Washington state’s recreational pot dispensaries will receive their first licenses this week to sell a legal product that’s less accessible than black market marijuana. When Colorado began selling pot in January, it had to deal with high prices and fears of shortages, but business is still doing well. Washington, on the other hand, has specific issues. As The New York Times reports:
- The weed isn’t where the smokers are: Only 55 percent of Washington voters approved legal marijuana, and most of them are in western Washington near Seattle. But the Seattle area only has one dispensary. Meanwhile, Vancouver, which is smaller and much more conservative, might have three. Washington is only issuing 24 of 334 available licenses. It all came down to who could get approved for a permit. Mikhail Carpenter, a spokesman for the Washington State Liquor Control Board, which regulates pot, said “a lot of people weren’t ready.”
- The weed isn’t ready: Colorado let medical marijuana dispensaries turn into recreational sellers, so they had product available. In Washington people are starting from scratch and only received licenses to grow in March. Many places will ration product initially.
In other words, legal marijuana will be less accessible and more expensive than black market pot, which only makes the illicit, unregulated market more appealing. Policy experts have offered a number of solutions on that front. Mark Kleinman, a policy professor at UCLA, argued in a New Yorker profile last November that Washington should start off with lower taxes on weed. In Washington there’s a 25 percent tax on the producer and the processor, on top of the tax customers pay.
Kleinman also argued that law enforcement needs to step up its policing of the black market to support the legal market. “One of the ideas that has actuated the cannabis-legalization movement is that law enforcement really has bigger fish to fry,” he told Washington officials. “But the implication of … a legal commercial market is not that you need less enforcement … In the long run, there shouldn’t be much of an illegal business … In the short run, though, the answer is just the opposite.”
The biggest issue driving up prices, however, is the fact that marijuana is illegal in the rest of the country. As Matt Yglesias explained at Slate in 2012, marijuana would cost “closer to $3 an ounce of usable product than the current $300” (in Washington it’s closer to $400) if growers could grow it the way we grow tea. The threat of a federal crackdown also prevents the industry from reaching the sort of scale that would make states significant tax revenue. But that’s a federal matter. All Washington can do is attempt to work out the early kinks in its launch: sell more product at better prices with lower taxes.
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