Washington State's first legal marijuana shops set to open amid - WRCBtv.com | Chattanooga News, Weather & Sports

Washington State's first legal marijuana shops set to open amid chaos

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A worker displays marijuana buds. AP photo A worker displays marijuana buds. AP photo
BY TONY DOKOUPIL, NBC News

(NBC News) - The prohibition of marijuana in Washington state fell early Monday as a small number of retail shop owners received an electronic copy of a license to sell just-for-fun cannabis.

Those 2 a.m. local time (5 a.m. ET) emails bang-started a scramble for the actual pot, now waiting in the warehouses of an equally small number of separately licensed growers. Exactly 24 hours after product orders are placed, per a mandatory waiting period, the owners will be allowed to open for business, launching a new experiment in the legal sale of a very old plant.

The cash registers are ready. The display cases are clean. But less than a day before the likely first retail sale of marijuana in Washington, no one knows for certain which stores will be open, or which growers will provide the chlorophyll of the hour.

“It’s going to come down to the wire,” says Sean Green, the founder of Kouchlock Productions, which got the state’s first official growing license back in March. Now there are about 80 licensed growers, and some 20 retail shops who expect a license this week.

Green said at least three retail shops will open Tuesday: Cannabis City Seattle, Top Shelf Cannabis in Bellingham and The Freedom Market" in Kelso.

“Our industry is evolving,” Green continued. “But it’s evolving very slowly.”

Eighteen months ago, Washington’s legalization effort passed with cartwheeling support. Voters saw a special chance to build the perfect pot machine from scratch, unlike Colorado, which had an existing medical marijuana regime. Now that perfect dream has yielded to a much more chaotic reality, some say.

“It’s a mess,” says Kurt Boehl, a lawyer who represents a number of hopeful marijuana retailers and growers. “People are still scrambling to get their paperwork in.” No one doubts that someone, somewhere in the state will sell someone else a joint this week, but the market beyond that remains as foggy as the Puget Sound.

The state faces a huge backlog for licenses. There are only 18 license reviewers sifting through thousands of applications. The first approvals for growers didn’t go out until March, which left at most two growing cycles to stock the shelves.

That's created an inescapable shortage of product, and a growing population of desperate, irate business people. Some have already gone under as opening day was delayed again and again. Others are trying to sell or hold on long enough to break even.

Ed Rhinehart is a middle-aged businessman who sunk tens of thousands of dollars into a marijuana farm. He expected to monetize his crop by April, as the state originally planned. Three months later, however, he’s had to lay off four workers, and there’s still no firm date for when he can start operations.

“If I had to do it all over again,” he told The Associated Press this month, “I wouldn’t have done it.”

The agency in charge is the Washington State Liquor Control Board, which has been drafting rules and reviewing license applications. The board has conceded the chaos of the recent past, attributing delays to an unexpectedly large number of license applicants (thousands instead of hundreds), many of them apparently dazed, confused, or otherwise befogged by pot's new bureaucracy.

Turns out there's a lot of paperwork between the utopian optimism of legalization and the dreary reality of actual sales. “Some people just don't have an idea what they're doing — no clue at all,” Randy Simmons, the board's pot project manager, told the AP this week. “It slows down the process."

But even if the process were working, not everyone would be ready to celebrate. At least 10 cities, counties, and municipalities have banned marijuana business out right. Dozens more have declared a moratorium on new businesses, beyond the state's hazily regulated medical marijuana shops.

They want to wait, and see. Will pot use skyrocket? Will the drug fall into the hands of kids? Will overdoses swamp emergency rooms? Will high drivers cross the yellow line, pierce guard rails, and veer through who knows what? Probably not immediately, if Colorado is any indication.

But people are nonetheless worried about where this is going. When Washington started to build its new economy, it hired BOTEC, a consulting firm run by Mark Kleiman, a UCLA professor of public policy who for decades has been studying the pros and cons of marijuana policy.

He says that Washington’s approach is far from ideal. In fact, he calls it “probably the second worst” way to treat cannabis after prohibition itself. He says he tried to steer the state into a policy that balanced sales, taxation, and public health. Instead the state built what could be a gathering problem.

“We’re going to have much more drug abuse, and much less revenue for the state,” he says. “Compared to what we could have had, I’ll be weeping.”

In the end, Washington hasn’t done something original. They've borrowed the outline of Colorado’s market: full commercialization, stores, and taxes based on a percentage of sales—basically the post-prohibition alcohol model. Are there instant horrors? No, but the scenario reminds Kleiman of an old joke about a man who jumps from the Empire State Building.

"How's it going?" someone yells as the man passes the 42nd floor. "So far, so good!"

If there's a hard fall coming, critics argue, it’s because the market will reward companies who create the most hard-core consumption. Stores will act like big marketing centers, and owners will have a strong economic incentive to drive up use. That's why Kleiman wanted home delivery only, or else non-profit stores without the same compulsive need to hit the sale button.

But Washington's new pot economy is also subpar economically, he says. Legal pot will fall in price over time, and as it does the tax revenue will fall as well. A smarter tax would tie revenue to THC content, the chemical that makes people high. Instead Washington pegged tax to price, which economists expect will collapse as volume rises and legals risks evaporate.

At the same time, Kleiman warns, Washington has yet to create a scenario in which recreational marijuana has the best chance to thrive. There's still a humming black market, for one, and the state has shown no interest in using more arrests to push those people into the legal retail scene. Worse, the state's medical marijuana industry—supported by a 1998 voter initiative—is cheap and familiar.

Kleiman likes to joke, “What if we threw a legalization party and no one showed up?”

It’s not so far from the reality in Colorado, where the first six months of recreational sales were tens of millions of dollars below estimate. Only about a third of the marijuana sold in Colorado is considered recreational, and Washington’s feel-happy market could be even smaller.

Washington has yet to create a scenario in which recreational marijuana will thrive.

Because of delays in the licensing process, shops on opening day will be selling only pounds of pot in a state that consumes an estimated half-ton a day. As a result the price of a gram could exceed $30 dollars, compared to half that or less in the park around the corner or the medical shop a block away.

“The thing to watch for is the death struggle between medical marijuana and recreational,” Kleiman says.

It’s a death struggle one suspects Sean Green would like to avoid. Green holds marijuana growing license #001. “I’m coming home with jobs,” he promised a cheering crowd when he got the license four months ago. His grand long term plan: 78 stores and 57 manufacturing centers, a roll-out that matched the work of a family friend, Arthur Oberto, the founder of the Oberto Sausage brand.

Now, however, Green is getting out of the marijuana business. He doesn't like the risk of robbery, in what is still largely an all cash business. He's also worried about a federal crackdown, in what is far from a settled matter in the nation’s capital. As excited as he seemed when he got his license, he can seem even giddier at the prospect of letting it go.

"Life is amazing," he says. "And I'm ready for a new adventure."

The Associated Press contributed to this report.

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