Along certain stretches of highway in Washington state are green crosses painted on a white background.
These crosses signal a medical marijuana dispensary nearby.
Next week, on July 1, those storefronts must merge into the state-regulated system.
Any dispensaries without state licenses could face marijuana seizures. But Alison Holcomb, the sponsor of Washington’s legal marijuana law, said she worries too many providers won’t make the transition.
Holcomb, who works with the ACLU, led the campaign for Initiative 502, which legalized recreational marijuana in Washington state. Holcomb said it’s now time to bring medical marijuana providers out of the “gray market” and into the state system.
But she fears many will fail and remain illicit.
“It’s still too expensive to open a business, too difficult to find a location, too difficult to comply with some of the regulations, and there’s not enough guidance from agency officers in many cases,” she said.
When the merger was first mandated under state law, regulators said they weren’t sure how many new licenses would be issued.
But last December, a report estimated the size of the state’s marijuana market as $1.3 billion annually – and said medical marijuana was currently supplying the largest share of it with 37 percent. Retail stores and the black market had smaller shares.
Given that data, state officials decided to nearly double the number of licensed retail stores to include medical providers. They issued 222 additional retail licenses, and set priorities for who should receive them. But they received more than 10 times that number of applicants.
Marijuana lobbyist Philip Dawdy said the results felt chaotic. They “made it a competitive footrace, and were making up the rules as they went along. It was a very frustrating process,” Dawdy said.
Holcomb noted a similar time in history – the end of Prohibition. There was no quota on liquor licenses then, she said, and that helped get rid of the black market.
“I just worry that we are making it too difficult for people that are trying to operate businesses in good faith to do so successfully,” she said.
Rick Garza, director of the Washington State Liquor and Cannabis Board, agreed that it’s not ideal for market entrants. “Yeah, I think the system is difficult,” Garza said. But, he added, “It’s not something we created. It’s in the initiative.”
Garza said the difference with Prohibition is that marijuana is still illegal under federal law. So his agency has to impose tight regulations to keep marijuana produced here from going elsewhere, even as regulators try to draw providers into the system.
As of July 1, Garza said unlicensed medical providers could face enforcement actions and civil penalties.
“If we’re aware of a dispensary or a collective that’s not licensed or registered with the state, we will likely go in and confiscate all of the marijuana that’s at that premises,” he said.
If a business or collective continues to operate, they could also face criminal charges.
But many medical marijuana providers have been preparing for this deadline and have already sought a license or closed their doors.
Meanwhile, some local governments have banned state-licensed marijuana businesses, at least temporarily.
Holcomb said last week that those bans would aid the black market. She urged the King County Council to ditch its current moratorium on marijuana businesses in unincorporated areas.
“The harder we make it for people to enter that marketplace, the more likely it is that it will be reserved for the privileged,” she told council members. “King County does not want to be on the wrong side of this debate.”
Council member Kathy Lambert responded that local governments are trying to troubleshoot the unintended consequences of the law. Including what she called the “odor situation” near some marijuana growers.
“They make me gag,” she said. “I could not live next to them. And to say that we are trying to do this because we are getting in the way – we are setting the course for the country.”
Garza said many local governments were displeased when his agency expanded the number of marijuana licenses to accommodate medical providers.
He said Seattle was the only city where the mayor and city attorney asked for more marijuana retail stores than the 48 they are now allotted.