WSJ: Washington State Sets Pot-Sales Rules

Prof. Kleiman estimates Washington’s medical and illicit consumption presently generates about $1.2 billion in annual sales.  Other research is reports that about 200,000 “regular” users—those who reported in a survey they consumed marijuana 21 times in an average month—account for 80% of the state’s pot consumption.

The following article By Joel Millman was published in the Wall Street Journal October  16, 2013:

Washington’s State Liquor Control Board on Wednesday set the rules for retail marijuana production and sales, clearing the way for tight regulation of the seed-to-smoke market for recreational pot users.

In a session that took less than an hour at the state capitol in Olympia, the three-member board unanimously approved a host of regulations covering pot production, processing and retailing. Among the rules: Two million square feet will be allowed statewide for marijuana cultivation, with a limit of 40 metric tons of annual production. Also newly regulated are marijuana-infused products in solid, extract and liquid forms.

Under Initiative 502, which Washington voters approved overwhelmingly last November, users age 21 or older will be permitted to possess, consume and purchase “usable” marijuana in single-ounce increments and shop at any of 334 retailers that will open next year across the state.

Internet sales and home delivery are forbidden. It also remains illegal to grow any amount for personal use, except in cases where medical exemptions have been given.

“Over these last several months [we] have put together a comprehensive system of rules which will serve as the foundation for this new industry,” Board Chairwoman Sharon Foster said. “This has been a very open process of rule making with public involvement each step of the way.”

Over the past year, Washington officials participated in raucous and sometimes angry public hearings with residents about how marijuana will be produced and consumed under a new legal framework. The Liquor Control Board also hired Mark Kleiman, a professor of public policy at the University of California Los Angeles, to research Washington’s existing marijuana market to determine how much pot new businesses should be allowed to grow and process.

Prof. Kleiman estimates Washington’s medical and illicit consumption presently generates about $1.2 billion in annual sales, adding that he can’t yet calculate how much of the illicit market will migrate to the new commercial trade.

Other research commissioned by the board indicated that about 200,000 “regular” users—those who reported in a survey they consumed marijuana 21 times in an average month—account for 80% of the state’s pot consumption.

In a regulatory document running 43 pages, rules are spelled out in minute detail. For example, no single marijuana garden can exceed 30,000 square feet, and no single grower can hold more than three licenses, for a total of 90,000 square feet of allowable cultivation. Licensing, checks of applicants’ criminal histories and the disposition of marijuana waste are all covered by the new rules.

The window to apply for a state license in any of the three areas of the new industry—retailing, growing or processing—will be open for just 30 days starting Nov. 18. Washington state officials say this may be the only time residents will be allowed to become licensed pot businessmen. Much like New York City taxi-medallion owners, it’s possible Washington pot licensees will end up with permits that increased in value because no new ones will be issued.

In any case, no one now knows how many entrepreneurs will step up. “We don’t know if we’re going to get 4,000 applications or 400,” said Randy Simmons, deputy director of the Liquor Control Board charged with implementation of Initiative 502. “If I had to guess, I’d say 2,000 in total—growers, processors and retailers.”

A typical section approved Wednesday reads: “To prevent diversion and to promote public safety, marijuana licensees must track marijuana from seed to sale. Licensees must provide the required information on a system specified by the board. All costs related to the reporting requirements are borne by the licensee.

“Marijuana seedlings, clones, plants, lots of usable marijuana or trim, leaves, and other plant matter, batches of extracts and marijuana-infused products must be traceable from production through processing, and finally into the retail environment, including being able to identify which lot was used as base material to create each batch of extracts or infused products.”

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