Washington Considers Combining Retail and Medical Marijuana

Washington

On February 13, 2015, the Washington state Senate adopted Bill 5052, introduced by Republican Sen. Ann Rivers in an attempt to combine the state’s recreational and medical marijuana industries. There is a certain simple logic to folding the preexisting medical market into the newly created retail system, and reformers see a chance to address some of the abuses that have taken hold in the absence of effective medical marijuana regulation.

However, the creation of a patient registry and the practical problems of implementation have alarmed activists. The bill is scheduled for a public hearing before the House of Representatives Committee on Healthcare & Wellness on March 5, where some of these concerns may be aired.

Coordinating the medical and recreational aspects of the marijuana industry may be the new focus of state regulation, but the details go deep into the weeds of local legalization history and politics. The next new wave of states to legalize recreational sales after medical use may be able to take something away from Washington’s experience.

 

The Perils of Step-by-Step Legalization

Initiative 692, approved by Washington State voters in 1998, permitted the use of medical marijuana for certain debilitating conditions but provided no mechanism for distribution or regulation. What followed was the development of a largely unregulated gray market with medical users allowed to grow as many as 15 plants, possess up to a pound and an half, and sell excess product through cultivation co-ops.

Retail sales, on the other hand, are regulated under the provisions of Initiative 502, approved in 2012. I-502 prohibits home growing, limits possession to one ounce, requires seed-to-sale tracking and testing for contaminants, and imposes a hefty 25 percent excise tax on production, processing and retail sales. It does not change existing medical marijuana law.

The result was predictable. The availability of cheaper, unregulated medical marijuana has promoted medical fraud and undercut the operation of licensed retail stores. Many, including Alison Holcomb, drafter of I-502 and former drug policy director of the ACLU, have called on the state legislature to eliminate the differences.

 

Senate Bill 5052 and Reaction

A central feature of SB 5052 is the creation of a registry of medical marijuana patients, and only registered patients will be allowed to benefit from certain special provisions in the law. These include the right to possess three times the recreational limit and grow as many as six plants at home. Registered patients will also be exempt from paying sales tax on medical products. The measure eliminates collective gardens, but allows small patient cooperatives for registered patients in remote locations.

Activists have become alarmed about the creation of the patient registry because of an understandable skittishness about law enforcement. They have also voiced concerns that certain medical strains will cease to be available. From a practical perspective, it is also not clear that the limited number of retail stores will be able to meet the needs of patients, currently being served by hundreds of medical dispensaries that would be shuttered under the measure.

More states are moving step-by-step through the process of decriminalizing possession, legalizing medical use, legalizing recreational use and eventually creating a regulatory structure to support commerce. The pace seems to be picking up. Although the medical marijuana step may come first, legislators should anticipate that recreational legalization may follow. It may now be wise to plan a tax structure and quality control measures that will allow the later addition of retail sales in a coordinated way.

Anne Wallace is a New York lawyer who writes extensively on legal and business issues. She also teaches law and business writing at the college and professional level. Anne graduated from Fordham Law School and Wellesley College.

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