Marijuana growing could become industry

SEATTLE – In initial rules for a legal marijuana system, state officials did not cap the number of growing licenses they would issue later this year, trying to give small growers a chance to get a toehold in the emerging industry.

They didn’t cap the size of growing operations, either. That might set the stage, some say, for big growers to dominate.

Former Microsoft manager Jamen Shively has already announced his plans to “go big” with a national brand of pot launched in Colorado and Washington, the two states to legalize recreational marijuana.

“The resources Big Marijuana would have open the door for rapid industrialization, which brings with it parallel challenges for advertising and marketing to kids,” said Derek Franklin of the Washington Association for Substance Abuse and Violence Prevention.

Franklin and others worry that what’s known as “Big Bud” would promote products to young users and lobby to dilute regulations, as they say the alcohol and tobacco industries have.

The state’s top pot consultant, Mark Kleiman, has expressed concerns about a big pot industry “devoted to creating and sustaining as much addiction as possible – including among minors – because addiction is where the money is.”

And a coalition of public-health advocates urged state regulators “to begin with smaller-scale operations that will have more limited capacity to advertise heavily.”

Based on what they say they’ve heard from the Washington State Liquor Control Board, the Seattle City Council is considering new zoning to allow indoor farms the size of a football field, or 50,000 square feet, to help production costs and retail prices compete with the black market.

Jeff Gilmore, who grows pot in his garage in Thurston County, which includes Olympia, acknowledges that some small farmers might have problems competing with large operations.

But like many, including Shively, Gilmore believes there will be room in the market for both big and small, the Budweisers and the microbrews of weed.

Gilmore, 60, says he’s never had a real job outside the pot business. The care he lavishes on his Blackberry Kush marijuana plants couldn’t be matched by Big Bud, he said.

“The hours people put into 100-square-foot grows are astronomical and the quality is fantastic,” he said. “Can you do that on a large scale and turn out a quality product? Can you produce a Stradivarius when you’re banging out 70 a day? I don’t think so.”

Alison Holcomb, primary author of the state’s recreational-pot law, agreed that the market likely will have diverse tastes.

“Somehow, artisanal cheese makers and craft distilleries manage to make a living despite the fact we have Kraft macaroni-and-cheese and Seagram’s,” Holcomb said.

It would be easier for the Liquor Control Board to allow only large growers because they’d be fewer and easier to regulate, agency spokesman Brian Smith said. But it’s the board’s intention to allow all types of business models to get into the industry, he said, and he believes “there’s room for everybody.”

There may be another powerful force that keeps Big Bud at bay. The federal government’s prohibition of marijuana makes it a risky business for big investors or corporations.

“As long as this remains a federal crime, I don’t see them coming in because they have to answer to shareholders,” said Hilary Bricken, a lawyer specializing in the marijuana business.

Holcomb believes the board eventually will cap farm sizes. The board recently issued initial rules to get feedback from stakeholders before writing final rules. It’s also waiting on a consultant’s projection of pot use in Washington, which should guide officials as to how much supply they need to meet overall demand.

“Just because they haven’t set caps in this version (of the rules) doesn’t mean they’re not going to,” she said.

The law requires the Liquor Control Board, at some point, to set the maximum amount of pot a grower can have on premises, she noted. Once they know demand, state officials could apportion licenses among different classes of growers, based on size.

Or the board could cap the share of the growing market for individual producers, Kleiman said. Or the board could cap total grams of the psychoactive ingredient THC each grower can produce, rather than the size of an operation by square footage or number of plants.

Kleiman said he did not advise the board to set any particular limits, noting that his team’s job is to answer questions about likely consequences of different actions, rather than arguing for one course over another.

“As to what the board will do,” Kleiman said, “your guess is as good as mine.”