Marijuana Stores Could Double In Washington State

Washington could get lots more pot stores.

State regulators will allow medical marijuana providers to seek retail licenses later this fall. There are no strict limits on how many new licenses could be granted, and there is no requirement that they focus on medical patients.

This sounds like it could mean more competition. But it also means that all pot stores will be on equal footing.

The passage of Initiative 502 in 2012 launched Washington’s regulated marijuana system. But officials watched in dismay as hundreds of unlicensed medical marijuana dispensaries sprouted on street corners around the state. Now under a new state law, “gray market” marijuana providers must get state retail licenses or close their doors.

Liquor and Cannabis Board spokesman Brian Smith said the number of new licenses his agency can grant is open-ended.

“We want to take those people now that are operating in the gray market, so to speak, and be able to move into the fully regulated state system,” Smith said.

He said legislators estimate that 800 dispensary owners may seek the new licenses, and perhaps 400 will be eligible to receive them. So far, the Liquor and Cannabis Board has issued 196 retail licenses since pot became legal.

Geographic quotas and lotteries made retail licenses scarce and valuable when I-502 was implemented. For these new applicants, the approach will be different. They will likely get a license if they meet certain criteria: That they opened before the passage of I-502, paid their taxes and obtained local business licenses.

Smith said the number of marijuana retail stores in Washington could more than double as a result. That’s daunting news for existing store owners, but Smith said that way the licensees will be playing by the same rules.

He said when store owners testified during the legislative process, they complained they were competing with “people down the street who weren’t paying taxes or otherwise abiding by the same regulations that they were.”

In Seattle’s SODO neighborhood, Maria Moses is still putting the finishing touches on her recently opened marijuana retail store, Dockside SODO. She’s thrilled that it has room for parking and space to accommodate the city’s burgeoning marijuana tourism scene.

“We have a Japanese-language tour group that is interested in making this their regular stop,” Moses said.

Moses owns both retail stores and a medical marijuana dispensary in Fremont. She said legislators talked about retaining products and expertise for medical patients.To give medical advice and award tax breaks for authorized patients, store owners must get a medical endorsement from the state. “If all these places are really going to get a medical endorsement, I think it’s a great thing for patients,” Moses said. But it’s not clear they will.

“It sort of sounds like they’re opening up the recreational retail market, but they’re not requiring that you get a medical endorsement,” she said. “To me, that’s just a back door to open up more recreational shops.”

For existing retailers, the new competition comes with one more challenge – buffer zones. Marijuana businesses must still be 1,000 feet from schools and playgrounds under federal law, but in the future they could be just 100 feet from parks and child care centers.

Dispensary owner John Davis predicts Seattle officials will choose to shrink those buffer zones, perhaps as soon as this fall.

“As far as the arcades, the child care centers, the locals have the option of taking that [buffer zone] down significantly and the city of Seattle is likely to do that,” Davis said. “And will it open up more real estate? Yeah.”

Moses said that if that happens, there will be a scramble for new store locations. “That actually frees up quite a few places, because there are a lot of day cares in this city,” she said.

But her business partner Aaron Varney says after the money they’ve spent building out their new store, they’re in no position to move. “We’re in a location today because of the 1,000-foot rule and it was a location that needed a lot of work to upgrade into a suitable retail environment,” he said.

For dispensaries that don’t get a license, both Seattle and King counties have sent them letters telling them their time is up.

King County Prosecutor Dan Satterberg said, “My goal is for those stores to be out of business. They need to comply with the law.”

This summer his office sent letters to 15 dispensaries in Skyway and White Center telling them to close. He said five have done so but at least 10 remain open. He doesn’t plan to arrest these business owners, but his office is preparing civil lawsuits against them.

“The next step is to share a draft of that lawsuit with selected stores and give them a choice – do you want to be sued, hauled into court, pay a lawyer, or are you willing to voluntarily shut the doors on a certain date that we’ll negotiate?” Satterberg said.

The Liquor and Cannabis Board expects to issue its proposed rules for the new round of retail licenses later this month. State law requires that all marijuana businesses obtain licenses or close by next July.