With Pot Legal, the Days of Washington's Medical Marijuana Dispensaries Are Numbered
Last month I said "it looks like the writing is on the wall" for medical marijuana dispensaries in Washington now that the state is about to license recreational pot shops. (The Washington State Liquor Control Board started taking applications on Monday.) I wondered, "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?" The answer appears to be: not long. Four days after I wrote that post, an interdepartmental committee recommended that the state legislature fold medical marijuana into the recreational system, shutting down dispensaries and banning home cultivation by patients. Last week Alison Holcomb, the ACLU of Washington lawyer who ran the campaign for I-502, Washington's legalization initiative, agreed that "it makes little sense" to maintain two parallel distribution networks but argued that home cultivation should be permitted for medical use.
The committee, which included representatives from the liquor control board as well as the state revenue and health departments, called for a mandatory registry of patients who are authorized (based on their doctors' recommendations) to use marijuana as a medicine. Those patients would have to buy marijuana at the same shops as recreational consumers, paying the new triple excise tax (25 percent at each of three levels) but avoiding standard state and local sales taxes (which total 9.5 percent in Seattle) by presenting their state-issued registration cards. They would no longer be permitted to grow their medicine or have designated providers do it for them, and they would be allowed to possess no more than three ounces at a time, one-eighth the current limit.
The dispensaries, which operate as "collective gardens" under a creative but court-sanctioned interpretation of Washington's medical marijuana law, would have to shut down "no sooner than January 1, 2015." The committee recommends various other restrictions aimed at limiting access to semi-tax-free medical marijuana, such as making registrations expire after a year so patients will have to see their doctors again, issuing regulations to discourage doctors from specializing in marijuana recommendations, and defining "intractable pain," one of the "terminal or debilitating medical condition[s]" for which marijuana may be recommended, "to clearly indicate the condition must be severe enough to significantly interfere with the patient's activities of daily living and ability to function."
Last year the I-502 campaign assured wary patients that the initiative "does not change the Washington State Medical Use of Cannabis Act." That was literally true: The initiative itself did not change the law. But now the marijuana regulators appointed by the initiative are recommending changes to the law in light of the newly legal recreational market.
The main thrust of the recommended rules is to restrict the production and distribution of medical marijuana so as to maximize tax revenue and satisfy federal demands for a carefully regulated market. The Seattle Post-Intelligencer reports that "officials in state and local governments as well as law enforcement from the feds on down have made it clear that the current, mostly unregulated, 'system' in which medical pot is distributed is 'untenable' and has to be shut down or significantly changed." In a November 13 letter to the liquor control board, Holcomb basically agrees:
Patients who choose to purchase, rather than produce, their medicine will have greater assurance of quality and safety than is available to them under the current unregulated patchwork of commercial collective gardens. Given these conditions, it makes little sense to create a parallel system of production and distribution and incur duplicative administrative and enforcement expenses. Nor would it be good policy to continue allowing collective gardens to engage in unregulated commercial activity.
But Holcomb says "the ACLU-WA strongly opposes elimination of patients' right to produce their own cannabis, a right they have enjoyed since the passage of Initiative 692 in 1998." Although "the availability of I-502 retail stores will accommodate the needs of most patients," she writes, some have bred special strains tailored to their individual needs that may not be available in the stores. Holcomb also objects to the committee's recommendation that the state legislature eliminate the affirmative defense for patients who possess more than the presumptive limit on marijuana but can show the amount is medically appropriate, which she calls "an essential protection for fairness."
The objections from Americans for Safe Access are much broader:
Patient advocates have become increasingly concerned by an apparent unwillingness to accommodate two parallel markets and a desire to roll the state's 15-year-old medical marijuana program into the emerging recreational marijuana program by making the medical-use law much more restrictive, the requirements unnecessarily onerous, and the costs far too prohibitive for patients….
"Patients in Washington will not sit idly by to see the state dismantle its 15-year old medical marijuana program and attempt to roll them into a nascent recreational market," said ASA Executive Director Steph Sherer. "The very real needs of medical marijuana patients cannot be adequately met by the recreational marijuana program and must be addressed by preserving and strengthening the law that currently exists," continued Sherer. "We're urging Governor Inslee and the state legislature not to abandon the tens of thousands of patients in Washington and continue to treat medical marijuana as a public health issue."
The recommendations to the legislature regarding medical marijuana have not been finalized yet. Like Holcomb, state Sen. Jeanne Kohl-Welles (D-Seattle), who has been working on this issue for nearly two decades and plans to introduce a medical marijuana bill during the legislative session that begins in January, wants to preserve the right of home cultivation for patients but sees no need for dispensaries. "I don't think we need to have two systems," she told the Post-Intelligencer last month, "but we have to preserve the ability for legitimate, qualifying patients to have access to a safe, secure, reliable source for their medicine."
Just not at the businesses that have been serving them until now. While Colorado's medical marijuana dispensaries are becoming recreational pot shops—in fact, they have a lock on the business for three months under state law and longer under local ordinances—it looks like Washington's dispensaries will be shut down to make room for new cannabusinesses. There may be some overlap between the people running the existing dispensaries and the people who end up running the state-licensed stores. The Associated Press notes that dispensary owners such as Yevgeniy Frid of A Greener Today in Seattle and Angel Swanson of The Cannabis Emporium in Tacoma hope to win recreational licenses. But even if applicants such as Frid and Swanson did not have to compete with newcomers, there would not be enough licenses to go around. The liquor control board, for example, plans to grant 21 licenses in Seattle, a city with something like 274 dispensaries.
Both Colorado and Washington are imposing arbitrary limits on their marijuana markets, restricting the number of outlets in the name of public health and safety (and with an eye toward appeasing the feds). Their marijuana licenses, like liquor licenses or taxi medallions, are valuable only because they are artificially scarce. But the two states are distributing these valuable privileges in different ways: The incumbents in Colorado will dominate the new recreational market, while the incumbents in Washington will mainly be squeezed out.