High times in Washington and Colorado
Attendees enter into Hempfest on April 20, 2014 in Seattle, Washington. Seattle Hempfest is an annual event for the purpose of educating the public about the benefits of marijuana and advocating for its decriminalization.
It's the first day that residents in the state of Washington State can walk into a store and legally buy marijuana for recreational purposes. Washington is the second state to legalize pot -- Coloradans have been able to purchase recreational pot since January 1st. But there are some notable differences in how each state regulates the still federally illegal plant.
One major difference is the number of retail outlets. Washington has capped the number 334, while Colorado has no cap. And initially Colorado did not require lab testing on pot.
“Everything that is sold in a retail marijuana store in Washington has been tested,” says Brian Smith, a spokesman for the Washington State Liquor Board, which drafted Washington’s new marijuana laws.
Colorado retailers are also required to grow nearly all the pot themselves. In Washington, retailers aren’t allowed to grow their own. They have to purchase it from a licensed growers and processors. And Smith says it’s taxed heavily: “25 percent from producers to processors, 25 percent from processors to retailers, and 25 percent from retailers to consumers.”
Revenue projections in both states are, like many residents, high. Washington predicts nearly $600 million over the next four years.
“What people forget," says Mark Kleiman, “is the high price of cannabis today reflects the legality. But once you don’t have to hide, you can do things much more efficiently.”
Kleiman is a UCLA professor of public policy and the author of several books on drug policy. He predicts that in the long run, legalization will drive pot production costs down. As a result pot prices will plummet, along with tax revenue.
For more of Marketplace's coverage on the legalization of retail marijuana sales in Washington, check out the links below:
Here at Marketplace, we've covered the growing marijuana industry in Washington since it was first approved for recreational use -- From the search for a marijuana consultant by the Washington State Liquor Control Board (which they later found), to figuring out a price structure, to the advent of businesses hoping to take advantage of legal sales.
And remember when the Denver Broncos took on the Seattle Seahawks at this year's Superbowl, and advocates for legalizing marijuana spent $5,000 on pro-pot billboards near the stadium? The event sprouted a lot of nicknames -- "The Stoner Bowl," for example.
But growing a business that's illegal most everywhere else can be tricky, especially when it comes to managing finances.
That's because most banks have decided that the venture is too risky, and are reluctant to do business with the marijuana industry. It's forcing many pot-related businesses to use cash only, which is nearly impossible as operations and revenue grow. With the amount of money involved things like sales, taxes, and licensing fees, it's difficult for businesses to operate without access to bank accounts.
Talk about a buzzkill.