Politics & Government

Recreational, medical marijuana businesses at odds over law

After investing months of work and tens of thousands of dollars in their Tacoma business, Tyler Severy and his partners last spring won a state license to grow, process and package marijuana — seemingly something akin to a golden ticket.

But Severy says Torch NW, formerly Commencement Bay Production and Processing, is limping from payday to payday because it’s sitting on bud that stores can’t sell.

He blames the competition.

Hundreds of shops around the state — an estimated 250 to 350 in King County alone — sell marijuana intended for medicinal use. They vastly outnumber the more than 60 state-licensed stores that have opened so far, including about five in most-populous King County.

Existing in a gray area of state law, medical operations do not need to obtain the licenses or pay the high taxes required by the 2012 ballot measure that legalized pot for recreational use. They face few rules and even less enforcement of what local rules do exist.

Many sell marijuana for half of what the licensed stores charge, or even less.

“If you could just go down to the bootleg store and buy your gin and vodka at half the price … Costco would be up in arms over it. And that’s what we need to be,” Severy said.

The Legislature is gearing up to tackle medical marijuana again this winter, a year after failing to reach agreement on a merger of the recreational and medical industries. This time, though, the players have changed. There are now dozens of licensed growers and retailers in the recreational pot business, all worried about their bottom lines.

They are far from unanimous. Some also run medical operations. Many are part of lobbying groups that represent both sides of the divide. But expect them to be vocal in lawmakers’ deliberations.

“As we make this shift to recreational, my God, medical’s exploding,” Severy said. “If they can’t bring medical in check ... they can just write this whole marijuana thing off.”

But if implementation of Initiative 502 is fodder for those who want to rein in medical marijuana, it’s also grist for its defenders, who should again be out in force during the legislative session.

Merging a thriving medical system with a recreational system struggling to get up and running is the wrong approach, said Patrick Seifert, whose Rainier Xpress has sold medical marijuana in downtown Olympia for three years.

“Right now they can’t even handle getting the product to people who just want to smoke weed, so you can’t tell me they can handle the medical,” Seifert said.

Seifert wants to be licensed as a medical shop. He wouldn’t mind paying fees, he said. But he is nonetheless “terrified” by early talk out of the Legislature. Medical marijuana is “under attack,” he said.

Medical patients and sellers bristle at efforts to create a registry of patients and to lump them in with recreational buyers. Their lobbying, along with disputes over whether medical patients should get tax breaks and whether cities and counties should get a share of marijuana revenue, scuttled a deal in the 2014 session.

Those dynamics will again be hurdles to a law next session, when a multibillion-dollar budget shortfall will make lawmakers resistant to giving up any of the more than $100 million a year expected from pot sales.

One way the path could be smoother: For the first time, amending I-502 will require a simple majority of lawmakers, not the supermajorities required in the first two years of an initiative’s existence.

Taking point on the do-over attempt is La Center Republican Sen. Ann Rivers.

She’s floating an evolving proposal that would create standalone medical stores licensed and overseen by the state liquor board, which does the same for recreational stores. Patients registered with the state could shop at those stores.

Seifert is worried that if the two systems are merged, existing recreational sellers will have first crack at obtaining a medical license and existing medical sellers like him will be left out. He would have to close and his patients would have to hope that a licensed medical shop opens, he said.

But Rivers said her proposal, even more so than last year’s failed legislation, has a heavy emphasis on making sure there’s adequate supply for patients of safe, lab-tested marijuana. Medical professionals would be on hand to counsel patients about their medical needs, Rivers said, something that’s not allowed at recreational stores.

“I’m calling it the Cannabis Patient Protection Act,” Rivers said. “We really try to look at what the needs of the patients are and we’re trying to meet those in a regulatory environment that’s never existed before for medical cannabis.”

Some medical-marijuana interests may prefer an alternative that Sen. Jeanne Kohl-Welles, a Seattle Democrat, has in the works. Kohl-Welles is keeping mum about the details for now but said she’s “going in a different direction this year” with an approach that “will involve no need for a medical authorization, or database or registry, at all.”

Local governments are eagerly awaiting action by the Legislature.

Olympia officials say the city has spent dozens of hours enforcing its moratorium on new medical outlets, shutting down one new store and stopping others from opening their doors. The city grandfathered in 13 stores, leaving Thurston County with one of the state’s densest concentrations of medical marijuana access points compared to population.

City Manager Steve Hall said enforcing the moratorium “takes time from the police department and our code enforcement” and legislative action on medical marijuana would help.

Some local governments may not wait for lawmakers. Courts have upheld the right of the city of Kent to ban medical-marijuana shops in a case that is awaiting review from the state Supreme Court and could shape future enforcement.

Seattle warned medical operations last month they must shut down by the summer of 2015 or 2016, depending on the Legislature’s action. But Mayor Ed Murray, a former state lawmaker, also has called for taking as-yet unspecified local action to remove patients and businesses from legal limbo.

This week, the Pierce County Council — which has a de facto ban on recreational marijuana businesses — voted to “terminate the operation of collective gardens and unlicensed marijuana dispensaries” next July 1, unless the Legislature changes their status.

Tacoma city officials also are exploring their options for dealing with the estimated 56 medical marijuana shops in the city. .

City Councilman Ryan Mello said that proliferation is unfair to the handful of stores that are paying taxes and following the law. Another councilman, Robert Thoms, said the city should notify medical establishments that the city will regulate them, closing some, if the state doesn’t act.

“I don’t know if we can wait for the Legislature,” Mello said. “We’ve been waiting for the Legislature to do a lot of things and there hasn’t been a lot of action.”

Dan Smith, owner of Tacoma Custom Jewelers and president of the 6th Avenue Business District, points out that the city does not enforce existing marijuana laws, which put limits on marijuana that most medical shops and some of their customers skirt.

Smith said customers who emerge from medical shops sometimes brazenly light up a joint on the street or pass off their purchase to someone else in an apparent drug deal. Tacoma voters have mandated that police consider marijuana their lowest priority.

A one-mile stretch of 6th Avenue is home to at least three medical shops as well as one recreational store and a second expected to be licensed and open in two weeks.

That’s too many for Mary Johnson, who with her husband Tomowns a store, Northwest Costume, in the same neighborhood.

“If you get too many of one thing, it’s not a good thing,” she said. “If we had too many costume shops, it wouldn’t be a good thing.”