical marijuana initiatives of the 1970’s described earlier, Proposition 215 was passed during a time when federal policy was firmly engaged in the drug war and opposed to recognizing marijuana’s medicinal value. Last, California’s MML specified that patients and their caregivers could legally grow marijuana, establishing a legitimate source of supply that did not require any cooperation from the federal government. The federal response was swift. One month after Proposition 215 passed in California, then-Drug Czar Barry McCaffrey threatened to arrest any physician who recommended cannabis to their patients. A group of physicians, patients, and nonprofit organizations challenged this threat in court and succeeded. The 1997 decision in Conant v McCaffrey ruled that doctors could not be prosecuted for recommending or discussing cannabis with their patients . By the end of 2008, twelve other states had successfully passed MMLs .While these policies indicated state-level acceptance of the medicinal value of marijuana, federal opposition under the Clinton and Bush Administrations created uncertainty regarding the risks facing those who participated in the state MML program. Federal officials repeatedly stated that users and producers operating in compliance with state MML policy could still be subject to federal prosecution ,rolling benches hydroponics and federal agents conducted numerous raids of large-scale production sites, primarily in California . The election of President Barack Obama in 2008 signaled a potential shift in federal enforcement policy toward MML states.

Throughout his campaign, Obama had indicated that he would not use federal resources to try to circumvent state MMLs . On March 18, 2009, Attorney General Eric Holder issued a statement that federal authorities would cease interfering with medical marijuana dispensaries that were operating in compliance with state law . This policy of federal non-enforcement was formalized October 19, 2009, when Deputy Attorney General David Ogden issued a memorandum stating that federal enforcement priorities should not be directed against users or producers compliant with a state’s MML . While the intent was to signal a shift in drug enforcement efforts and provide reassurance to states considering liberalization, the memo did not change marijuana’s legal status at the federal level. It explicitly stated that marijuana remained illegal under federal law, and a careful reading of the Ogden Memo shows that it left substantial discretion to U.S. Attorneys in how they could choose to adopt the federal guidelines . Even if the Ogden Memo did not end up affecting the actual risk of arrest or prosecution, the widespread perception was that it would. The federal statement was hailed by mainstream media and marijuana advocacy groups as a historic step toward the enactment of national marijuana liberalization. The day of Ogden’s announcement, the largest marijuana advocacy group in the country posted to their website that the Ogden Memo marked the end of federal arrests of medical marijuana patients and raids on suppliers . In the days following the issuance of the Ogden Memo, representatives from the prominent marijuana advocacy group NORML spoke with dozens of mainstream media outlets, proclaiming that federal prosecution of state-compliant medical marijuana patients and their suppliers was now over .Similar to the experience of the early medical marijuana initiatives described in section 1.2.1, the federal signal had important effects on the way in which local governments regulated and implemented state law. For instance, New Mexico was the only state to pass an MML prior to the Ogden Memo that explicitly allowed for the establishment of state-licensed dispensaries in its initial legislation in July 2007.

One month later, the state Attorney General warned the New Mexico Department of Health that its employees could face federal prosecution for overseeing the production and distribution of medical marijuana . The first dispensary was not licensed until the day of Eric Holder’s statement in March 2009, and four licenses were issued shortly after the Ogden Memo in November 2009. All six states that passed MMLs after the Ogden Memo allowed for the operation of state-licensed dispensaries . The changing landscape of medical marijuana markets elicited federal reaction. Beginning in February 2011, U.S. Attorneys in several MML states sent letters to state officials indicating that large-scale marijuana production or distribution facilities would not be tolerated by federal policy, even if state law permitted their operation . On June 29, 2011, following a series of federal raids of medical marijuana dispensaries, Deputy Attorney General James Cole issued a memorandum to clarify the Ogden Memo and emphasize that federal resources would indeed be used to prosecute individuals involved in large-scale medical marijuana sales and distribution businesses . The Cole Memo was widely publicized as a disingenuous reversal of the Ogden Memo, and marijuana advocacy groups issued warnings that dispensaries compliant with state law would once again be federal targets .The aim of this paper is to understand how the federal memos affected medical marijuana participation within states, and to explain variation in take-up across states. The approach is thus motivated by the economic theory of program participation . Attention is limited to states that required medical marijuana patients to register with the state in order to receive the full protections afforded by state MML, since participation data in the three states with voluntary or non-existent registration programs are likely measured with substantial error .Conceptually, individuals will apply to be a medical marijuana patient if the expected benefits of applying exceed the expected costs. An individual who applies and is approved becomes a registered patient, and receives the legal protections afforded by state law.

An individual who applies and is rejected decides whether to obtain marijuana illegally or to abstain from marijuana use. Conditional on knowing about the MML’s existence, an individual then makes the decision whether or not to apply to be a medical marijuana patient. To apply for medical marijuana, an individual must first obtain a doctor’s certification that she has a medical condition that could benefit from marijuana use. The patient then must submit an application to the state authority,cannabis indoro grow system along with a registration fee. Registration must be renewed every one or two years. Registration fees represent the direct cost of applying to the medical marijuana program, but there are additional indirect costs of finding a physician to provide the necessary recommendation. This will be a function of an individual’s health status, search costs of finding a recommending physician, and state-specific regulations regarding the eligible qualifying conditions. If the application is approved, a registered patient may incur additional costs from the perceived risk of federal prosecution. Under the pre-Ogden regime, individuals may have feared that having their name on a medical marijuana registry could lead the federal government to more easily target them for prosecution. There may also be “stigma” costs from choosing to violate federal law. While in reality, the probability of facing federal prosecution for simple marijuana possession is almost non-existent, federal penalties are substantially higher than most state penalties.As evidence suggests individuals overweight low-probability events that carry heavy losses , even a small risk of federal prosecution during the pre-Ogden period may have been sufficient to deter individuals from registering for medical marijuana. If that is the case, by reducing the expected risk of federal prosecution, the Ogden Memo would be expected to increase medical marijuana participation; conversely, by re-instating perceived federal enforcement, the Cole Memo would be expected to decrease medical marijuana participation.

As the federal memos applied to all MML states, they should have similar effects on medical marijuana patient take-up in all states.In all MML states, one of the benefits of registering is protection from state prosecution for possession of marijuana. All states in the sample imposed a maximum possession limit with the initial law . Limits ranged from 1 ounce to 10 ounces of usable marijuana, though several states have passed amendments increasing these limits .Whether this benefit alone outweighs the cost of applying will depend on the perceived probability of arrest as well as the expected penalties for possession if the patient does not register. For heavier users, higher possession limits may offer additional benefits through quantity discounts or through reducing transaction costs associated with frequency of purchases. As noted in section 1.2.2, one of the most important benefits of modern MMLs in comparison to earlier policies is access to legitimate sources of marijuana. Benefits to registered patients could include decreased prices, increased quality or potency, greater product variety, and lower search costs due to increased legal availability. There is substantial variation across MML states in the regulations placed on legal supply sources. These different supply regulations will have heterogeneous effects on medical marijuana availability, and thus generate heterogeneous benefits to registered patients. Table 1.1 shows the supply regulations established by each state’s initial MML law, separately for states that passed MMLs prior to the Ogden Memo in 2009 and after . Legitimate supply sources are categorized as patient home cultivation , cultivation by a designated caregiver , state-licensed dispensaries , and de facto dispensaries or collective grows . Table 1.1 lists the access sources allowed by the state’s initial MML, but it should be noted that many of these states enacted later amendments changing these regulations. All MMLs enacted before 2009 allowed qualifying patients to grow their own cannabis, though plant limits varied. However, if patients are not already experienced growers, the start-up and maintenance costs of home cultivation likely exceed those of obtaining marijuana from the black-market. Inexperienced growers will incur the time and monetary costs of learning how to grow marijuana efficiently, produce an adequate and consistent yield, vary potency, etc. Home cultivation may not even be feasible for many patients due to physical limitations, housing issues , or difficulty finding seeds or starter plants to begin cultivation.Perhaps recognizing these limitations, early-enacting MML states that permitted home cultivation also allowed patients to designate a caregiver15 to assist with their cultivation of marijuana or to legally grow marijuana on their behalf. In states that permit caregiver cultivation, benefits to registered patients will be a function of the number of providers and production per producer, which will depend on the expected profits of legal production. Caregivers’ expected revenues increase with the number of patients they are allowed to grow for and the number of plants they are allowed to grow. Some states restricted caregivers to growing for only one patient . Other states allowed caregivers to grow for multiple patients, and a few states placed no limits on the number of patients a caregiver could serve and did not cap the amount they could grow. Many of these states had MMLs that were ambiguous with regard to group growing or storefront dispensaries and thus effectively permitted the de facto operation of largely unregulated large-scale production. Some states did not permit caregivers to grow for patients, but instead established a legal framework for the creation of state-licensed dispensaries or equivalent entities as described in Pacula, Boustead, et al. . Theoretically, the legalization of state-licensed dispensaries offered a significant benefit to patients. Patients did not need to find an individual willing to be listed as a caregiver on their application form, and could instead rely on a state-sanctioned large-scale production source. However, unlike caregivers or collectives, the number of dispensary licenses was set by MML policy, state-licensed dispensaries needed to overcome a number of regulatory hurdles before beginning distribution, and upon operation these facilities often faced substantial oversight from state authorities. The expected costs faced by legal producers will be a function of the perceived risk of arrest and prosecution. In states that required caregivers to register, fees were minimal , and if the caregiver did not exceed the MML production limits she was protected from state prosecution. However, the federal felony charge for cultivation of any amount can carry up to 5 years in prison and a $250,000 fine .