Would-be pot retailers reporting widespread problems with Washington lottery

Andrew Elliott is hoping to score one of the golden tickets of Washington’s legal marijuana industry: a license to sell pot, granted in part on a series of high-tech lotteries held this week.

He almost didn’t get a shot. Just days before the lotteries began, the state’s Liquor Control Board informed him he had been disqualified because his proposed pot shop in Seattle’s Queen Anne neighborhood was too close to an area frequented by children — a game arcade which, it turns out, doesn’t exist.

Thanks to quick work by his lawyer, the board agreed at the last minute to put Elliott back in the Seattle lottery. But some others disqualified haven’t been so lucky.

Interviews with applicants and their attorneys detail a number of reported problems, from one rejection based on a typo to potential issues with the state’s software to technicalities that torpedoed what might otherwise have been strong applications.

Most troubling, they say, is that some people weren’t informed until this week, after the lotteries had started, that they’d been disqualified, leaving them no meaningful way to appeal what might have been mistaken decisions by the board.

A Cowlitz County Superior Court judge on Thursday halted the lottery for marijuana retail licenses in Longview until a hearing set for May 7. An applicant there, attorney Liz Hallock, sought the order, arguing that the board’s reason for disqualifying one of her applications was vague.

In an interview Friday, Alan Rathbun, the board’s licensing director, and Becky Smith, its marijuana program manager, said they were confident the board had treated all applicants fairly, and that they had even erred on the side of including people in the lottery.

Three people, including Elliott, who quickly pointed out errors in the board’s decision to reject them were reinstated in time for the lottery, they noted. They said the board so far has received fewer than 10 requests for an appeal of lottery rejections.

Rathbun said there would be an appeal process, but he and Smith acknowledged they don’t know what the remedy would be for applicants who win their appeal. By that point, the lottery will have taken place without them.”We couldn’t delay the lottery to wait for all potential appeals to come through,” Rathbun said.

The board is pushing to have pot shops open by early summer. It is initially limiting the number of stores statewide to 334, but it received more than 2,100 applications for licenses. It hired Washington State University to hold lotteries this week, with randomly generated numbers assigned to applicants, for 78 cities and counties where there were more applicants than there will be licenses awarded. Those who score a low number in the lottery get first crack at being approved for a license.

Beginning in late February, applicants had a month to submit five pieces of information, including their criminal history and a lease or signed “letter of intent” from a landlord indicating that they had a valid location for a pot shop, to be cleared for the lottery.

For weeks, the board has warned of a high rate of failure.Many of those who completed their applications still faced disqualification if their proposed location was within 1,000 feet of a school, day care, game arcade or other venue frequented by children, or if their criminal history was problematic.

Ultimately, 1,170 qualified for the lottery. The fact that so many did suggests the lottery is working, board officials said.

An attorney who represents marijuana businesses, Hilary Bricken, said one client learned he was disqualified this week because the liquor board had made a typo in the address of his proposed store, putting it too close to a school. Another lawyer, Rachel Kurtz, said one of her clients had two applications withdrawn: One was supposedly too close to a school, the other to a daycare.

But Kurtz said she’d been unable to find any nearby schools or daycares.

Several of those rejected said they still don’t understand why they were, and they wished the board had given them a chance to correct shortcomings.

Derek Anderson lost out on three well-financed applications — in Bellevue, Tacoma and Marysville — because he didn’t realize the letters of intent he had received from a commercial real-estate firm weren’t signed.”All they had to do was say, ‘Hey, Derek, did you realize these letters aren’t signed?”‘ he said.

But Rathbun said there was no way the board could review all applications as they were submitted, so the fair thing was not to review any until the application window had closed. By then it was too late for any fixes, and it was the responsibility of the applicant to get their documents in order.

Hallock, who obtained the court order in Longview, said she suspected her application was denied because the board might not have been using the most up-to-date software, and thus might not have been able to view all the documents she submitted.

Pete O’Neil, who runs a medical marijuana shop in Seattle, was told two of his three retail applications had been denied because in the computer system the state used to accept applications, he left some fields blank. But screen shots of his application proved otherwise, and the board put him back in the lottery this week after his lawyer threatened to go to court.

Robert Flatt, 65, had no such success overcoming computer issues for the retail lottery in Vancouver. An investigator with the board emailed him to say she could see the documents he uploaded, but that he hadn’t officially submitted them.

Flatt said he still doesn’t understand how the board received his documents if he didn’t submit them.”I’m not some monkey who can’t read a document and send it in,” he said.

Reporting by Gene Johnson/Associated Press