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TheStreet Open House

Pitfalls Abound as Legal Pot Sales Begin

DENVER (AP) -- Colorado and Washington State will launch the world's first legal recreational marijuana markets in 2014. Though pot has been sold for three decades at coffee shops in the Netherlands, the two states are the first to regulate and allow a full industry.

Being first to allow growing it, processing it and selling it doesn't come without risks. The states face plenty -- from a potential crackdown over a drug that's still illegal under federal law, to threats to public health.

A look at some of the pitfalls the two states will want to avoid as Big Weed tries to go mainstream:

YOUTH USE: The U.S. Department of Justice has told the states it won't interfere with state marijuana laws as long as they keep the drug away from those without permission to use it. Top of that list: children. Neither state will allow people under 21 to buy pot.

HEALTH: Some doctors warn that increased marijuana use will result in more emergency-room visits. There's not enough data to show if that is happening, though some hospitals have reported spikes in child admissions for pot overdoses. With no Food and Drug Administration oversight, the two states are producing their own product-safety standards to make sure pot is as potent as labeled and doesn't contain harmful molds or other contaminants.

SMUGGLING: The states have also been told they must keep legal pot out of other states and off federal property. That's no small task in Western states with huge swaths of federal property, such as parks and ski areas. The states will allow visitors to buy pot, but also warn them about where they can and can't take it.

CRIME: Legalization opponents say residency requirements won't prevent criminal cartels from setting up straw-man growing operations. The states also have tracking systems to make sure what is grown ends up sold legally. Colorado, however, also allows people to grow pot at home, making it impossible to keep track of where it is coming from and where it's going.

DRIVING: The states set up marijuana analogies to drunk-driving laws, setting driver blood limits for pot's psychoactive chemical, THC. The laws are new, and it's too soon to say whether legal pot has made highways more dangerous in Colorado and Washington. Both states report seeing more positive driving-high tests, but it's not clear whether that's because of increased driver use or increased testing.

TAXES: Nobody knows how and at what level to tax pot. Too low, and the states won't be able to afford intense regulatory supervision of the industry. Too high, and pot users may stay in the black market.

DEMAND: Guessing marijuana demand is a tricky proposition. Colorado growers warn that early demand could lead to sky-high prices and shortages, with state production caps still uncertain. In Washington, regulators are taking a new look at supply needs after a recently released study produced a demand estimate that far outstripped earlier guesses.

BANKING: Marijuana legalization hasn't taken away one black-market aspect for the drug in Colorado and Washington: Cash runs the business. Financial services as simple as checking accounts and credit cards are off-limits because of federal guidance to financial institutions. Colorado officials say they're optimistic the U.S. Treasury Department will loosen those rules next year, but it's unclear what that would look like.

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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