Week in Review: Bill Spells Doom for Many WA Dispensaries & MMJ Grows, Boom for Rec Shops

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By Tony C. Dreibus

Big changes are likely in store for one of the nation’s largest medical marijuana markets, and there could be hundreds of MMJ business casualties – but new opportunities for fledgling recreational stores – as a result.

Earlier this week, Washington State lawmakers passed a sweeping bill that essentially seeks to eliminate the state’s thriving unregulated medical cannabis industry, meaning many of the 475-plus dispensaries and scores of collective gardens could be wiped out.

The measure will become law with the stroke of Gov. Jay Inslee’s pen, which is expected any day now.

If that happens, the state will significantly alter a medical marijuana market that hauled in $80 million to $100 million in sales last year, according to Marijuana Business Daily estimates.

Under the bill, dispensaries and collective gardens would basically have to get licenses from the state – and meet a host of regulations – by July 1, 2016, or close up shop.

Many of the details still need to be worked out, such as how the state will respond to those that don’t comply, how many licenses will be available to these businesses and when the permitting process would begin.

But many existing dispensaries and MMJ grows that have been operating for years likely won’t be able to make the transition to a licensed landscape, as they don’t have the capital or resources to meet regulatory and compliance requirements. There also might simply not be enough licenses to go around.

“The deal is that … collective gardens and all MMJ dispensaries as we now know them will be shutdown by summer 2016, no questions asked,” said Hilary Bricken, a lawyer with Canna Law Group in Seattle.

While the state and individual cities have done little to crack down on medical marijuana businesses yet – they have operated in a gray legal area for years – that would likely change if the governor signs the new bill.

Seattle City Attorney Pete Holmes told the Seattle Times the law gives his office the clarity it needs to “usher the 103 or so dispensaries we know of into legitimacy or into a new line of work.”

The measure (Senate Bill 5052) aims to create a more stable environment for the state’s cannabis industry by bringing both the rec and medical markets under one umbrella.

Recreational businesses stand to benefit from the new law, as they wouldn’t have to compete against a proliferation of dispensaries that can sell cannabis at much lower prices because they don’t face the same regulatory and tax burdens. Just as importantly, recreational stores would have increased access to the tens of thousands of MMJ patients that currently purchase cannabis at dispensaries.

A medical marijuana market would still exist, just in a different form than now.

Under the law, stores with a rec license could apply for a medical marijuana endorsement that would allow them to target registered MMJ patients, who would be exempt from paying taxes and could purchase three times as much cannabis as rec users. The stores would also be allowed to legally sell medical cannabis to patients as young as 18 (buyers must currently be over the age of 21 to even enter a rec shop).

Some dispensaries currently operating would likely vie for a rec license with an MMJ endorsement, though some would just attempt to obtain a general retail license so that they could continue operating. Regardless, it’s doubtful the state will award enough new licenses for every existing dispensary, meaning many – even the more reputable players – could be shut out.

The upshot is that some dispensaries that applied for – but did not win – rec licenses previously could get another shot to enter the regulated market.

The law also would force collective gardens to obtain licenses and meet regulations that would impose strict plant limits (60) and follow other rules.

Some other details:

  • A new Liquor and Cannabis Board would replace the Liquor Control Board that currently oversees the state’s recreational program.
  • The state is expected to begin accepting applications for additional licenses once the bill is signed, but when and how many is undetermined.
  • The bill calls for the use of a merit-based system to award licenses, giving first preference to those who applied for a marijuana retailer license prior to July 1, 2014, operated or were employed by a collective garden or dispensary before Jan. 1, 2013, maintained state and municipal business licenses and paid all applicable state taxes and fees. Second preference would be given to applicants who hadn’t applied for a retailer license, but met the other criteria.
  • To determine how many licenses will be issued, the state will need to consider limits on how much marijuana is allowed to be grown. If increased production is warranted, the board will then decide whether or not to open a licensing period for applicants, but only to cultivators “who agree to grow plants for marijuana retailers holding medical marijuana endorsements,” Bricken said.

The bill is quite controversial in the existing medical marijuana industry, as one would expect. Many patients will be unwilling to register for a medical card, and therefore they would tap the black market.

Some see this as a way for the government to “hold patients hostage,” said Karl Keich, the owner of collective Seattle Medical Marijuana Association.

“For my patients who are on a fixed income, the cost is going to go up at least 30%,” he said. “That’s something I’m concerned about as a business owner and humanitarian. Plus, we give away a lot of medicine, and we wont’ be able to do that, so that’s concerning.”

Keich said he’s one of those who meets the initial criteria to give him a leg-up in the next round of licensing. Yet there’s no guarantee he’ll win a permit.

“It’s nerve-wracking,” he said. “We’re hoping there’s no disconnect in Olympia and they issue the right amount of licenses. Hopefully these changes are going to right the system. If (other states) want a great example of what not to do, look at how Washington state has started.”

Ian Eisenberg, the owner of Uncle Ike’s, a recreational retailer in Seattle, said he thinks only a “small percentage” of collective garden owners will convert to the new system.

“Some aren’t good at living under a regulated system,” he said. “A lot of people don’t want government regulations or to pay taxes at all, and that’s a disservice to patients.”

The governor has five business days from receiving the bill to either sign it or reject it. A spokesman wouldn’t say Inslee would definitely pass the bill, but said the governor has wanted a resolution to troubles surrounding the MMJ program for some time.

“He’s been pushing for something like this for two years,” Inslee spokesman David Postman said.

Tony C. Dreibus can be reached at [email protected]

23 comments on “Week in Review: Bill Spells Doom for Many WA Dispensaries & MMJ Grows, Boom for Rec Shops
  1. Windy City on

    …this is so backwards. Shame on the rec store owners who want to destroy MMJ dispensaries and put the patients at risk.

    Unacceptable as the recs appear to care not one iota for those with debilitating diseases. Buy from us or die. Do they even know the cannabinoid content?..

    Reply
  2. Omari Tahir-Garrett on

    IAN EISENBERG, SEATTLE CITY AND WASHINGTON STATE OFFICIALS ARE ENGAGING IN A FEDERAL OUTLAWED “RICO-RACKETEERING ORGANIZED CRIME RING TO SELL AND DISTRIBUTE A SCHEDULE 1 NARCOTIC MOOD ALTERING DRUG CLASSIFIED WITH COCAINE AND HEROIN. UNDER EXTANT FEDERAL LAW THEY ARE SUBJECT TO PROSECUTION FOR ASSAULT, FINE, IMPRISONMENT AND FORFEITURE OF ALL PROFITS AND PROPERTIES USED IN PROMOTING THE ORGANIZED CRIME SCHEME, THE AS THE BLACK TEACHERS IN ATLANTA FOR CHEATING / FORGING (RICO-RACKETEERING) ON STUDENTS TEST SCORES!!! Omari Tahir-Garrett assaulted by Ian Eisenberg on Sunday October 17th 2014 at UNCLE IKES FEDERALLY UNLAWFUL NARCOTICS DISTRIBUTION RACKETEERIN SITE AT 23RD AND UNION, SEATTLE WASHINGTON,COMPLAINT REPORTED TO Capt. Jennifer Dzubay (253 661-4934), Lt. WoodyPerkins and Balinda (360) 664-1632,Glenda Enforcement Customer (360) 664-9878 and Officer Paul Magerl (360) 600-1972 at 355pm, Oct 28th 2014

    captain Jen

    Reply
  3. Al Montano on

    I strongly apose this bill! I think if Marijuana users have to register with the State so should EVERY person that drinks ALCOHOL or PAIN pills should also be registered! Kind of hypocritical to make us register when ALCOHOL and PAIN pills have a black market and have KILLED MILLIONS of people which Marijuana has NOT!

    Reply
  4. Al Montano on

    As a matter of fact I think all of us MMJ patients should push for a law that makes every one that Smokes Any Tobacco Drinks any Alcohol and takes any pain pills! I mene the Statistics say they are all more deadly than MMJ! Only fair!!

    Reply
  5. James on

    You all need to chill out. Dispensaries where never looking out for you, they were after the all mighty dollar. Its about time, medicine is safe, tested and regulated within some guidelines.

    Reply
  6. Brian on

    Slippery slope here, Recreational is far more likely to be made illegal again by the Federal govt then medical. The 502 Rec lobby just planned their own demise.

    Reply
  7. John Doe on

    This is going to make it profitable to sell cannabis illegally again. With the high price and low quality of the rec shops, growers will begin to grow cheaper, higher quality cannabis and sell it on the black market… Thanks WA for creating a system that supports black market sales.

    Reply
    • Sysco on

      Your funny,
      I agree with you that the black market will become more profitable, but with out the mmj industry to protect you
      You better be willing to do the time for your crimes.

      Reply
  8. Earn my trust on

    @ James – You think politicians care more about mmj patients than dispensaries do? Unheardof. How many politicians even bother to receive patient input, or heed their advice for that matter.

    Yet, I have personally had dispensary operators take special requests for uncommon strains with higher CBD levels over the last decade.

    You think government regulation (law) is better than free market regulation (consumer choice) in providing safer, higher quality mmj with broader access points? Again…simply not true.

    The fact is, consumers efficiently regulate markets by saying ‘NO’ to bad growers/sellers, ultimately making them change to better practices or go out of business. Quality in a market is achieved by people saying ‘NO’ rather than at the pen of some Olympian bureaucrat.

    This whole process of legalizing Rec MJ in Washington STINKS of inept politicians and cartel-like benefits to a select handful of fortunate individuals who’ve been baptized into compliance by the WA LCB.

    You simply cannot convince me (nor anyone with a brain and an econ 101 class) that restricting the market for MMJ, both in terms of retail access points and number of producers, will result in better access and quality for patients.

    Reply
    • Sysco on

      Baptized into compliance ?
      What a ridiculous statement the Lcb never wanted this, all they do is apply the letter of the law.
      Do you realize that the recreational market is not making any money?
      In the next few years the rec industry will stabilize and with a few changes at both the local and federal government it will become a legitimate industry.
      And enough with the winning about patients, the medical marijuana in Washington is about making money and evading taxes. It was nice while it lasted.

      Reply
  9. Marc on

    Dispensaries started with real good intentions and then it evolved into a free for all
    Just a bunch of drug pusher hiding behind the mmj
    the black market prices will go back up but you will need to be willing to do the time if you get busted.
    now that it’s legal we will have access to scholars, and university to better understand this amazing plant.
    All of you who have been selling to so called patients go get a job and stop saying you want to help people if you did you would have paid 500 dollars and you could be part of the legal market.
    I have gotten high for years using a medical card for knee pain what a joke.
    Thank you Washington for being at the for front of this revolution 10 years from now Cannabis will be everywhere and available to anyone who wants it.
    Smoke on, and quit the bitching nobody cares about you fakes, and you have one more year to make some easy tax free money then you can all go fuck yourself’s
    And to all the true patients out there you should be celebrating it’s finally going mainstream,
    And don’t be fooled by all the drug pushers you will soon have access to real medicine.

    n

    Reply
    • Windy City on

      …considering the gibberish you just put forth you seem apparently clueless regarding cannabinoids and their useful functions in medical applications. You just wanna get high, OK, but do not deprive those that need it for medical purposes from obtaining it from legitimate sources.

      Your generous but unnecessary use of profanities qualify you as being ignorant regarding mmj and considered QRM to be filtered out when seeking intelligent discourse among other posters.

      Enjoy the day and coming week…

      Reply
  10. nobodysbusiness on

    Those pigs have been going at it for some time now…. I’m surprised it took this long but they did it real quiet like. Filthy dirty rotten governor we have. Is trying to do the same thing with ecigs too, “for the children.” If he gets his way he will destroy two industries in one term. Despicable.

    Reply
  11. Windy City on

    …now those that need specific cannabinoid content will be outta luck as the rec crew only considers how potent they can make their product.

    This needs to be addressed as there are legitimate patients that need specific types and strengths of cannabinoids other than THC(there are dozens of cannabinoids with specific uses).

    Thanks to the rec crew for telling the mmj patients to just get “high”…

    Reply
  12. michael douglas on

    i AM ammj smoker, and have been in the buisness for years. BUT the medical dispensaries have been a serious Joke, let me explain, first off right from the start the whole “Donation” BS was a scam from the getgo, there is NO donation Box,as a joke one time I went in to one of my competitors establishments and offered 5 bucks for a gram, he said”No the price goes 12 dollars for this brand” There are prices for everything. the definition for donation has NOTHING to do with money.so that is a big lie to begin with,second almost every person I know who works for these shops all have a backdoor scam of some sort.
    3rd there are really very few symptoms that marijuana actually treat. I TOTALLY am on board as far as the CBD oil for Pain & sezures,but things like “migrain headaches”, smoking pot just makes ya cough and whats more painfull to a headache than coughing! ect. its kinda like those people who bring these tiny dogs into planes,resteraunt’s
    who say “its my service dog” really! so if Marijuana is to be legal, it needs to be regulated to be legitimized to the federal goverment so they can take it off that ridiculous “schedule 1” law.

    Reply
  13. michael douglas on

    I work in the rec buis now and every sample we send in to be aproved for sale goes through a complete lab testing process for molds,pesticides,ect.so the comment made by the Jackass who thinks dispensaries are more caring than the state is,, well buddy I used to buy & sell alot of marijuana that would have got rejected now.as far as requests, we have em now for CBD product ect.
    the only reason people are whining, is because it takes there scam away.

    Reply
  14. David on

    #7 Brian
    At some point prior to rescheduling, recreational marijuana users could easily find they are once again being jailed and prosecuted under Federal marijuana laws. The finest legal minds agree that in destroying it’s 17 year old MMJ program, Washington just placed every medical marijuana at risk of serving Federal jail time. 5052 leaves all state citizens at jeopardy. The irony is at some point, states once considered “backward” compared to West coast marijuana laws (let’s say, Tennessee and Oklahoma) will have State medical marijuana laws on the books that will pass muster with Federal law. Washington’s legislature just flushed medical marijuana down the toilet, placing every sick and disabled Washingtonian at jeopardy.

    Reply
  15. David on

    I’ve been using marijuana for over 50 years. Never had my pot tested. Lab testing is just a way to screw people out of their hard earned money.take people who purchase a new car and the salesman has tack’s on a “double sick hurt and croak” insurance policy at the end of the sale. It’s Expensive, not worth it and would never have missed it had it not been so expensive and unnecessary in the first place

    Reply
  16. JJH on

    So what you are saying is that quality testing for pollutants toxins and molds are a scam how can marijuana be medical if it is not even tested to see what is in it and if it is clean. the medical shops are simply angry to be losing a sizeable income which if they wanted to pay taxes and be legit about they would get first crack at the next round of Marijuana licenses but since most medical people preferred to be shady and avoid taxes and a real business license no such favor will be extended to them It was on the MMJ market to make itself more legit for 20 years the medical folks chose not to regulate themselves no the state will step in some one has to or the feds will then where would we be.

    Reply
    • mattyice on

      Except that the tests are not accurate.
      Analytical360 is especially fraudulent. Dont believe me? Try testing from them and a few other labs here in the seattle area and see how much the results vary.
      I agree that microbial testing helps but really, bubble hash always fails microbial tests while bho almost always passes, since the butane only bonds to oils.

      Reply
  17. Ilpalazzo on

    That’s government for ya! They don’t care about people, or even people’s incomes – only their own fat wallets. Of course they’d make it so the only weed sold are the stores that jack up the prices 2x so the government can get a hefty 50% take from it.

    Reply

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