Liquor Board sets new pot-growing limits
UPDATE: OLYMPIA — Faced with far more people wanting to grow legal marijuana than state rules would allow, the Liquor Control Board upped the amount of land that can be planted to the drug by more than five-fold. But it also put some new restrictions on would-be growers.
The board agreed Wednesday to limit applicants to one grower license per business entity, cutting down on the multiple requests some new marijuana entrepreneurs have turned in for as many as three grower licenses. It also reduced the amount of land all requests will be allowed to plant by 30 percent.
“We are going to do this right,” Board Chairwoman Sharon Foster said. “The Department of Justice is not going to have anything to complain about for the state of Washington.”
The board’s decision came as the state’s fiscal analysts made their first estimates of legal marijuana’s boost to state coffers – a possible $51 million bump in tax revenue from recreational sales – and the Legislature continued to examine ways to merge the separate existing medical marijuana system with the untried recreational system. . .
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. . . The state originally planned to allow some 2 million square feet to be planted to marijuana; it has applications that could cover 35 million square feet if each grower planted to the maximum allowed on the license. Spokane County alone has 241 applications to grow marijuana, and if each planted to the limit allowed on their license requests, the county would have more than 4 million square feet eligible for growing.
The new guidelines for growing licenses raise the total amount of land that could be planted to marijuana to between 11 million and 13 million square feet. Liquor board staff believe, however, that less land will actually be planted at least initially as licenses are phased in. A fourth of all applications processed so far are being rejected for not meeting standards for residency, clean criminal records and viable business plans. Half of those who receive a license could be out of business in 18 months, based on Colorado’s experience with its regulated medical marijuana system.
Washington will likely need more marijuana that original estimates if licensed growers will be supplying the drug for the medical market as well, staff said.
“We're making the best guess possible out of the data we have,” Board Member Chris Marr said. “This is not an academic exercise in economics. This is not a free market. This is a highly regulated business.”
Chris Kealey of Spinning Heads, which applied for three licenses covering 30,000 square feet each, said his business is spending $8 million to build a 100,000 square foot facility. Now it will be able to plant just 21,000 square feet and will look for other growers to sublet space.
But the new rules are better than some alternatives, such as cutting all requests back by 90 percent or just awarding licenses to the first applicants until the old limit was reached, Kealey said.
The state will begin issuing licenses to producer and processor applicants next month as investigations are completed, and will continue for the next several months. A lottery for stores will be announced in two weeks, and the first could open by the end of June, Randy Simmons, liquor board deputy director, said.
Uncertainties in the state’s recreational marijuana business model were repeatedly cited Wednesday afternoon as the Senate Ways and Means Committee considered a bill to merge the medical marijuana system into it. The state has hundreds of medical marijuana “dispensaries” that would be banned in mid 2015 under the bill. The Legislature should wait at least another year, opponents said, and see if the recreational system succeeds before deciding to close the dispensaries and throw their employees out of work.
Under the latest version of the proposal, patients would be exempt from the sales tax and some, although not all, of the high excise taxes that hit the recreational drug as it moves from grower to processor to stores. The price would still increase beyond what some low income patients could afford, opponents of the bill said.
