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.