SEATTLE (AP) — Pete O’Neil saw Washington’s legalization
of marijuana in 2012 as a path to retirement, or at least to his kids’
college tuition.
He’s paid tens of thousands of dollars in rent on
possible locations for a pot-shop chain, hired lawyers and picked out
flooring. But now the nation’s second legal recreational marijuana
industry is about to start without him.
O’Neil struck out in
Washington’s lottery for coveted pot-shop licenses. He has
unsuccessfully tried to buy companies that scored a lucky number. In
frustration, he’s turning what would have been his Seattle retail store
into a medical marijuana dispensary.
"Our company is bleeding money, and I haven’t sold a single joint," O’Neil says.
As
Washington plows toward the legalization of pot, it’s finding that
getting the cannabis market off the ground has been even tougher than
anyone imagined.
Among the frustrated are growers who have been
waiting months for permission to start raising their bar-coded plants;
advocates who wish more public health messaging had been done by now;
and would-be pot vendors like O’Neil who say bad luck, minor oversights
on their applications, or errors by state officials have torpedoed
otherwise promising efforts.
Washington’s Liquor Control Board
expects to issue the first 15 to 20 marijuana retail licenses July 7,
months later than first expected, but it’s not clear how many of those
shops are ready to open. Board staff said last week only one shop in
Seattle is prepared for its final inspection.
Randy Simmons, the
board’s legal pot project manager, predicts a "bumpy road," with an
initial shortage of stores and marijuana alike. Many businesses that got
lucky in the pot-shop lottery in April have since been disqualified,
such as by being too close to schools or playgrounds. Others haven’t
finished building or made deals to buy pot from licensed growers.
"This
is a gold-rush mentality and everybody wants to get rich," Simmons
says. "Some people just don’t have an idea what they’re doing — no clue
at all. It slows down the process."
Pot shortages are certain.
More than 2,600 people applied last fall to grow marijuana, but those
applications are being reviewed glacially by the board’s 18 swamped
licensing investigators. Only about 80 growers have been approved, and
some won’t harvest by early July. Hundreds of applicants haven’t even
been assigned an investigator.
Prices could run more than $25 a
gram for the heavily taxed pot — about twice what the state’s
unregulated medical dispensaries charge — until more growers are
licensed, Simmons says.
There will be no edibles available. People
who want to make brownies, cookies or other pot-infused treats must
have their kitchens inspected by the state. Of the two tested so far,
one failed — it didn’t even have a hand-washing sink. The report on the
other hasn’t been completed.
The board has capped the number of
retail stores statewide at 334, but dozens of jurisdictions have banned
them, prompting lawsuits in two cities.
Colorado, which also voted
in 2012 to legalize pot for adults over 21, is bringing in millions of
dollars a month while Washington struggles to build its industry. Unlike
Washington, Colorado already had a regulated medical system, making for
a smoother transition when it allowed dispensaries to begin selling for
recreational use in January. Washington has also done more work
developing marijuana safety standards.
Many industry hopefuls have
found Washington’s delays maddening. Douglas Taylor spent $230,000 on
land for his planned outdoor grow. The payments run $1,600 a month, and
he says the board hasn’t even started reviewing his application.
Meanwhile, he has missed the outdoor growing season — a revenue loss of
about $500,000, he estimates.
Ed Rhinehart, 58, a retired
businessman, counted on being licensed for an outdoor grow by April. He
hired four workers, spent $22,000 on a required fence and dropped
$10,000 on surveillance cameras. April 15, he laid everybody off. After
months of back-and-forth with the board, Rhinehart expects to get his
license soon. But he too will have missed the outdoor season.
"If I had to do it all over again, I wouldn’t have done it," he says.
Many
would-be retailers allege missteps by the board. For example, they
point to mixed signals about whether officials would allow multiple
people to apply for retail licenses using the same address. The board
did, and some groups formed numerous corporations to apply myriad times —
significantly boosting their lottery odds and prompting complaints they
gamed the system.
Others say they were kicked out of the lottery
because inaccurate measurements placed them within 1,000 feet of a
protected area, because board staff misread their criminal history, or
because they supposedly failed to turn in complete applications.
Simmons
says anyone who believes mistakes were made in their removal from the
lottery should appeal, and 127 people have done so. But it’s unclear
what the state will do for them if they succeed.
Despite the
bumps, others credit the board for its handling of a monumental task.
Bob Leeds, who retired from banking and social-services work, is a
partner at Sea of Green Farms, a licensed pot-grower in Seattle. His
team just finished harvesting 40 pounds — some of the first marijuana
that will be legally sold in Washington.
"It’s the most fun thing
I’ve ever done," he says. "I had never seen a marijuana plant until a
year and a half ago. Now I own 5,000 of them."