'Pot' sales kick off in Washington

Only 25 of 334 licenses issued, buyers running through stock

Deb Greene (right) chooses marijuana from a display case with the help of clerk Willis Bibbs at Cannabis City on the first day of legal sales of recreational pot Tuesday in Seattle. Greene was the first customer, having waited in line since Monday afternoon.

Deb Greene (right) chooses marijuana from a display case with the help of clerk Willis Bibbs at Cannabis City on the first day of legal sales of recreational pot Tuesday in Seattle. Greene was the first customer, having waited in line since Monday afternoon.

Wednesday, July 9, 2014

SEATTLE -- Washington on Tuesday became the second state where recreational marijuana is sold, though availability will be limited after officials approved just 25 of 334 allotted retail licenses.

Marijuana retailers eligible to open stores included Main Street Marijuana in Vancouver and Cannabis City in Seattle, the only one in the state's largest city, according to a list released by Washington's Liquor Control Board.

"What we found is that many of our applicants just weren't ready to be licensed yet," said Brian Smith, a spokesman for the agency charged with regulating the industry. Many are still negotiating with landlords, he said.

Washington -- home to Amazon.com, Microsoft and Starbucks -- joins Colorado in permitting the sale of marijuana for recreational use after voters in both states approved 2012 ballot initiatives. Colorado retailers began selling it in January.

"We've been slammed since we opened," said Zack Henifin, 26, co-manager at Bellingham's Top Shelf Cannabis, which opened about 8 a.m. Washington time to a line around the corner. One gram of marijuana sells for $16 to $25 after a 33.7 percent tax, he said.

"Everyone is excited to buy marijuana legally in Washington," Henifin said. "If it continues like this, we're going to be close to selling out."

Alaska voters will consider a measure for recreational sales in November, and an effort is underway to place a similar initiative on the ballot in Oregon. Two years from now, advocates of marijuana legalization plan campaigns in Arizona, California, Massachusetts, Maine and Montana.

Selling marijuana remains illegal under federal law, and any marijuana bought in Washington must be consumed there.

Cannabis City owner James Lathrop said he invested $50,000 in his store, located in an industrial section south of downtown Seattle, along a six-lane road and with no off-street parking. He said he was turned down by 10 landlords who didn't want to be associated with marijuana.

The store's name is in small print above the mailbox. Under state rules, cannabis can't be displayed in windows, and stores can't be near schools, playgrounds, libraries or parks.

"This spot was really a terrible spot, but it's cheap rent," said Lathrop, who previously ran a bar. "Most of my costs have been in making it beautiful."

Inside, recycled glass jewelry cases display pipes and bongs -- devices that filter marijuana smoke through water.

Washington also issued 90 licenses to producers and processors, Smith said, citing data as of last week. There's no limit on how many such permits can be issued.

Under the ballot measure approved by Washington voters, producers, processors and retailers each must pay the state a 25 percent excise tax. The actual levy on marijuana sales will be lower than the combined 75 percent, because many producers and processors will operate as one entity.

Revenue in Washington from recreational sales is projected to fall short of initial estimates. Two years ago, state officials projected tax revenue totaling as much as $1.9 billion from July 2013 through June 2017. Officials last month estimated revenue at $586 million over the four years starting in July 2015.

Washington state growers are still struggling to produce enough product to meet demand.

Colorado, which initially allowed only existing medical marijuana retailers to sell marijuana for recreational use, collected $10.9 million in tax revenue in the first four months of sales. Consumer demand in the state doubled prices in the first week, to an average of $400 an ounce, compared with $200 an ounce for medical marijuana, partly because of a higher tax on recreational sales.

In Washington, unlike Colorado, marijuana-infused foods such as chocolates and mints won't immediately be available, Smith said. The liquor board will approve all marijuana-infused products, packaging and labeling.

"The board is very concerned that the products are not especially appealing to children," Smith said.

Cannabis City store manager Amber McGowan said she expects the state to over time allow the sale of edible marijuana products.

Democratic Washington Gov. Jay Inslee warned against marijuana sales to minors.

"It is incumbent on everyone -- retailers, parents, health professionals and public officials -- to do everything possible to keep pot away from kids," he said in a June 24 statement. "If we fail in that, Washington's regulated, retail market for marijuana may fail too."

A Section on 07/09/2014