Legal pot in the west

A couple of weeks ago, the Washington Liquor and Cannabis Board announced they had worked off the 7000 pending cannabis applications that were submitted six years ago. WA has a limit on the number of retail stores, around 550, but about 450 are actually generating revenue. There is a limit on the farmers as well, but that limit was not well thought out and the result is there isn’t a limit.

Stores that haven’t opened for business are mostly in counties or cities that have bans or moratoriums on cannabis licenses. WA did not allow the localities to opt out of the state law, so licenses were issued to people who would then be prevented from opening by some creative local ordinances. That issue hasn’t been resolved legally yet, so the state has implemented a “title” system: In lieu of a retail license to operate in those locales, folk have been issued a title to get a license should their locality allow the businesses someday.

There is too much marijuana being grown in WA, dragging down wholesale prices quite dramatically. Some legal farmers are then tempted to cheat a bit and send product out to the illegal states to get 3 or 4 times the price. Because of the long backlog, several growers had opted to go ahead without any licensing, “spoofing” their farms to look like they are licensed so as not to attract attention.

Retail prices in WA are lower than Colorado, Alaska, Nevada, and California despite having the highest taxes. Oregon generally has the lowest prices because the stores can legally offer deep discounts at the point of sale, something that is severely curtailed in WA. It’s almost universal that an Oregon store will offer a sales price discount of 20% (Special Sale! Today Only!) which is what the state and local taxes are.

It’s obvious to any visitor that Oregon has more stores than WA because they don’t limit the number of licenses, relying on an open and business-friendly philosophy for their regulated market. Oregon has many more unlicensed growing operations because of their history supplying the rest of the nation. Wholesale prices are the lowest in Oregon, and the bulk of the product is exported to the illegal states.

California is issuing state licenses, although they are temporary until the regulations can be finished. Because the regs haven’t been finalized, licensees are free to invent the way things are done. More importantly, locales must approve the businesses before they can apply for a state license, which has really slowed the process down. There isn’t a logjam at the state level. A visitor will have to exert some effort in finding a retail store since they are not at all common. Retail prices are very high to compensate for the high start-up costs, and legal growers for the state market are few (relatively speaking). Hopefully the state system will be nailed down this summer and it will begin to operate as it was intended.

Colorado keeps it’s legacy medical system, though the other states have basically eliminated it. It’s not politically tenable to outright ban the legacy medical programs in any state, though they can make it irrelevant and costly. One of these days Colorado taxpayers will tire of supporting two systems when one doesn’t generate the revenue that the legal system does.

Arizonans were convinced not to vote for legalization, leaving them only with their existing medical program. All medical programs are weakly written and not at all comprehensive enough to offer any real control by the state, so the Arizona medical market is booming as the loopholes are discovered. Their market will very soon resemble the other states but without the high taxes, the regulations, and the enforcement efforts. Should Arizona reconsider this approach, it wouldn’t surprise me to see the opposition for doing so will come from the existing operators who won’t want the burdens of state regulation.

New Mexico has been seriously stymied in their legalization efforts by some elected officials who are adamantly opposed to it. But they do have a rudimentary medical system that is full of loopholes and operators have figured out how to take advantage of that. So lately, the market has been growing quickly.

Alaska is doing fine, but they have some big obstacles (like geography) in bringing up their market. As always, Alaskans will do what they want, just a bit slower.

All legal states are growing far more than they can legally sell, so the supply exported to the illegal states is plentiful and expensive. Watch this year’s election results to see what a large number of states are doing to this situation.

Canada

Justin Trudeau made a campaign promise to legalize marijuana, and demanded such by summer of 2018 when he got elected. He required two conditions: keep it away from kids, and away from organized crime. After that the provinces were charged with developing their own details.

Ignoring the fact that the deed wasn’t done at the federal level, the provinces dove in and invented yet another set of laws to regulate the industry. Those laws are now being implemented, but the feds aren’t quite there yet. This is how it works in Canada, the feds point in a general direction, and the provinces figure it out.

All that law-making and regulation will pretty much be complete this summer and the nation-wide market will go into full swing. Contrast with the US experience.

In anticipation, many Canadian companies have opened up export deals all around the world. Great for them as the US strictly prohibits exports. That’s a whole bunch of money the US conceded to Canada.

Here in America, it’s generally regarded that Humboldt County, California grows the best weed in the world. That’s a tad bit of propaganda, because if you ask the world, they’ll likely say “BC Bud”. It is a religion thing: BC-developed genetics were quickly mixed with Humboldt strains to make the present-day cannabis, so there is really no way to say what’s best.

But BC Bud will be on the world market far sooner than Humboldt Grown. Watch Canada to see what the world’s first legal regulated market looks like.

Thoughts on potential jurors

I’m laughing at a couple of my fellow potential jurors. #42 sat next to me (I was #41), a large bulky fellow of the type routinely seen around the marina, doing the “lift this, carry that” type of work. When confronted with questions about “beyond reasonable doubt” and “Would jury duty impede your income?”, his only answer was “Uh?”, except once when he answered “I guess”

#28 explained early on she was manic-depressive, could control herself for a few hours with timely administration of medicine, every 2 hours. Her problems were confounded around men with white shirts and ties (think defense attorney). She also required a special diet that needed refrigeration. The judge and bailiff consulted and she (the judge) announced that a refrigerator would be made available.

#46 was odd. During the day, the attorneys asked three times for anyone in law enforcement. At the absolute end he raised his hand and said he was a retired (30 years) LA policeman, an investigator in internal affairs. He should have known he wouldn’t be welcome on a jury.

At a recess, juror #28 was dismissed by agreement between the judge and attorneys. The big guy next to me wasn’t excluded until the end. There were four others dismissed for obvious psychological problems.

If you can’t, or don’t want to serve on a jury, do everyone a favor and call the number on the summons to say so. You won’t go to jail or get a ticket, but you will be given a firm lecture on civic duty and such, at worst. Just say so and save us all a bunch of time.

Close Call for Jury Duty

I was looking forward to possibly serving on a jury in Jefferson County, but after spending an entire day on hard benches sitting through the jury selection process, I missed being selected by just 2 numbers. I was number 15, but there’s only 13 seats in the jury box.

The case was a meth head that violated a restraining order and robbed some stuff. He was apparently going to plead “the meth made me do it”. I’m glad I didn’t have to sit through the case.

The attorneys, the judge, and the jury seemed to be reasonable people, so he’ll get a fair trial. Unfortunately, there’s not a lot our society can do for a meth addict besides sending him to jail.

Cannabis Cup in Sacramento

At this point in time, the only argument in opposition to legal cannabis is the fear of the unknown. And there are still a lot of unknowns, but for the most part the real risks have been mitigated by the regulatory system. A big question has always been about public consumption, and it’s been fear that no one has allowed such in any way, shape, or form. Rather than try to codify consumption etiquette, all localities have opted for complete prohibition.

Since the 90’s, public consumption has been common at major festivals and organized events. Like Hempfest in Seattle, where the law is challenged by putting up 50,000 people smoking joints against however many cops the city wants to waste on the enforcement effort. There have been many such events around the country, and the cops have not won a single battle, so now they just make an appearance.

California allows such events at fairgrounds, an entity that is separately protected by law, and this weekend such an event is occurring in Sacramento at Cal-Expo. There is selling, sampling, and consuming on the grounds by licensed purveyors and adults. People are watching closely from all over the world to see how this goes, the first time a legal cannabis public activity has been permitted by the government.

It’s going well, as anticipated. Alcohol is not permitted

I assume that the legal states will be watching and seriously considering adjusting their laws to allow similar events, if all goes well in CA.

Legal pot in California

The new legal marijuana system in California is coming online much slower than anticipated. The main factor is likely the “dual permit” system, whereby a state license won’t be issued until the local jurisdiction issues a permit. Over half of the local jurisdictions currently do not issue permits, either with outright bans on legal pot businesses or because they are still developing the rules for issuing licenses.

Costs for a state license are high, which discourages a lot of businesses, and some local jurisdictions are likewise demanding large fees for new businesses. Built-in advantages for small enterprises were eliminated at the state level just before implementation, giving a substantial advantage to the well-heeled corporate types. In addition, limits on the number of growing licenses were dropped, clearing the way for moneyed organizations to buy many dozens of licenses to build the largest cannabis farms in the world.

Stores are concentrated in the big cities, smaller towns (that allow stores) have maybe 1 or two places licensed. Four months in, the state has already noted that tax collections are much lower than anticipated, and their projections were on the low side to begin with.

Because not all of the state rules have been finalized yet, there’s a free-for-all as stores make their best guesses on packaging, labeling, and advertising. Since all of those rules will change, investing in marketing or packaging equipment is stymied.

California has a distributor system whereby all cannabis grown is sold to a middle man for packaging, which is then sold and delivered to the processors or to stores. But that system isn’t running yet, causing even more confusion. I am very curious how this system will work, since no other state has such an arrangement. Nevada tried it, but it’s not working yet, and may not.

Only licensed entities can sell to each other, which means that no matter how many growers there are, if they haven’t a license legal stores can’t buy product from them, creating an artificial shortage in the stores. Variety on the shelves is very thin, compared to Washington and Oregon.

Retail prices are high, about double those in WA and OR, and about the same as Nevada. Taxes are not the explanation as WA has much higher taxes. We saw this in all the legal states: initially, prices are high to recover the costs of start-up and compliance, and then go down as the competitive environment matures.

Meanwhile, the mature illegal market is thriving without the high start costs and compliance costs. Unlicensed growers have a much easier time selling product out of state, at twice the price they get in CA. Some of the potential businesses look at the obstacles and decide they’ll stick with the system they have been using quite successfully for twenty or thirty years. Better you take the risks you know than betting everything on an unknown.

Big money from NYC hedge funds and Canadian investors are going into shockingly enormous growing operations in the Central Valley and the SW deserts. The state already grows about 8 times what it consumes, and this will make the overproduction problem much worse. Everything so far conspires against the family-owned operations.

We would expect the largest market in the world to be complicated, expensive, and slow, so time must be allowed before we see what California’s system looks like.

Downtown Port Townsend

When I first heard of this street project, I knew that the city would be able to do it without closing down the sidewalk or the businesses. They’re doing it.

Water Street is PT’s main drag through downtown. It’s the only drag through town. PT is rebuilding Water Street, from sidewalk to road surface to utility locations. During the winter, tourist traffic is miniscule, but the shops stay open just in case. Therefore, there must be a walkway and a way for cars to travel, while those things are being replaced. A tricky problem, but they figured out how to do it.

The goal is to get it finished before the tourist season. Or die.

Back in PT

I’m back in Chimacum, looking forward to another week of rain and cloudy skies.

Almost back

The winds, rain, and thunderstorms at Newport weren’t going to let up for at least a week, so I grabbed a break in the action to head to I-5. Tomorrow I should reach Chimacum, but with plenty of rain along the way.

Today a slide blocked 101 on my aborted route, so I dodged that one.

Newport

It was a pleasant day to drive to Newport, to wait out a storm. When I get a calm day I’ll likely head to I-5 to avoid the nasty weather. Winds have been high, 40-50 mph at times.