Tuesday, February 12, 2013

Squeezed Out

Publisher's Note

Ted S. McGregor Jr.

Who could have predicted that privatizing liquor sales in Washington would produce winners, losers, legal challenges and higher prices? Oh yeah, we did! It’s fairly predictable with any special interest-written legislation; the part we didn’t call, however, is that Costco, the author of the law, would file a lawsuit, too. That’s new.

Another surprise is that the state Liquor Control Board has stayed busy, as it has been charged — thanks to another initiative — with administrating the sale of recreational marijuana. Their members are barnstorming to gather input before they write the rules for the newly controlled consumer product.

A lot of the testimony has come from medical marijuana providers (empowered by yet another state initiative) who fear their service/business/vocation is going to be lost in the shuffle. They’re right to be afraid.

After the U.S. Attorney shut down the medical marijuana sales infrastructure in Eastern Washington, it’s been very hard for patients here to exercise their state-granted rights and find relief from the natural remedy. Now the Liquor Control Board is pressing on with recreational sales rules and ignoring medical sales, as that is not in their mandate. That leaves it to the Legislature to create clear outlines for the medical side, but that’s not looking too likely. First, the U.S. Attorney in Seattle did not crack down, so there’s no outcry from over there. And second, Eastern Washington is mostly filled with legislators who are not sympathetic to the issue.

This is what becoming a political orphan looks like, and it’s not at all fair to Eastern Washington. Perhaps the dispensers’ best hope is that in the process of developing parameters, the federal Justice Department will relent in the hard-line approach that put nearly all local dispensaries out of business. Many had thought the feds would quickly signal their opposition to Washington and Colorado’s choices and tie the legalizing marijuana issue up in court for a few years. But they did not. Apparently President Obama is OK with letting us experiment.

This is another case of too many initiatives that contradict each other. Still, legalizing marijuana, controlling its use and taxing it will, in the end, take the criminal element out of the picture and produce much-needed state revenue.

As for the medical marijuana dispensers in Eastern Washington, many waiting to get back in business, well… they may not be able to beat them, so they might start thinking about joining them. Starting in mid-September, the LCB will begin taking applications for licenses to sell marijuana to any legal-age citizen, medical or recreational.

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Corporate Cannabis

Ted S. McGregor Jr. posses an excellent question in this (last) weeks Publisher´s Note (Squeezed Out: 2/14/13): If local medical marijuana entrepreneurs can´t beat the emerging recreational market, why not join it? Trust me, many local “gangapreneurs” would like nothing more than to do just that. In fact, transitioning into recreational markets was and integral part of most in the industry´s strategic planning. Here´s the rub: First, while Seattle and California based canna-business owners were making money hand-over-fist over the past decade, providers in Spokane have been hindered by unresponsive and apathetic politicians and ongoing interference on behalf of both local law enforcement and the DEA. If a business is unable to keep its doors open, it can´t make a profit – no profit, no long term business planning.
Next, most local cannabis producers cultivate their product in basements, attics, and outbuildings. Zoning regulations recently unveiled by the Spokane City Council and Planning Commission limit production and processing of cannabis to commercial and industrial zones. Due to political restrictions on our markets over the past few years, virtually no local providers are in a position to move their operations to an industrial warehouse.
Finally, members of the Liquor Control Board admitted at a recent meeting with City Councilmembers, that, in order to comply with prospective regulations, meet the price point estimate, pay the 25 per cent excise tax (and now, maybe even federal income taxes) and still turn a profit, an organization would have to put down a half a million dollars just to cover start up costs. Convincing legitimate investors to put their money into this industry is virtually impossible considering the risk involved. Furthermore, the board predicted that thousands of square feet and tens of thousands of plants will be required to compete in this emerging industry.
So, in conclusion, the answer to your question, Mr. McGregor, is they can´t.

Ian Moody
Hillyard Feb 13, 2013 | Reply to this comment

 

Corporate Cannabis

Ted S. McGregor Jr. posses an excellent question in this (last) weeks Publisher´s Note (Squeezed Out: 2/14/13): If local medical marijuana entrepreneurs can´t beat the emerging recreational market, why not join it? Trust me, many local “gangapreneurs” would like nothing more than to do just that. In fact, transitioning into recreational markets was and integral part of most in the industry´s strategic planning. Here´s the rub: First, while Seattle and California based canna-business owners were making money hand-over-fist over the past decade, providers in Spokane have been hindered by unresponsive and apathetic politicians and ongoing interference on behalf of both local law enforcement and the DEA. If a business is unable to keep its doors open, it can´t make a profit – no profit, no long term business planning.
Next, most local cannabis producers cultivate their product in basements, attics, and outbuildings. Zoning regulations recently unveiled by the Spokane City Council and Planning Commission limit production and processing of cannabis to commercial and industrial zones. Due to political restrictions on our markets over the past few years, virtually no local providers are in a position to move their operations to an industrial warehouse.
Finally, members of the Liquor Control Board admitted at a recent meeting with City Councilmembers, that, in order to comply with prospective regulations, meet the price point estimate, pay the 25 per cent excise tax (and now, maybe even federal income taxes) and still turn a profit, an organization would have to put down a half a million dollars just to cover start up costs. Convincing legitimate investors to put their money into this industry is virtually impossible considering the risk involved. Furthermore, the board predicted that thousands of square feet and tens of thousands of plants will be required to compete in this emerging industry.
So, in conclusion, the answer to your question, Mr. McGregor, is they can´t.

Ian Moody
Hillyard Feb 13, 2013 | Reply to this comment

 

The Federal Government has dictated that marijuana is illegal. The ruling class has spoken. Shut up, get in line, do what you´re told and don´t talk any nonsense about state rights or personal freedoms. You might be mistaken for conservatives and shunned by progressives. Feb 14, 2013 | Reply to this comment

 

 
 
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