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STEVE ELLIOTT

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Washington state’s absurdly low cap on recreational marijuana cultivation could create a number of consequences for the state’s nascent legal cannabis industry, almost none of them good. Among the possible, even likely effects of the too-low production cap include high prices, inventory shortages, and concentration of cultivation licenses in just a few wealthy hands.

Last year, the Washington State Liquor Control Board established — OK, pulled out of their asses — a 2-million-square foot “canopy cap” on the area used for recreational marijuana cultivation in the state under legalization measure Initiative 502, reports the Marijuana Business Daily. It turns out that 2 million square feet of canopy space — a rather arcane way of measurement, on the face of it — equals about 46 acres of growing weed. Regulators opted for the canopy measurement rather than plant counts.

If the Liquor Control Board’s number crunchers are in the neighborhood of accuracy (and there is, of course, no guarantee they are, since their actions and pronouncements haven’t been particularly confidence-inspiring, so far), 2 million square feet of canopy space can product about 40 metric tons of usable marijuana, and 40 metric tons of production for cannabis concentrates.

Forty metric tons almost certainly equals one shit-ton of cannabis, according to our involved scientific calculations, but there’s one problem with that amount. You see, Washington state marijuana users burn through 175 metric tons of weed each year, according to a recent study from the RAND Corporation — which means that from the get-go, the Liquor Control Board is ceding three-quarters of the state’s marijuana sales to the black market.

With production unwisely capped at just one-quarter of what state residents already consume, it doesn’t take Einstein-level math skills to figure out that state-licensed pot stores are going to have empty shelves. A quick look at the long lines and inventory shortages experienced in Colorado will underline concerns about such problems arising in Washington.

Somehow, three out of every four marijuana sales still being illegal wasn’t exactly that way we’d pictured “legalization.” But then, what the hell do we know? We thought “legalization” meant  you got to grow your own, but apparently not, at least if you listen to morons like Rectal Russ Belville and Marc Emery, both of whom vocally supported the execrably written I-502, and both of whom loudly and obnoxiously assailed those who dared to point out its shortcomings.

Steve Sarich, Cannabis Action Coalition: "Quote" [KOMO News]
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Steve Sarich, Cannabis Action Coalition:
“They have no clue what they’re doing”
[KOMO News]

“They have no clue what they’re doing. Big surprise?” Seattle-based activist Steve Sarich of the Cannabis Action Coalition told Toke Signals on Monday. “Three thousand growers’ licenses, and maybe only 22 to get licenses? There will be a lot of wailing and crying.

“We predict that it will only be a chosen few large growers that get licenses,” Sarich said.

The figure of 175 metric tons arrived at by RAND is more than twice the amount estimated by Washington’s Office of Financial Management, which in 2012 guessed annual cannabis usage in the state at around 85 million metric tons.

Now, those rates of consumption, being roughly twice the previous estimates, mean that sales should go briskly, once the Washington recreational marijuana stores finally open later this year. Washington state officials certainly think so; they’re predicting sales of $1 billion. The Marijuana Business Factbook estimates initial sales of up to $500 million. But those figures could double, if the RAND report is accurate.

The data on marijuana consumption was compiled using an online questionnaire of the state’s marijuana users (this reporter was among the respondents), combined with some federal research. Amusingly, the survey included photos of various amounts of marijuana to help respondents remember the actual quantity they smoked every day.

By the way, if that survey was correct, King County along (where Seattle is located) smokes almost one-third of the weed consumed in the entire state every year. Mad props!

Canopy Limits Could Mean Just A Few Licensed Growers

Those absurdly low canopy limits could have yet another unfortunate effect in the real world — limiting the number of growing licenses awarded by the state.

While the state didn’t cap the number of growers, the canopy limit could quickly be reached as the Liquor Control Board vets applications and distributes production licenses. The licenses are awarded in three tiers, based on square footage. Tier 1 is for less than 2,000 square feet; Tier 2 is from 2,000 to 9,999; and Tier 3 is from 10,000 to 30,000 square feet.

Since growers are allowed to apply for up to three licenses, some well-heeled and ambitious cultivators have applied for the maximum of three Tier 3 licenses.

As pointed out by Seattle-based cultivator Bill Wagenseller in Marijuana Business Daily, if the application process is dominated by big growers who each have applied for three Tier 3 licenses, that could result in as few as 22 cultivation licenses being awarded statewide.

Many prospective growers are just applying for the maximum allotment of square footage and praying that regulators deny most of the other applicants, according to Seattle-based attorney Hilary Bricken, who specializes in cannabis clients. “That’s no way to plan your business,” she said.

The Problem With Setting Your Sights On Only A Quarter Of The Market

While it may seem prudent, even laudably conservative, for the Liquor Control Board to assume it’s going to capture only one-quarter of the marijuana market with its highly taxed, probably dearly priced marijuana (upon which it will be perfectly legal to use a couple hundred pesticides), there’s a problem with that scenario, specifically with a cap on production that is set at only one-fourth of the state’s estimated consumption.

That problem is the fact that medical marijuana patients are being asked to “transition over” to the I-502 recreational marijuana stores for their medicinal supply of cannabis — when almost any rational projection of supply and demand shows those stores running out of marijuana very soon after opening.

Add to this the fact that Washington Attorney General Bob Ferguson has said that local municipalities can ban pot shops, and access to cannabis is starting to look pretty spotty in large portions of the state.

Never mind that the cannabis in those few stores will likely be over-priced and full of pesticides. How are patients supposed to relax and rest easy about safe access when the stores probably won’t have any cannabis to sell them, at any price?

 

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