Washington Releases First Regulations Regarding Legalized Marijuana Industry

It's been nearly eight months since Washington voters legalized marijuana, and now they finally have a few rules in place regarding their new legalized marijuana industry. Last fall, Washington and Colorado became the first states to legalize the sale of marijuana to adults over the age of 21. This historic moment, however, means that Washington and Colorado must pioneer the way for the new legalized marijuana movement and this requires putting the appropriate laws and regulations in place.

These new recently released regulations are based on hundreds of hours of internal research and deliberation. The staff at the state Liquor Control Board spent many hours visiting marijuana growing houses and studying the science behind what affects marijuana potency and how people get "high". They consulted with multiple industry experts and obtained input from over 3,000 individuals statewide. The board hopes that by creating a tightly regulated system, they can ensure that both large and small marijuana operations have a place in this emerging marijuana market.

Some of the new regulations are:

·         No sale of marijuana extracts allowed (such as hash)

·         All pot related businesses must have security systems and 24 hour surveillance

·         Any marijuana product sold would carry a label stating that this product may be "habit forming"

·         Marijuana will be tracked from seed to store

·         There will be a cap on the number of retail stores in each county

·         No cap will be placed on the number of licensed growers or processors

·         A criminal history point will be used in determining eligibility to grow, sell, or process pot

·         Criminal and financial background checks will be obtained on all financiers of pot businesses

Seattle City Council Considers New Zoning Laws for Marijuana Operations

Members of the Seattle city council have recently proposed a string of zoning ordinance changes that would hopefully lay the groundwork for how commercial marijuana operations will work in the future. While the city council sees these zoning proposals as positive progress, pot advocates warn that the plan could hurt the economy and send jobs outside of Seattle.

Marijuana lobbyist Phillip Dawdy warns that the city council needs to leave more than 10,000 square feet or people will just go outside of Seattle. This would lead to a loss of hundreds of jobs and the tax revenue that follows.

Seattle city council members want to restrict the pot industry from encroaching on the city's historic districts off limits to the pot industry. In addition, they want to keep a 1,000 foot buffer between pot stores and schools, parks, neighborhoods, libraries, and daycare centers.

Pot advocates believe, however, that the city council shouldn't be wasting their time rewriting zoning laws. Instead, they hoped that the city's leaders would be reaching out to the federal government who continues to threaten medical marijuana businesses in Seattle.

"Informing them that Seattle citizens are tired of these ridiculous laws, and as a city council, you don't want to see legal businesses within the city of Seattle to be underneath threat by the federal government."

                             --Jared Smith, the Responsible Marijuana Project

Federal Crackdown on Seattle Dispensaries Signals Return of War on Marijuana

The Drug Enforcement Administration has ordered 11 Seattle medical marijuana dispensaries to close their doors and cease operations within 30 days. Even though November's voter approved Initiative 502 legalized marijuana for adults over the age of 21 throughout the State of Washington, the 11 dispensaries received DEA letters because the distribution of marijuana is still illegal under federal law. The letter informed dispensary owners that they had 30 days to cease operations or their properties may be legally seized under federal drug trafficking laws.

At the present moment, it remains unclear why these particular dispensaries were singled out because all owners are fully compliant with state and local laws. One thing is certain, however, these letters signal a return of the war on marijuana.

“These letters suggest that if my clients remain in business, they could lose their companies, their homes, their cars, basically every piece of property that the Feds consider an asset. ”

---Seattle criminal defense attorney Kurt Boehl

These letters are strikingly similar to letters that were mailed last summer to more than 2 dozen dispensaries in the Seattle community. Last summer's letters referenced federal drug sentencing laws that prohibit the sales of marijuana within 1,000 feet of a school, park, or other type of sensitive location. Yet, neither Washington nor Seattle prohibits dispensaries from operating within 1,000 feet of a school or park and there is currently no federal law governing medical marijuana dispensaries and their proximity to schools.

Polls Show That Medical Marijuana Support Has Never Been Stronger

A poll released earlier this month showed that 85% of all voters agree that adults should be allowed to use cannabis for medicinal purposes if a physician prescribes it. This means that 9 out of every 10 Americans believe that medical marijuana should be legal; the highest level of public support ever reported. Although respondents were divided on whether they believed that most patients truly needed medical marijuana.

Currently, 18 states and Washington D.C. have enacted laws that authorize medical marijuana and numerous more states have laws pending in state legislatures. Some of these states include Illinois, New Hampshire, and New York.

Yet despite the overwhelming public support for medical marijuana law reform, there is still little federal support. House Bill 689, the States' Medical Marijuana Patient Protection Act currently only has less than 4% of the entire U.S. House of Representatives behind it. A bi-partisan group of US representatives have also introduced legislation known as the Respect State Marijuana Laws Act (House Bill 1523), but it is unknown whether this will get passed in the near future.

While the majority of Americans have warmed to the idea of legalizing medical marijuana, less than half the population are in support of broader legalization for recreational use. In fact, only 46% of voters favored broader legalization of marijuana. At the present time, only 2 states have voted to legalize recreational marijuana—Colorado and Washington.

Washington's Pot Consultant Cautions that Selling Marijuana may not be Highly Profitable

Washington's recently appointed pot consultant warns that recreational sales of marijuana may not be as profitable as many experts believe due to heavy taxes, regulations, and competition from untaxed collective gardens. In addition, it will most likely be a small number of heavy users that account for the majority of the sales of marijuana. Many of these users are already acquiring their marijuana from collective gardens that have already sprouted across the state.

“What if you gave pot legalization and nobody came? It is entirely possible that by the time we finish regulating and taxing this product, it’s going to be uncompetitive with what you can get at the collective gardens.”

                             ---Mark Kleiman, Washington's Pot Consultant and UCLA Professor

These are the challenges that Washington legislators will be facing over the next 12 months. If they tax recreational marijuana too heavily, they risk increasing the black market supply and lose valuable profits. If Washington and Colorado want to make recreational marijuana profitable, they need to have people come to the legal market rather than alternative ones. This means keeping costs competitive and taxes down.

Unfortunately, keeping the recreational market competitive may mean changing the medical marijuana market in Washington, something that patients and medical marijuana growers fear. While Kleiman is not leaning in that direction for now, the future remains cloudy for Washington's medical marijuana industry. 

Federal Legalization of Marijuana Would Generate Billions in Tax Revenue

Don't expect marijuana to be legalized federally any time soon, but if it is, experts suggest that it could bring in billions of dollars in tax revenue. 2010 research from the Cato Institute estimates that legalizing marijuana federally would generate $8.7 billion in federal and state tax revenue annually. This would help Washington lawmakers balance the national budget, something that has eluded them in recent years.

The researchers assumed that marijuana would be taxed similarly to alcohol and tobacco. The income earned by pot producers, sellers, and distributors would also be subject to standard income and sales tax. In addition, state and federal authorities could save billions in money that they currently spend trying to regulate and prosecute marijuana use.

Currently, Washington and Colorado are the only two states that have legalized marijuana, but more states are considering it, including California and Oregon. It seems that the majority of Americans also support the legalization of marijuana, which was reflected in several polls across the country.

"We don’t know the size of the marijuana market right now, and we certainly don’t know what would happen to the price and the demand for marijuana under different levels of legalization. But we do know that legalization would lead to a positive revenue impact on the income and sales tax side."

                   --- Carl Davis, senior analyst at the Institute on Taxation and Economic Policy 

Washington Delays Pot Sales Till Spring

The State of Washington is delaying pot sales until next spring, because the original timeline for granting marijuana growing and processing licenses is being pushed back until December .Washington's Liquor Control Board has been in charge of devising the rules that will govern this new industry. This includes specifying how the plants will be grown, how the product will be tested, and how many stores will be allowed to sell marijuana. This official timeline was changed based on input from several public forums.

In mid-May, the Liquor Control Board will begin drafting rules for all license types and these rules are expected to become effective in August. In September, the board will begin accepting applications for growing, processing, and retail licenses in Washington.

“If you were interested in becoming any of our licensees, you’d want to have a good idea of what the business landscape is going to be. For example, if you want to grow, how much competition will you have? How many retailers will there be? You’ll be able to get a sense of that right from the beginning.”

                             --- Brian Smith, Spokesman for the Washington Liquor Control Board

All eyes are on the State of Washington and on Colorado, since they were the first states to legalize recreational marijuana for adults over the age of 21. If this goes well, then other states in the country are sure to follow. As a result, the Liquor Control Board is eager to get this thing right---the first time.