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Pot in Washington

The local pot store is celebrating it’s third anniversary this week, it was the fifth retail store to open in Washington State. There are now 505 stores state-wide with 421 reporting sales last month. There are 1197 farmers and processors in the state. Consumers have spent $1.2 billion dollars in the last 12 months, of which $300 million went to the state. The industry ranks just behind breweries in the state economy.

When the state began writing the rules there was no information on anything related to the future industry. No one knew how many people consumed, how much they consumed, where it came from, or how they got it. Colorado had a minuscule amount of date collected, but everything was guess-work. That two years of data is extremely useful now; it’s too young to be making any major conclusions from it, but we can see some patterns forming.

One goal of the rules was to prevent cannabis from “getting into the hands of kids”, which is reflected in the large proportion of the laws and regulations addressing this issue. Every state since then has been driven (beyond common sense) by this goal. At this point in time, it looks like regulations in Washington did not decrease the rate of use by minors. Nor did they increase it. It changed nothing in this regard. Under-age use is the same as it was before legalization.

Another goal was to prevent criminal activity. There aren’t any shocking crime waves or cases piled up in courts. Maybe the biggest story was the exporter taking weed back east in rather large quantities, partly led by a Seattle police officer earning $10,000 a month for his expertise in something. Pot shops have been a target of smash-and-grab type robberies, but the amount taken is always so trivial as to make the perpetrators look foolish. One store only lost it’s stock of THC-infused vaginal suppositories, which makes me wonder what the thieves had in mind. I wonder about THC-infused vaginal suppositories, anyway. Naturally, there was a huge drop in arrests for adults owning and consuming marijuana, as well as farming and selling it.

Advocates of the new law crafted the language to favor Washington residents wishing to operate small-scale “Mom-and Pop” farms and stores. The State wrote regulations to prevent Mexican cartels, Los Angeles gangs, the Chicago mafia, California hippies, and Portland effetes from having any ownership at all in the operations. Restrictions on out-of-state interests are so severe that entrepreneurs are short of capital for expansion. But, the cartels did not take over the Washington businesses. Oregon saw this and took the opposite approach, opening up their licenses to anyone from anywhere, speeding up the process in getting operators up and running and collecting tax money.

Two years ago there were contentious City Hall meetings for every license issued involving the neighbors complaining about the perceived threats of noise, crime, smell, traffic, kids, waste, and who knows what else. Last week a licensee on Marrowstone Island, a neighbor, faced the NIMBY crowd over just those complaints. The zoning authorities quickly dismissed their concerns because those have now been cast into the land-use code, and the license was immediately issued because he was in full compliance.

It’s taken two years for the local jurisdictions to get their acts together. But then, the role of local jurisdictions was never anticipated in the state law and noise from them came as a surprise. In both Washington and Colorado this lead to outright bans in some communities, and moratoriums in others to wait and see. After that experience, other states have codified the locals’ role in system.

It’s not a very well-kept secret that certain small banks in Washington have found a way to service the industry, enough so that the state does not have to accept cash for it’s tax payments anymore. Cash is used by the customers exclusively, though.

Taxes are, by far, the highest in the nation. Unfortunately, now is not the time to challenge the legislature to bring them more in line with the other states.

Washington does not allow any off-license growing. Those that sprout a seed and grow a plant in their kitchen garden are still subject to state felony penalties, as well as federal sanctions. At present the state Cannabis Board is taking input on the topic of home growing so they can study the issue.

Washington is doing everything to eliminate it’s small medical marijuana program. And so is every other retail-legal state except Colorado. Medical programs don’t have anywhere near the rules as retail, medical farmers and consumers can trade goods without paying the taxes that retail does, the products are identical, and they’re sold in the same place. There’s no reason to have a tax-exempt medical program at all in the state.

Nation-wide, the 29 states with some level of cannabis legalization are watching the federal administration for what it wants to do. The most rational thing is for the feds is to simply strike references to cannabis entirely and leave it to the states to figure out, which I think are doing quite nicely. The irrational thing is that the feds try to put the genie back in the bottle and become the subject of ridicule, lawsuits, political blow back, and economic damage while building an even more robust black market.

In Washington, it’s not possible to see what is ahead. In the West, California will be coming online in January, and Nevada is worth watching. There’s a lot to be learned yet….

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