Lawmaker wants state to get more money from legal pot

By GENE JOHNSON Associated Press Published: Mar 12, 2013 at 2:09 PM PDT Last Updated: Mar 12, 2013 at 6:16 PM PDT
Lawmaker wants state to get more money from legal pot »Play Video
(AP Photo/Ted S. Warren)
SEATTLE (AP) - A key lawmaker is proposing changes to Washington's new law legalizing marijuana, saying the state can squeeze a lot more money out of people who want to participate in the recreational pot marketplace.

Rep. Christopher Hurst, an Enumclaw Democrat who leads the House committee that oversees cannabis, said Tuesday the state will be leaving "money on the table" unless it increases the fees required to obtain a license to grow, process or sell marijuana.

Initiative 502, passed by voters last fall, legalized the possession and private use of cannabis by adults 21 and over, and called for the state to set up a marijuana distribution system. Voters in Colorado passed a similar measure.

Hurst introduced a bill Tuesday that would amend the law by creating a new "certificate" to be issued by the Liquor Control Board, which is setting rules for the industry, as a precursor to obtaining a license. It would require the board to set the price of the certificate at no less than fair market value. It's unclear what fair market value would be, he said, but he estimated it could range from $1,000 in a rural town like Forks to $250,000 in downtown Bellevue - perhaps $50 million or more in additional state revenue this year.

The state is facing a "billion-dollar mandate" to improve education spending, Hurst said in a news release, and "it would be foolish to leave money on the table in the face of a daunting number like that."

As passed, I-502 requires a $250 application fee and $1,000 annual license renewal. Hurst's bill would allow the board to charge a reduced price for the annual renewals, in line with the $250 annual renewal fee for liquor licenses.

The bill also would allow marijuana businesses to be located closer to parks, daycares and schools - 500 feet instead of 1,000. Hurst said the 1,000-foot rule is too strict because it could preclude pot shops from opening in urban areas, thus forcing people to travel farther to buy pot. That could cut sales and state tax revenue while fostering a black market.

Amending a voter-approved initiative in the first two years after passage requires a two-thirds majority in the Legislature. Hurst said he didn't think the measure should be controversial, but Alison Holcomb, the author of I-502 and the drug policy director at the American Civil Liberties Union of Washington, said she had concerns.

"It might be a bit premature because we haven't had a chance to see how this fledgling marijuana industry might unfold," she said.

Jacking up the cost of participating in the legal market is especially troubling, she said. At public forums on the new law around the state, small-time marijuana growers and would-be sellers have urged the Liquor Control Board to make it possible for them to get involved.

"One of the goals of I-502 is to bring the illicit market under regulatory oversight," Holcomb said. "There are hundreds of people who are growing illicitly and who want to participate in the regulated market. If we make it prohibitively expensive for them to do so, they're going to continue to grow illicitly."

Hurst told reporters in a news conference that such economic barriers will keep fly-by-night operators and criminals out of the market. There's no place for the small-time growers Holcomb referenced to get licenses because they've been breaking the law, likely will continue to break the law, and probably don't have the money to provide the security and stability the Liquor Control Board is looking for, he said.

Instead, he suggested they could go to work for more reputable license-holders.

By contrast, a number of medical marijuana dispensaries have positioned themselves well for a recreational pot license by voluntarily paying state business and sales taxes, Hurst said.

"They were doing the best they could to comply with a very, very complex law," he said. "But if you've been growing illegal marijuana for the last year or 10 years or 30 years and not paying taxes and violating all these laws, why would we give any of those people a certificate? ... Why reward bad behavior with a gold mine?"

Holcomb also argued that increasing the cost of doing business risked inviting big commercial interests to the market - a point echoed in a letter the ACLU and several local public health and substance abuse prevention organizations sent to the Liquor Control Board on Tuesday.

"Our experience with tobacco and alcohol cautions us that opening the door to large enterprises would run the risk of aggressive marketing and promotion of marijuana use generally, which increases the likelihood of increased marijuana use by all people, especially youth," the letter said.

Hurst said that's not an issue because the law already includes marketing restrictions.

The groups included the Children's Alliance, the Science and Management of Addictions Foundation, the Asian Pacific Islander Coalition Against Tobacco and the University of Washington's Innovative Programs Research Group.

They said placing conservative limits on marijuana production will help make sure pot isn't diverted to minors or out of state, and strict advertising limits will minimize exposure to those under 21.

The groups also urged the board to require that labels on pot products inform people about how to get drug counseling if they need it, including the number for the "marijuana use public health hotline" created by the initiative, and warn about the dangers of driving while stoned.

New marijuana tax revenues are directed to the state general fund and local budgets, as well as substance-abuse prevention, research, education and health care.

Marijuana remains illegal under federal law, and the U.S. Department of Justice has not said whether it will sue in an effort to block the licensing schemes.