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This Washington City Could Soon Shutter All of Its Medical Pot Dispensaries

The state's recreational shops are struggling to attract local customers because dispensaries have less tax liability and can sell pot for as little as one-third the price of commercial vendors.
December 10, 2014, 5:55pm
Photo via Flickr

All of the medical marijuana businesses in one city in Washington State could soon be closed, forcing patients to get their medicine from recreational pot shops.

Officials in Tacoma have proposed closing the city's medical dispensaries and collectives, of which there are at least 56. That's because Washington's new marijuana law legalizes only recreational weed stores — medicinal vendors have no way of getting certified. Tacoma Mayor Marilyn Strickland believes the arrangement is unfair, lending considerable advantage to what she describes as "illegitimate businesses."

Hundreds of medical marijuana dispensaries have operated in Washington since voters approved a medical marijuana ballot initiative in 1998. But legislators never succeeded in creating a way to certify or regulate dispensaries — in 2011, then-Gov. Christine Gregoire vetoed provisions of an amended medical cannabis law that would have regulated dispensaries and given patients ID cards — so they "sprung up with no oversight," a Washington State Liquor Control Board representative told VICE News.

"They've operated in a legal gray area," the representative said. "Nobody has the authority to regulate them."

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Gregoire said that she vetoed the dispensary regulation sections to protect state workers from being required to "authorize and license commercial businesses that produce, process or dispense cannabis" out of fear that they would be subject to federal prosecution. State workers are now licensing actual commercial vendors under a separate law, of course, with no intervention from the federal government.

She also vetoed provisions establishing a state registry of marijuana users and providers, making Washington the only state with no patient registry, according Mark Cooke, policy counsel for the American Civil Liberties Union of Washington State. He said that the legislation allowed patients to either grow a limited amount of their own marijuana, grow up to 45 plants in a group of 15 patients, or pick a "designated provider" who could grow for each patient.

"To say dispensaries occupy a legal grey area is generous," Cooke told VICE News, explaining they are basically illegal — a view that was echoed by Washington Department of Health spokesman Donn Moyer.

"Dispensaries are not allowed under Washington law," Moyer told VICE News. "There are lots of them, but they're not lawfully authorized."

Recreational shops have been opening in the state since July, but are generally struggling to attract local customers because medical marijuana dispensaries have less tax liability and can sell pot for as little as one-third the price of commercial vendors.

While medical dispensaries are essentially unregulated, recreational shops must compete with thousands of applicants for a license, pay a license fee, install security cameras, and undergo extensive background checks and testing of their products.

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Washington's legislature failed earlier this year to pass a bill that would make the state's medical marijuana law coherent with the regulations that apply to commercial outlets, after lawmakers could not agree on how local governments and the state would share the tax revenue.

Now municipal authorities are trying different approaches. Seattle plans to propose medical marijuana regulation guidelines in January that will include costlier testing requirements than those imposed on recreational sellers, but Tacoma is taking a harsher route.

"We do not have the kind of regulatory guidance that the state deserved to give us, and now we have to make sure our community doesn't get burned by this," Tacoma City Councilman Robert Thomas told the local News Tribune, which reported that the council plans to shutter all marijuana businesses other than a few state-licensed stores by next summer. Unlicensed distributors overwhelmingly outnumber the five state-licensed shops that exist in the city.

Many City Council members spoke in support of the crackdown, but a final determination has not yet been made, Mayor Strickland's secretary told VICE News.

The mandate would be a devastating blow to medical marijuana businesses in the area — and, the dispensary owners claim, their patients. Kimberly Braga, a certified naturopathic health practitioner who opened Ancient Holistic Remedies last year, told VICE News that her customers are mainly senior citizens and cancer patients who would not go to a "pot shop for their medicine."

"We opened in honor of my father, a Vietnam vet. Cannabis was always his medicine of choice," Braga told VICE News. Her father died recently at age 64 of liver cancer. She explained that her center also offers counseling, herbs, and teas, and argued that it cannot afford to pay the taxes she expects would accompany regulation.

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"We opened for older people who don't want to be exposed to the Washington pot crowd," Braga said. "Now they're going to force medical patients to go into a recreational cannabis shop, with paraphernalia and people doing dabs" — a reference to the inhalation of a potent dose of concentrated cannabis. "It makes me scared as a doctor to think of the types of cannabis my patients will be exposed to."

But the Liquor Control Board representative noted that all weed is tested before entering recreational shops, while the testing of medical cannabis is not required.

Native Washingtonian Kevin Heiderich, who manages two different medical marijuana collectives, told VICE News that weed has always been available and cheap in his home state — hence the problem with high taxes on legal recreational shops.

"This whole idea of the tax on cannabis doesn't mentally add up to people," he told VICE News. Heiderich said that patients who work at the recreational weed shops do their personal buying at his medical dispensaries because the greens are so much cheaper.

The state's Department of Revenue requires all retail businesses, including dispensaries, to pay sales tax, but the Liquor Control Board representative said that some 70 percent of dispensaries don't pay up. Braga is herself contesting paying taxes because she insists that she is running a non-profit health center.

Meanwhile, recreational shops pay retail tax as well as a 25 percent tax each time the product changes hands, which can be as many as three times: from grower to producer, producer to retailer, and retailer to customer.

The result is that medical marijuana generally costs $8-12 per gram, while newly registered commercial stores typically charge $20-35 per gram.

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Dispensaries might be able to sell more cheaply, but Jake Schrader, who ran a dispensary for 18 months before opening Clear Choice Cannabis as a stable state-approved recreational shop, expects the advantage to soon end.

"We have a cold relationship with medical businesses, because they think we're selling out — but it's a business decision," he told VICE News. "It's not fair that there's not a system of regulations for everyone."

Both Schrader and Heiderich agreed that regulation was key to keep medical dispensaries alive and fair — as long as the taxes aren't too high, Heiderich noted.

"We must preserve this for the patients," he said. "This is done by hippies and the children of hippies who kept the spirit of cannabis alive."

Follow Meredith Hoffman on Twitter: __@merhoffman

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