Washington's Goal for State-Licensed Pot Shops: Just 25% of the Market?

Yesterday the Washington State Liquor Control Board officially adopted its regulations for the state-licensed marijuana growers, processors, and retailers that are supposed to start operating next year. According to the Associated Press, "The board hopes the sale of legal pot will capture about one-quarter of the total pot market in the state, for starters." Given the price reduction and other consumer benefits that should accompany legalization, that's a remarkably unambitious goal. But Washington is imposing hefty taxes and strict regulations on marijuana, and the liquor board's consultants project it will cost two to three times as much in state-licensed stores as it does in the black market. Furthermore, the stores will not offer amenities that might draw people away from their usual pot connection. Under Washington's rules, on-site consumption is not allowed; customers are expected to buy their marijuana, take it home in a sealed package, and consume it behind closed doors and drawn blinds. There won't be anything like Amsterdam's cannabis cafés, where people can pay to enjoy marijuana in a social setting similar to a tavern. And despite the preference for discretion, neither Internet sales nor home delivery will be allowed.

The state-licensed outlets will face competition not only from ordinary pot dealers but from medical marijuana dispensaries, which are not explicitly authorized by state law but are run as cooperatives by patients and their designated providers. There are something like 200 dispensaries in Seattle, where the liquor control board plans to allow just 21 state-licensed pot shops. A.P. notes that "the City Council has passed zoning regulations for pot businesses that would require medical marijuana dispensaries to obtain a state license [which is not currently available for dispensaries] or stop doing business by 2015." Despite assurances by supporters of I-502, Washington's legalization initiative, that it would not affect dispensaries, it looks like the writing is on the wall. How long will state and local governments eager for marijuana tax revenue allow these untaxed, unregulated outlets to compete with government-licensed stores selling cannabis of similar quality at higher prices?  

Comments

[Ken Shultz]

I still can't believe this is happening.

If we can do this with the Drug War, we can do this with anything.

[Robert]

That it's happening with cannabis is 40 yrs. overdue. That's how long it's been since a large swath of the gen'l public realized this is not a dangerous drug. The experts knew long before that, of course.

So no, I don't think we can do this with just anything. We can do it with things that are widely known for about half a century to be safe and hard to get rid of. It's not happening even now with hallucinogens such as mushrooms, because not enough people have had experience with them. It did happen with homosexual behavior once enough people knew enough of them for long enough to know homosexuals were safe to have around and hard to get rid of.

[Death Rock and Skull]

Legalization should not detract from the legitimacy of medical cannabis.

[SIV]

Medical cannabis should not detract from the legitimacy of legalization.

[Ken Shultz]

If it's legal, can't patients get it, too?

[Episiarch]

I think the long game is going to have to be played here. The Liquor Board will set up shops that suck monkey balls, just like their liquor stores did. And people will grow dissatisfied, then there will be another initiative, and it will be to decouple pot stores from the Liquor Board just like was done with alcohol. It might pass, it might not, but I think the momentum is in a good direction. I also think that legalization, even though private growing and sales are still illegal, have just removed a lot of pressure for law enforcement to arrest minor pot dealers. It's just all so pointless.

Also: Seahawks are 6-1. Yeah.

[Tman]

Pot laws will be the first to fall, ideally, but none of this happened overnight. It will take a while before the statistics show that legalizing it did not affect the usage rate before more states decide to experiment.

If Locker had been playing Seahawks would be 5-2.

[Francisco d Anconia]

Epi, were you just optimistic about something?

[TheZeitgeist]

Also: Seahawks are 6-1. Yeah.

As Denver Broncos fan, I have to admit Chickens vs. Nags is interesting for Superbowl for this:

First time teams from same conference (in the old days) brawl over the shiny trophy. A compelling narrative.

[Old Man With Candy]

Oh please, with Choker at QB? Denver in the playoffs and out in two, max.

[Snark Plissken]

? We are the second loudest, my friend ?

[Greg83]

At 2 to 3 times the cost I don't see how it will capture any market share whatsoever. Maybe they can sucker the occasional out-of-towner.

[mad libertarian guy]

At 2 to 3 times the cost I don't see how it will capture any market share whatsoever. Maybe they can sucker the occasional out-of-towner.

There will be the segment of the market that will gladly pay the tax as a stay out of jail fee. There will also be those who will pay the tax because they come from the "TAX AND REGULATE" school of thought, and stupidly believe that they are advancing society by overpaying for weed. And there will be tourists who don't have a local connection.

[Jquip]

Exempt the wealthy through indulgences. Criminalize the rest.

How you consider the intersection of poverty, race, and pot-smoking is your call.

[Corning]

It is going to be oh so fun making fun of tax and regulate pot smoking Democrats who try to save a few bucks by buying off the black market.

[mad libertarian guy]

And they deserve every bit of grief they get for their hypocrisy. Remind them every chance you get that, according to their ideology, they are actively trying to destroy society by circumventing taxes on weed. That because they want to save a few bucks, they are waging a war on women and the poor and that it means they hate blacks.

[Apatheist ?_??]

As someone who smokes once or twice a year I would. But then I wouldn't exactly be making up very much of the market.

[Cascadian Ephor Xenocles]

The absolute most important thing here, strategically, is that two things happen over the next few years:
1) A significant amount of legal pot gets sold.
2) Nothing else happens.

No surge in stupid people hurting themselves while tangentially associated with marijuana. No reefer madness. Just people enjoying themselves and the world not ending. If you like MJ you owe it to yourself to give these shops some business despite the extra cost. Even if you don't like it but want to see the drug war end and you can buy some weed with no risk of consequence, go do it.

[Greg83]

Screw that. People are already well-aware that marijuana is benign. I will never pay a dime of tax on weed, never-mind paying multiple times the street price to support the state coffers.

[Pathogen]

"and the liquor board's consultants project it will cost two to three times as much in state-licensed stores as it does in the black market."

The liquor board sez, "booze: still the only affordable, legal way to get off"... Imagine that.

[Generic Stranger]

So, if you buy black market weed...how the hell are they going to know?

I mean, maybe if they catch you during the sale, but later it'll probably be impossible without some very expensive testing. So, blackmarket weed will still be a thing and may actually expand because the state got greedy.

[Pathogen]

"So, if you buy black market weed...how the hell are they going to know?"

I don't know, I suppose they will try and handle it fail like Bloomberg's N.Y.C tobacco tax control scheme...

[Ken Shultz]

The NSA knows everything.

[Pathogen]

The War on Drugs?

[William of Purple]

Drugs are Bad, mmkay

[Mike Laursen]

To be fair, the Washington State market for marijuana is HUGE.

[SIV]

Too bad they didn't legalize cultivation.

[JeremyR]

This is why I think people are naive to think that simply legalizing drugs will end all the crime in Mexico and whatnot.

As long as there is government regulation, there will be a black market for stuff. Pot can be grown pretty easily, which will help, but the harder stuff needs the big criminal organizations to be made properly, and those will still be around, even if most things someday get legalized...

[Robert]

the liquor board's consultants project it will cost two to three times as much in state-licensed stores as it does in the black market.

This is actually good news, and I'm surprised Jacob either doesn't realize or remark about it. The fact that the price difference is so great is only partly accounted for by taxes. The rest is because the "prohibition premium" is expected to be low. That in turn is because enforcement is expected to be difficult or otherwise weak. People won't be driven strongly away from the black market, so black market prices will stay low.

If the state of Wash. expected to be heavily into policing the pot equivalent of moonshiners for revenue, then they might anticipate a lower price differential and the capture of more of the market.

[pronomian]

This is an continuing assault on legalization. These are probably the same people who whine about the right not giving legitimacy to voting in of Obama. Make it as restrictive as possible, instead of embracing the possibilities there is for the state, so they can say, "See, we tried it and it didn't work."