Week in Review: Canada Legalization Advancing, Application Avalanche in WA & Ohio MJ Revamp

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By John Schroyer and Omar Sacirbey

Canada moves toward legalizing recreational cannabis, Washington State gets flooded with applications for new retail marijuana licenses, and the man in charge of the failed MJ campaign in Ohio promises to change his approach in 2016.

Here’s a closer look at several notable developments in the marijuana industry over the past week.

Rec Progress Up North

America’s northern neighbor may be about to throw a can of gasoline on the fire that is the rapidly growing cannabis industry.

New Canadian Prime Minister Justin Trudeau took an important step this week toward fulfilling his promise of legalizing recreational marijuana, instructing his justice minister to begin working on “a federal-provincial-territorial process that will lead to the legalization and regulation of marijuana.”

What Trudeau didn’t do is give the minister a deadline for creating that process. So when sales may begin remains unknown.

“I’m not holding my breath,” said attorney Jason Gratl of Gratl and Co. in Vancouver, British Columbia. “It doesn’t inspire confidence that anything will happen in the short-term.”

Part of the problem, Gratl said, is that in addition to moving slowly, the ministries of public safety and health – with whom the justice minister will need to collaborate – have for years been vocal opponents of legalization.

“You have cemented institutional interests that grate against legalization,” Gratl said.

Russ Orsborn of Orsborn Cannabis Consulting, which has an office in British Columbia, is more optimistic.

His reason? There are dozens of medical cannabis dispensaries already operating in Vancouver with the city government’s approval, and there are dozens of new dispensaries opening in other provinces as well.

“I know a lot of people who are opening up dispensaries, who are saying, ‘I know it’s going to happen, so I’m just going to open,’” Orsborn said.

Because so many dispensaries are already opening, they will force Trudeau’s government to move quickly on setting up regulations, Orsborn predicted. He believes that at least a provisional set of rules for a new rec industry could be in place before the end of next year.

WA on Brink of Explosive Growth

In its process of combining recreational and medical marijuana businesses under a single regulatory system, the state’s Liquor and Cannabis Board (LCB) has begun accepting new applications for retail additional licenses.

To date, it’s received 962 applications, which seems like an enormous number to many people.

But not to Seattle attorney Hilary Bricken of Canna Law Group.

“I’m not surprised at all,” Bricken said in an email. “The city of Seattle had more than 100 brick-and-mortar medical marijuana (dispensaries), and the state would much rather see all of the folks come under the regulation of I-502 than go underground.”

There’s no way to know when the LCB may begin issuing new licenses.

That’s in part because the agency is working to prioritize the applications based on a set of legal criteria, such as whether or not a particular applicant put in for a rec permit back in 2013. Another key factor is whether an applicant is an existing MMJ dispensary that’s been in business since 2012 and hasn’t gotten in trouble with regulators.

LCB spokesman Mikhail Carpenter said there’s also “no guarantee” the agency will have the manpower to get through all of the applications by the time July rolls around, which is the deadline for existing medical dispensaries to either obtain a state license or close down.

“We’re still kind of placing people into their priorities,” Carpenter said.

The LCB is also waiting on a report from Botec Analysis Corp., which is performing a study on the state’s medical marijuana market, before it decides how many licenses will ultimately be issued.

Bricken, however, expects that the previous cap of 334 rec stores will at least double or triple.

And that could lead to some big changes for those in the industry, she added. With more storefronts will likely come more power to negotiate prices for growers, and also likely a drop in prices for customers.

But all of that has years to play out.

Ohio Marijuana Legalization 2.0

Ian James, the executive director of ResponsibleOhio, published what he called an “Open Letter to Ohioans” on Wednesday, in which he vowed to introduce a 2016 legalization initiative that will be vastly different from the one that failed earlier this month.

James promised a “free market” approach with his next initiative.

That stands in obvious contrast to the structure he tried to install in the state constitution, under which only 10 commercial grow sites would have been allowed (and those would have been owned by a handful of wealthy campaign contributors).

But while that may get more political support from cannabis industry insiders and activists – many of whom stood viscerally opposed to ResponsibleOhio – it also creates an obvious problem for James and his supporters: Where will they get the millions they’ll need to run a second initiative?

ResponsibleOhio raised at least $36 million from investors, but much of that was socked away into several private limited liability corporations and never spent on campaign-related expenses because it was intended to be used on the grow sites and cultivation infrastructure.

According to the latest campaign expense filing on Oct. 22, ResponsibleOhio at that point had only $552,000 on hand and had spent nearly $12 million.

Whether or not James has access to the rest of those millions for a second shot at the ballot is unclear; ResponsibleOhio spokeswomen did not return calls for comment on Thursday.

But if ResponsibleOhio will be back next year, it will have at least one other campaign competing against it: Ohioans to End Prohibition (OTEP), which is running its own initiative to legalize both medical and recreational marijuana. That means they’ll be competing for signatures, donors and possibly even votes if both campaigns ultimately qualify for the ballot.

That, combined with all the ill will that James generated towards his own campaign this past year, could mean that it won’t matter how much he walks back ResponsibleOhio’s original ballot measure.

In order for legalization to succeed in Ohio, the state may need a completely new campaign, instead of ResponsibleOhio 2.0.

John Schroyer can be reached at johns@mjbizmedia.com

Omar Sacirbey can be reached at omars@mjbizmedia.com