10 years later, industry says Washington’s legal marijuana needs an update

Dec 20, 2021, 2:56 PM | Updated: 3:17 pm

weed, marijuana...

Mike Medina picks out a free joint after attending the Joints4Jabs COVID-19 vaccination clinic, hosted by Pliable, at the Uncle Ike's White Center cannabis shop in June 2021, in Seattle, Washington. (Photo by David Ryder/Getty Images)

(Photo by David Ryder/Getty Images)

Next year will mark the 10th anniversary of the passage of I-502, the ballot initiative that Washington voters approved 56–44% in November 2012, becoming – along with Colorado – the first states in the nation to take the plunge into marijuana legalization.

I-502 created a regulated market that generates hundreds of millions in tax dollars for the state through the sale of small amounts of marijuana and other cannabis products to those 21 and over.

Amazon will no longer test job seekers for marijuana

A lot has changed in the last nine years, but some key aspects of the policy remain the same, and the industry says it is time for updates.

“The 10-year anniversary of the passage of Initiative 502, in some ways, feels like it’s been a lifetime, and other ways feels like it was just yesterday,” said Vicki Christophersen, executive director of the Washington CannaBusiness Association. “We are really trying to look at this from that lens, and in terms of what do the next 10 years look like for the industry in Washington state? How do we set ourselves up? The entrepreneurs and risk takers that got into the industry here, how do we set them up for success for the next 10 years, which likely includes some form of federal legalization in a federal marketplace? In fact, even a global marketplace? What are the barriers that are keeping our companies from being able to succeed?”

At the top of the list of things marijuana companies need to succeed: changing the state law to allow for venture capitalists to take part in the industry.

The need for marijuana venture capitalists

“We are still one of only two states in the entire country that don’t allow investment dollars to flow into the industry from out of state,” Christophersen said. “That may seem daunting to some people, like somehow allowing that would allow, I don’t know, big tobacco or whoever to come into the industry. But the reality is, venture capital is a key, really, to launching a business. And that’s especially true with the marijuana industry.”

She says the average cost for a retail store alone is $5–10 million to get it started.

“We have to have a location and all the security that’s required, and then you have to secure inventory, and you have to hire staff, and all of those things have to happen before you can even open up,” Christophersen explained. “What we see is people really struggling to access capital. If you don’t have money yourself, or you don’t have a rich relative that lives here in Washington, you’re out of luck.”

That causes equity issues, which Christophersen says also hurts the marijuana consumer.

‘”We see this for brands on the processor side, brands that are really establishing themselves as things that customers really like — whether those are the products that help with headaches, or some health issues, but also products that are innovative and different, where you need that next million dollars to expand your brand,” she said. “We really believe that it is something that the state needs to look at about how to safely allow capital to flow, as it does with every other business.”

There is a lawsuit currently in federal court on the issue that was filed by a would-be investor in Idaho. The suit claims Washington’s law violates the U.S. Constitution’s Commerce Clause, so they’re keeping an eye on that outcome, but also pushing the change as one of their legislative priorities in the upcoming session that starts Jan. 10.

Because that is also a significant barrier when you look at the legal marijuana industry with a social equity lens.

“We absolutely agree that the system unintentionally left people out, and it’s something that has to be rectified. We’re very concerned, though, that if we give out a bunch of new social equity licenses, which we think there should be some issued, if we don’t fix some of these regulatory problems and these barriers that the businesses have, we’re going to have the same problems for any new licenses as the current licenses have,” Christophersen explained. “So we think it’s really important that alongside that, the very important conversation on social equity, we also look at how we make this regulatory system better so that everybody can succeed.”

Changes for the Liquor and Cannabis Board

“The other thing that had become really clear to us, and some view this as an attack — and I just want to start by saying I don’t view it as an attack. We started to look at the last 10 years at the Liquor and Cannabis Board — how it is constructed,” she said, specifically pointing to the fact that the LCB is made up of just three board members, as it has always been.

“Prior to 2012, the Liquor and Cannabis Board was the Liquor Control Board, and its job, primarily, was to sell alcohol and make money for the state. It wasn’t as much this, but what happened in 2012 is not only the passage of Initiative 502, but the passage of privatization of liquor sales,” Christophersen recalled, pointing to the LCB being tasked that same year with shifting out of only state-run liquor stores to private stores selling booze as well, and making sure that was all being done as it should be.

“The breadth of the work that they do expanded exponentially with the passage of those two initiatives, and what didn’t evolve was the board itself,” she said. “So one of the things that we’re going to suggest is that perhaps having just three board members is not enough for the scope of work that they have.”

They looked at other board models and came up with a formula they like.

“One that really stood out to us is the Gambling Commission. The Gambling Commission has five commissioners, appointed by the governor, and then four ex officio legislators,” Christophersen said. “So the legislators who are going to be taking on whatever it is that the Gambling Commission is working on, there’s some continuity and some conduit between the legislative and the regulatory work. That seems to work pretty well. And so we’re suggesting that the LCB be changed to match that.”

“It’s been a bit perplexing to us that some at the LCB have viewed that as sort of an attack on the agency. We don’t see it that way,” she said. “We see it more as how do we modernize this board to fit the scope of work that they have? So we’re going to be bringing legislation forward on that.”

Unregulated THC processed products

But the big issue is the battle over unregulated THC processed products.

“So the other issue we’re looking at is the explosion of what we would call unregulated THC processed products in the convenience stores and online,” she said. “This is as a result of sort of a loophole in the federal farm bill that allowed hemp to be legalized. And really, there are two separate problems, but they’re getting conflated in the public dialogue.”

One of the problems, she explained, is that the unregulated THC products are being allowed, or the enforcement is not occurring to keep them out of the unregulated market.

“So kids have access,” Christophersen said. “They are not tested, they are not regulated. We don’t know what’s in them. If you walk into a convenience store and buy what’s called a Delta eight THC gummy, you don’t know what’s in it because it’s not regulated.”

“On the other hand, the hemp industry and the adult use cannabis industry are doing a lot of work together to innovate on new and interesting things,” she added. “Some of these are health related products that have no intoxicant. They are all different CBD, CBG, CBN — there’s all these different things and they all have different properties. There are also different THC cannabinoids, there’s Delta eight, Delta nine, Delta 10, the hemp industry and the adult use cannabis industry are doing a lot of work together to innovate and bring safe products in the regulated market.”

But, the LCB has interpreted current law as not allowing that innovation on the regulated market.

“So we’re being told you cannot bring in hemp products into the adult use market and innovate,” Christophersen said. “The problem with that is that just feeds that illicit market, in our mind.”

“So what we’re going to do is bring legislation forward that clarifies that within the licensed and regulated industry. We can collaborate with the hemp industry and we can bring in products as long as they’re tested and safe and transparent to the public as to where they come from,” she noted. “That’s where that innovation should occur.”

Large magazines, ghost guns, open carry restrictions on 2022 gun safety agenda

Christophersen added that the industry strongly believes the state needs to have a coordinated effort to enforce the rules on those unregulated products that kids can buy on the internet today.

View a full list of the Washington CannaBusiness Association’s 2022 legislative priorities here.

Local News

Construction on the Interstate 90 bridge light rail...

Kate Stone

New issue may impact opening of Sound Transit’s Eastside light rail line

Crews discovered loose and broken tiles on the South Bellevue station passenger platform, according to a spokesperson.

3 hours ago

left lane camping...

Chris Sullivan

Left lane camping rule doesn’t apply to express toll lanes

It's been eight years since the 405 Express Toll Lanes opened, and there continues to be confusion over whether the left lane camping rule applies.

3 hours ago

KCRHA partnership for zero...

L.B. Gilbert and Frank Sumrall

King County homeless organization lays off one-third of its staff as pilot project expires

Known as Partnership for Zero, the goal was to get nearly everyone who was homeless in downtown Seattle off of the streets within a year.

13 hours ago

Seattle clouds weather...

Bill Kaczaraba

Count out 80-degree days in Seattle as El Niño arrives

Remember those 80-degree days of summer you loved? Well, kiss those goodbye. But more nice days are coming.

15 hours ago

Seattle Seahawks run onto the field during team introductions before an NFL football game against t...

Feliks Banel

Memories of the magical 2013 Seahawks season refuse to fade

Sometimes, we can't help but look back at Seahawks history. It was a decade ago when the magical 2013 season unfolded and culminated in a Super Bowl title.

15 hours ago

tokitae killer whale...

Heather Bosch

Beloved killer whale Tokitae’s ashes to be laid to rest in Puget Sound

The Lummi Nation, which considers whales family, plans to welcome the killer whale Tokitae in a private, traditional ceremony.

17 hours ago

Sponsored Articles

Swedish Cyberknife...

September is Prostate Cancer Awareness Month

September is a busy month on the sports calendar and also holds a very special designation: Prostate Cancer Awareness Month.

Ziply Fiber...

Dan Miller

The truth about Gigs, Gs and other internet marketing jargon

If you’re confused by internet technologies and marketing jargon, you’re not alone. Here's how you can make an informed decision.

Education families...

Education that meets the needs of students, families

Washington Virtual Academies (WAVA) is a program of Omak School District that is a full-time online public school for students in grades K-12.

Emergency preparedness...

Emergency planning for the worst-case scenario

What would you do if you woke up in the middle of the night and heard an intruder in your kitchen? West Coast Armory North can help.

Innovative Education...

The Power of an Innovative Education

Parents and students in Washington state have the power to reimagine the K-12 educational experience through Insight School of Washington.

Medicare fraud...

If you’re on Medicare, you can help stop fraud!

Fraud costs Medicare an estimated $60 billion each year and ultimately raises the cost of health care for everyone.

10 years later, industry says Washington’s legal marijuana needs an update