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Published on Friday, September 19, 2014

Open for Business – A Look at Recreational Marijuana Industry Impacts

Almost two years after voters passed I-502, marijuana products are now being sold in retail outlets across the state.  However, many outstanding issues remain. Legislators still need to address the unregulated medical marijuana market, the Legislature must also address sharing a portion of the new excise tax revenue with cities, and recent court cases confirmed cities ability to apply local regulations to marijuana related businesses, for now. As we continue to explore this new market, we begin measuring the impacts on local governments. Youth access, and the perception that it is safe to use marijuana because it’s legal now, are only a part of the challenges faced by communities. Cities must continue to strongly advocate to receive a portion of the excise taxes in order to address similar public safety concerns.

Retail Outlets

As of early September, there are 57 recreational marijuana stores licensed by the Liquor Control Board (LCB). About 60 percent of those are located in city limits. Only 32 of the 57 are up and running at this time, and those that have opened their doors continue to struggle with a short supply of product to meet the high demand. We are just seeing the first reports of revenue flow into the state, but none of the excise tax revenue is returning to local governments. Since July 8, the recreational market has reached about $14 million in sales, and generated $3.5 million in excise tax revenue.

During their rule-making process, the LCB allowed for no more than 334 stores statewide, but continue to say they will revisit this number to meet demand for the product. That means that in the future, some jurisdictions could see additional retail stores. So far demand has outpaced availability; however, the LCB believes that growers are ramping up production which means retailers will have access to more product to help them meet the demand. Right now, the LCB is still working to get all 334 retailers licensed as well as continuing to process grower and producer license applications. The LCB recently announced that the retail store lottery winners who had not yet completed their applications have 60 days to do so, or will lose their lottery number to the next applicant in line.

Local Control

The Washington State Attorney General issued an opinion in January reaffirming cities local authority to regulate, including the ability to prohibit recreational marijuana businesses. According to MRSC, 30 cities currently prohibit recreational marijuana businesses. Cities are taking many approaches to recreational marijuana businesses, and AWC advocates for local control so that each jurisdiction can decide what is most appropriate for their communities.

Some cities with prohibitions have already faced legal challenges, including Fife, Wenatchee, and most recently Kennewick. At the end of August, a Pierce County Superior Court Judge upheld the City of Fife's ability to ban I-502 businesses. Wenatchee and Kennewick’s bans and Centralia’s moratorium are being challenged by prospective retail store owners as well. The Fife decision will likely be appealed, and we may see a reaction from legislators again this session. Attorney General Ferguson has announced that he will defend I-502 against any legal challenges that involve the question of federal pre-emption; however, Ferguson continues to support the position that cities have local authority to impose zoning and other regulations.

Act Now

AWC will continue to advocate for local control and push for revenue sharing options. As a city or town, you should be talking to your legislators about the need to maintain local authority over marijuana businesses, and the need for revenue sharing. It will be particularly difficult to convince the Legislature of the need to share revenue while they face their own ongoing budget crisis. It is going to be important for cities and towns to make a strong case for revenue sharing. You can help by collecting the information below and sending it to AWC.

Take Action

  • List the impacts of marijuana businesses and legal marijuana on your community.
  • Provide data about the criminal justice impacts of legalized marijuana such as police responses, impaired driving arrests, and especially juvenile marijuana related cases.
  • Calculate the costs related to code enforcement responses, neighborhood complaints, and costs related to enforcing local regulations regarding marijuana.
  • Share any other impacts your community has experienced including anecdotal examples.

Please e-mail this information directly to Candice Bock.