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.

Washington Lawmakers Continue to Push for Federal Marijuana Tax

Washington legislators are salivating over the different types of taxes they can impose on the state's new recreational marijuana industry. Both Washington and Colorado state lawmakers continue to push for a federal marijuana tax on the sales of recreational marijuana. This tax would be allocated for public services and schools.

Some estimate that a federal tax on marijuana would bring in as much as $100 million in potential revenue. In California, the director of the California National Organization for the Reform of Marijuana Laws estimates that if California legalized marijuana, the state could bring in as much as $1.2 billion in tax revenues.

Yet in the industry, there are many that believe these estimates to be too high. Once marijuana is legalized, they expect the price to fall substantially, which will bring in lower than anticipated taxes. They are also concerned that increasing taxes on recreational marijuana will only drive people to purchase the product from illegal dealers. Even with these warnings, however, Washington state lawmakers are considering adding a voter-approved 25% tax to marijuana production.

Colorado is pushing or a federal tax code that would allow the state marijuana business to claim tax deductions. Until then, marijuana growers, producers, and sellers, wait anxiously to see how the new taxes and deductions will affect their new enterprise. 

Seattle Pot Tourism Set to Take Off

When the State of Washington voted to legalize marijuana in November, legislators envisioned a tourism explosion. As such, they have begun to prepare for this sudden influx of visitors in an attempt to prevent pot tourism from opening the door to illegal activities. A new state-hired consultant projects that the State of Washington may earn an additional $180 million a year in tax revenue from marijuana sales alone.

Entrepreneurs are also preparing for marijuana tourism as a serious tourism industry and would like to see Washington's pot tourism take-off in the coming years. They have already begun planning different business models in order to take full advantage of the pot tourism. Even Washington's wine industry has anticipated full tours through organic pot farms, similar to winery tours and brewery tours.

Washington's new pot tourism will mean that more individuals will be able to get into the mix, including tour guides, guidebook writers, and even smoothie companies who are looking to sell marijuana infused smoothies. Local artists have even begun to create merchandise and art works that in an attempt to sell Washington's new "brand" of tourism. These coffee mugs, t-shirts, and hand towels will depict the most popular marijuana strains.

Even the Seattle police have gotten into the mix and have provided a guide to the legal use of marijuana. This guide is titled "Marijwhatnow? A Guide to Legal Marijuana Use in Seattle."

Washington Medical Marijuana Community Wants to Remain Separate

The State of Washington recently hired a pot tsar to help them determine exactly how to regulate the production, distribution, and sale of legalized marijuana. Yet even as the state continues to move forward with legalized marijuana, providers and patients in Washington's medical marijuana community would prefer to remain segregated from I-502's rules, licenses, and taxes.

Currently, state laws allow patients who have medical marijuana authorization to grow their own cannabis plants. They are also legally protected and allowed to participate in collective gardens. The difference between medicinal marijuana and recreational marijuana has a lot to do with a compound called cannabidiol (CBD). This compound helps provide pharmacological effects that can aide patients suffering from cancer, AIDS, glaucoma, and other chronic-pain conditions. Medicinal marijuana plants are often bred to yield lower levels of THC and higher levels of CBD.

While the medical marijuana community might be exempt from I-502's rules, a new tax is currently being proposed in the Washington state House. If this passes, it will tax medical marijuana 25% in order to avoid an underground market for medicinal pot once recreational marijuana is legally sold. Finance Chair Reuven Carlyle wants to treat medicinal marijuana the same as recreational marijuana—especially when it comes to taxation. This would mirror voter approved I-502 for medicinal marijuana in the State of Washington and is not necessarily welcomed by marijuana advocates and patients who rely on medicinal marijuana for relief.

Marijuana Decriminalization Bills Continue to Advance in Four New States

Four states recently advanced marijuana rights this month. Hawaii, Maryland, New Hampshire, and New Jersey have all passed measures to reclassify minor marijuana offenses. This would decriminalize the offenses and make them punishable by only fines, with no criminal record, jail time, or arrests.

Hawaii

In Hawaii, the Senate unanimously passed Senate Bill 472 which would change marijuana possession from a criminal misdemeanor to an infraction. On March 14^th, this Bill was revised to cap fines at no more than $100 for violations for infractions of possessing 20 grams or less of cannabis.

Maryland

In Maryland, Senate Bill 297 was passed to significantly reduce penalties for non-medical use of marijuana. Under this bill, minor marijuana offenses would be punishable by only a fine of $100, instead of the current penalty of $500 and up to 90 days in jail. The bill will now go before the House on March 28^th at 1pm.

New Hampshire

New Hampshire House members recently voted in favor of House Bill 621 that would decriminalize marijuana possession offenses and make them an infraction, punishable by only a fine. Currently, New Hampshire's law punishes those found guilty of marijuana possession up to 1 year in jail and a $2,000 fine.

New Jersey

Assembly Bill 1465 took one step further in New Jersey and now awaits action by the Senate. This would decriminalize possessing up to 50 grams of marijuana. Possessing up to 50 grams of marijuana is currently punishable by up to 6 months in jail, a $1,000 fine, and a criminal record .

The majority of voters continue to support pot reform and polls found that 6 out of 10 voters favored removing criminal penalties for first time marijuana possession offenders. Currently, 15 states have now decriminalized marijuana possession to a fine-only offense.

Washington Pot Bill Would Tax Premium Marijuana Strains

A bill is being introduced in the state of Washington that would tax marijuana brand names and trademarks. This bill was heard by the House Finance Committee and it calls for a marijuana tax of $3.60 per $1,000 on all trademarks, trade names, patents and copyright marijuana strains. This would be in addition to the 25% tax that will be assessed at each stage of the marijuana process, including the selling, growing, and processing of marijuana.

"I think that this reflects the uniqueness of the situation. What was the value of Marlboro as a trade name back when it was filed as a trade name or brand name?”

                                      ---Jeff Morris, Washington Democratic Representative

The bill specifies that this specific tax revenue would go into a special fund for agricultural research, specifically research for health benefits. Some of this research includes research that is currently being done at Washington State University to create plasma from wheat to make gluten-free wheat. Although Morris was quick to point out that this tax was not meant to replace state funding of research, only to enhance it.

At the present time, the amount of this tax's potential revenue is unknown, mostly due to the fact that this industry does not yet exist and the federal government may still block Washington's pot law from actually taking effect.

New California Marijuana Bill Attempts to Regulate Medical Pot

A new bill has recently been introduced in California that would impose state control over their medical marijuana industry, which has been unregulated since 1996. Assembly Bill 473 was introduced by Assemblyman Tom Ammiano and it would create a new agency inside of the California Department of Alcoholic Beverage Control that would help to regulate medical marijuana. This new department, known as the Division of Medical Cannabis Regulation and Enforcement, would be responsible for regulating the growth, supply, and sale of medical marijuana throughout the State of California.

At the present moment hundreds of thousands of legal medical marijuana patients depend largely on the rules and regulations of each city and county in California. This creates confusion since what is tolerated in San Diego is not necessarily tolerated in Los Angeles, etc. There are currently more than 50 local ordinances and a variety of laws throughout those ordinances. State regulation would bring continuity to the medical marijuana business and prevent confusion for law enforcement officials and patients who require specific strains of medical marijuana. It would also set up a structure for statewide licensing fees.

“California has been in chaos for way too long. Cities have been looking for state guidance, dispensaries feel at the mercy of changing rules and patients who need medical cannabis are uncertain about how their legitimate medical needs will be filled.”

                                                Tom Ammiano, California Assemblyman

Ammiano is no stranger to the medical marijuana issues that California faces. He proposed a similar bill last year that passed in the House but eventually stalled in the Senate. His last bill, Assembly Bill 2312 had full support from medical marijuana patients, dispensaries, and advocates.

Washington Picks its First Pot Consultant

The State of Washington has tentatively chosen their new marijuana consultant. Mark Kleiman is a professor of public policy at UCLA and the head of Botec Analysis Corp. Botec has evaluated government programs in the past, relating to drug abuse, crime, and public health and provided in-depth analysis and consulting for these programs. Now, Kleiman and Botec will be responsible for advising Washington state officials as they attempt to develop rules for new legal marijuana laws.

Washington and Colorado made headlines last year when they became the first states in the nation to pass laws legalizing the recreational use of marijuana. They are now in the process of setting up rules and systems for state-licenses growers, processors, and retail stores. This also includes developing rules for marijuana taxing. According to the Associated Press, sales of marijuana are expected to begin at the end of 2013 at the earliest.

Washington State's Liquor Control Board is currently trying to determine how many growers and stores they should allow, how much pot should be produced, types of packaging, and the appropriate testing of THC content. Even while Washington gears up for its own pot industry, marijuana remains illegal under federal law and many wonder if the government will attempt to block the licensing schemes from taking effect.

‘‘Hopefully the feds will cooperate so Washington won’t be sending money down the drain,’’ 

                                      --Khurshid Khoja regarding the new pot laws

Some of Botec's responsibilities will be to cover quality testing to determine the appropriate levels of THC, statistical analysis of how much marijuana to produce, and development of regulations. He faces a daunting task, since marijuana has never been regulated or legal before in this country. If Washington State produces too much marijuana, then there is a risk of it being trafficked out of the state. Producing too little marijuana results in a dangerous spike in the black market. 

Author of Pot Law Downplays War on Weed

The author of Washington's new legal pot law said that there is really nothing new about 8 former DEA chiefs' demands to nullify the new pot laws in both Colorado and Washington. Alison Holcomb said that these are the same arguments that she has been hearing for years and some are accusing these DEA chiefs of irrelevant meddling in the state's affairs. While these arguments may be nothing new, a bigger issue looms on the horizon for these two states: how to respond to legal marijuana for adult recreational use.

According to the federal government, marijuana is a dangerous and illegal drug that has no medicinal value and should not be used either recreationally or medicinally. In addition, a United Nations drug agency recently urged the U.S. to fight legalizing marijuana in these states because it directly violated international drug treaties.

If the federal government tries to challenge Washington's legal pot law, then State Attorney General Bob Ferguson said that he is ready to fight and respond legally.

"I understand their perspective, but my job as lawyer for the state is to uphold Initiative 502 and that's what I intend to do."

                   --Washington State Attorney General Bob Ferguson

For now, legislators and Washington residents await U.S. Attorney General Eric Holder's decision on how the federal government will respond to adults who choose to use legal marijuana recreationally. His decision is imminent and is expected to be announced sometime this month.

California Voters Strongly Support Legalizing Marijuana

California is currently the state with America's largest medical marijuana industry and it looks like California voters would like it to stay that way. A California Field Poll released in February 2013 showed that voters strongly support the existence of medical marijuana dispensaries. In addition, they favor legalizing marijuana for recreational use and would like the federal government to stay out of California cannabis businesses all together. In fact, 67% of Californians oppose an ongoing crackdown on businesses who are selling pot for medicinal use.

This poll's results come at a time when the California State Supreme Court is deliberating on whether cities and counties in California have the right to ban marijuana dispensaries or not. This poll also comes only three months after Colorado and Washington both passed measures to legalize marijuana.

"This poll…heartens me and makes me feel validated"

          --Steve DeAngelo, Director of California's largest medical marijuana dispensary

However, California's four U.S. attorneys do not seem to feel the same way as their voters. All four have brought criminal cases against some of the medical marijuana growers and even sent threatening letters to several other growers in attempts to seize their properties.

Many believe that California politicians, who continue to oppose medical marijuana and its distribution in California, are going to see serious consequences at election time and that this poll demonstrates the growing public trend favoring legalizing marijuana.

"I think it shows that it's going to in in 2016, and it's just a matter of writing the best law that we can."

          --Richard Lee, Proposition 19

Hawaii State Senate Makes Moves to Decriminalize Pot for Personal Use — But will Fine Users with $1,000 Civil Penalty

Hawaii may be joining the ranks of Washington and Colorado in the decriminalization of cannabis, with its state senate unanimously approving a bill to allow personal possession if up to an ounce.

However, it's not entirely clear toking for those looking to get a little Maui in your wowie — the bill would fine those caught with pot for personal use $1,000. The fine would be a civil, not criminal, penalty, reports Honolulu TV station KITV.

 The rationale of the bill is that it would relieve the state's courts of their backlog of marijuana cases, while emphasizing that possession is still a crime. Despite the message the senate wants to send, law enforcement is against the bill and believes it will make enforcement more difficult.

Medical Pot to be Taxed Three Times, If Washington Law Passes

Washington state lawmakers are considering a bill that would apply a 25 percent tax at each of the growing, distribution and selling levels involved with medical marijuana.

Steve Schechter, owner of a dispensary, told the The Everett Herald that a an ounce of pot currently going for $280 in his shop would go up to $350 if the new law goes into effect. Schechter added that the price hike would price medical cannabis out of the reach of those who need it the most.

There's also no guarantee that the revenue will be put toward any research regarding pot, rather than being absorbed into the larger state budget.

The taxes are being proposed on cannabis flagged for medical use because without it, pot sold in dispensaries would be cheaper than marijuana sold for recreational use. Local and state sales taxes would also be charged.

Oregon Congressman Puts Name on Legislation to End Pot Prohibition, Allow Standard Business Deductions for Dispensaries

While many congressmen say something should be done about marijuana, Oregon Representative Earl Blumenauer is taking up the cause of actual federal reform of marijuana laws, Politico reports.

Blumenauer, along with 13 other co-sponsors, introduced legislation that would allow medical marijuana use at the federal level and allow dispensaries to take deductions other business are allowed to take.

Though many states have OK'd the medical use of pot (most by popular vote), the federal government continues to shut down dispensaries on the grounds of violating drug laws and despite promises made by President Barack Obama that he would not make medical marijuana prosecutions a priority.

The IRS has ruled dispensaries are not eligible for standard business deductions such as rent and payroll. Without these deductions, a dispensary's tax rate could hit 75 percent.

"Frankly, the people in the federal hierarchy are in an impossible position," Blumenauer said. "[This bill] gets the federal government and the Department of Justice out of this never-never land."

Pot Sells Out — MBAs Poised to Invade Legalized Marijuana Industry

Though the popular image of the medical marijuana grower and dealer is of a hippie eschewing anything to do with "the man," button-down Ivy League MBAs — for better or worse — are becoming the new face of legalized cannabis.

Seattle NPR affiliate KPLU profiles Privateer Holdings, which developed the Leafly website (known as the Yelp of medical marijuana). With the passage of legalized pot in Washington, the company's partners, Yale MBAs, have employed lobbyists to push legislators to allow large scale grow operations.

But that's not all — Privateer Holdings wants the cannabis industry to start taking cues from more mature agricultural markets. "If you go Nebraska, if you go to Lincoln, Nebraska and you look at corn there’s corn banks and corn insurance and agricultural supply houses and corn associations and high fructose corn syrup and there’s hundreds of sub industries around corn and all of those opportunities will exist in the cannabis industry," Brendan Kennedy, one of the partners, said.

However, other aren't so thrilled with the prospect of marijuana becoming King Cannabis.

Alison Holcomb, who spearheaded the Initiative 502 effort that legalized recreational pot in Washington and Drug Policy Director for the ACLU of Washington stated in a letter to the liquor control board, "Large industries that have large overhead and are interested in maximizing their profits are going to target their advertising in ways to promote marijuana use, not simply meet current demand where it currently exists."