December 5, 2012

12 Things to Know About New Washington Marijuana Law as Legalization Takes Hold

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Washington is set to become the first state in the nation to formally legalize marijuana when its voter-approved initiative goes into effect tomorrow.

But those hoping to grow and/or sell cannabis will have to wait to get involved, as storefront retail marijuana locations and cultivation operations are still illegal at this time.

Here’s a quick overview of the new law and related business information:

#1. Starting Dec. 6, adults 21 and over can posses one ounce of usable marijuana, 16 ounces of infused product in solid form or 72 ounces of infused product in liquid form. However, the distribution of marijuana for non-medical use is barred for at least a year. Translation: You can’t start growing or selling cannabis (even to just your friends) for recreational use just yet. The Washington State Liquor Control Board must first develop rules and regulations tied to retail sales before any stores are allowed to open. Under the law, the state must finalize those rules by Dec. 1 of next year. Even then, however, you won’t be able to grow marijuana at home unless you are an MMJ patient.

#2. The regulations could include everything from security and hiring requirements to advertising and labeling rules as well as limits on hours of operation and record-keeping methods. The state could also set limits on how many retail operations will be licensed in each county.

#3. Once distribution rules are set, entrepreneurs interested in starting a business to cultivate, process, package/label and sell marijuana will have to obtain licenses from the state. Cannabis must be sold “in standalone, marijuana-only stores operated by private Washington businesses.”

#4. License applicants must be at least 21 years old and have legally resided in Washington for a minimum of three months.

#5. Licenses will only be issued to applicants whose businesses are at least 1,000 feet from “the grounds of any elementary or secondary school, playground, recreation center or facility, child care center, public park, public transit center, or library, or any game arcade admission to which is not restricted to persons aged twenty-one years or older.”

#6. Retail stores might not open until the spring of 2014 – or even later – depending on how long the state takes to develop regulations and how long the permitting/licensing process takes.

#7. The application fee for a license to produce, process, package or sell marijuana is $250, with annual renewal fees set at $1,000. Operators will need a separate license for each location.

#8. All licensed marijuana growers and retail operations will eventually have to send marijuana samples to accredited third-party testing labs to ensure compliance with state standards.

#9. Retail stores are limited to just one outside sign measuring up to 1,600 square inches identifying the business by its name.

#10. The state will levy a 25% tax on all sales of marijuana and infused products by licensed producers and retailers. Washington’s Office of Financial Management estimates that legalization will create $1.021 billion in gross sales of marijuana grams per year, providing a windfall of tax dollars for the state.

#11. Medical marijuana dispensaries can continue with business as usual, given that MMJ laws remain the same.

#12. Businesses that don’t deal directly with marijuana but want to tap the emerging market can start operating at any time. Expect to see dozens, if not hundreds, of consultancies, hydroponics companies, legal firms and other ancillary businesses crop up over the next year.

There’s still a lot of uncertainty tied to how all this plays out, particularly because the federal government hasn’t yet said how it intends to respond to legalization.  We’ll likely see plenty of hiccups and confusion along the way. But Washington – as well as Colorado, which officially legalizes marijuana next month – will develop a blueprint for other states that eventually move in this direction

“It is a great responsibility and privilege for Washington residents that are in the cannabis movement or making the new laws.,” Greta Carter, executive director of the Washington-based Coalition for Cannabis Standards and Ethics, said in a release. “All eyes around the world are watching us, so we intend to make them proud and show the federal government that allowing Washington to regulate cannabis is good policy.”

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