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What Prop 19? The Future of California's Marijuana Industry

Dreams of legalized marijuana in California went up in smoke this week as Proposition 19, the state's legalization measure, failed to pass with over 40% of the vote. What happens now to the state's pot industry?

The failure of the measure can be attributed partially to marijuana growers in the so-called Emerald Triangle (Mendocino, Humboldt, and Trinity counties), where entire towns rely on weed cultivation for revenue. As we explained previously, these growers are invested in keeping the status quo for the marijuana industry in California—they fear that legalization could cause them to be shut out as industrial-scale growers take over.

These growers need to be educated, says Tom Angell, a spokesman for the Yes on 19 campaign. "There was a lot of short-sightedness there. People were worried this might hurt their bottom line, and they failed to properly appreciate that with a little bit of work and planning, they could be in an even better position," Angell argues.

Marijuana legalization proponents plan to put a Prop 19-like measure on the ballot in 2012—with some changes. "There's an opportunity to learn from this year's initiative, an opportunity to put larger funding in place," says David Borden, Executive Director of "Not one and a half million dollars and another million or two showing up at the last minute but 10 million dollars at the getgo."

Next time around, proponents also need to work on explaining that legalization won't cause issues in the workplace. Prop 19 would have restricted the ability of employers to use drug testing for marijuana as a basis for firing—a loophole that opponents exploited ruthlessly. There were concerns that "schoolbus drivers could smoke joints behind the wheel," Angell says. "In retrospect, we could have done a better job showing the public that these concerns weren't based on the actual language of the initiative."

There is still opportunity for growth in California's marijuana industry even without full legalization. Oakland recently became the first city to allow large-scale industrial marijuana cultivation, with four entrepreneurs given the opportunity to build growing facilities measuring up to 100,000 square feet (if they pay a $5,000 permit fee, a $211,000 regulatory fee, and an 8% gross sales tax). But indoor industrial-sized marijuana cultivation is unlikely to make it to the Emerald Triangle for many of the same reasons that Prop 19 failed (fear of being shut out, decreased profits, etc.).

Angell, for his part, thinks that it's time for growers to embrace competition. "It's inevitable that big business is going to be part of this market as it becomes more and more legitimate," he says. "It could be similar to have we have with alcohol in the U.S. There are gigantic multinational corporations, but there is also a burgeoning microbrew industry."

Both Borden and Angell are hopeful that a legalization proposition could pass in two years. Even if it doesn't, Borden believes that it's only a matter of time before legalization becomes a reality in California. "Younger people understand that marijuana use is just not a big deal and prohibiting it is not good governance."

[Homepage image via Flickr user r0bz]

Ariel Schwartz can be reached on Twitter or by email.