Washington’s Gold Rush For Pot

Earlier this year, The Washington State Liquor and Cannabis Board raised the cap on recreational marijuana retail licenses from 334 to 556.  The emergency rule change was in response to higher than expected consumer demand from medical marijuana patients according to lawmakers.  Competition and squabble are expected to intensify over a rapidly inflating market.

Marijuana sales totaled $257 million, roughly doubling state projections, in 2014. In turn, $70 million in tax revenue has been generated.  This is only a drop in the bucket for Washington’s approximately $35 billion state budget.  

2015 sales totaled approximately $709 million, according to ArcView Market Research.  The slow speed of law rollouts and businesses being able to establish themselves correlates with sales. Estimates of use appear to be unaffected by legalization according to The CBHSQ Report.

Governor Jay Inslee signed The Washington State Senate Bill 5052 unifying medical and recreational marijuana markets on April 14, 2015.  Existing medical marijuana businesses that fail to obtain a recreational license will be closed by July 1, of this year.  Lawmakers hoped to increase the profitability of recreational businesses and end the growing abuse of the tax-free medical market.

Last January, lawsuits were filed by a number of Washington medical marijuana businesses.  They claim that the state isn’t following its own rules of giving license preferences to longtime collectives that have a history of paying taxes.  So-called “Frankenstein” applicants have been approved by the state instead, teaming up aspiring entrepreneurs with former employees of collectives.  According to local owners, this could put many medical collectives out of business.  Washington state does not comment on pending lawsuits.

Last February, Washington approved two new recreational marijuana retailers in Olympia—Northwest Express and THC of Olympia.  This brings the total to four.  Other licenses are pending.

Washington currently limits retailers to three store licenses and growers to two-thirds of an acre.  Retailers cannot be growers and vice versa.  Owners and financiers are required to have had a residency of at least six months.  For the time being, these regulations have kept the market local and decentralized.  The general consensus of analysts seems to be that, “Big Marijuana is inevitable.”  As more states legalize marijuana, competition will increase and federal pressure for state localization will likely wane. Washington lawmakers will likely be pushed to deregulate the market to compete.

The marijuana boom has contributed growth in several sectors of the economy.  Agriculture, security, biology, and engineering are seeing more money from recreational marijuana profits.  Estimates are pending for exactly how much of an effect this will have, but stakes are high as businesses fight over the increasingly valuable and exclusive money pot that is the recreational marijuana market.  Expansion is expected to continue with imitation closely following from other states like Colorado.