Green light given on weed, I-502 in Spokane’s poorest neighborhoods
May 29, 2014
When Initiative 502 passed in Washington in 2012, it gave the green light for the legal sale of marijuana in the state.
In Spokane, however, I-502 quickly became an over-regulated issue when the city council voted on the zoning for new dispensary locations.
Only the poorest areas of town are going to be on Spokane’s pot map.
According to Council President Ben Stuckart, the new zoning lines up with Spokane’s known poverty districts.
The council voted 6 to 1 against Stuckart to allow weed-selling facilities to open in Spokane’s centers and corridors.
This means if any of the possible negative aspects of the new industry actually happen, such as an increase in crime, exposure of the drug to a youth population or possible federal convictions, they will be happening more often to people living in the new “pot zones.”
“I think we should have embraced it, and created a weed friendly district of town which could be marketed as a destination for pot-tourism,” Stuckart said.
An additional problem with Spokane’s new “green” industry is the high tax, which is expected to raise over $51 million revenue statewide on the now recreationally-legal drug, making it hard to compete with the black market.
According to Stuckart, the only way to compete with a black market is to have the legal version of the product priced the same as the illegal product, and to have the legal version available.
“You rarely get an opportunity to switch from a black market to a legal market,” Stuckart said. “I believe we are over-regulating the market.”
The Spokane City Council failed on both of these points.
Once the stores start selling in early July, low sales due to lack of access and a “high” price tag may change the other council members’ minds, but until then, expect to find the green light to be shining on Spokane’s poorest neighborhoods.
Steve Sarich • May 30, 2014 at 11:02 pm
Where in the world did you get the idea that there would be $51 million dollars in new tax revenues from 1-502? While this is a lot less idiotic than the $582,000,000 a year in tax revenues predicted by the State’s Office of Financial Management two years ago, but still ignores the reality on the ground.
The LCB, and license holders, may believe this fairytale, but I’m predicting that the LCB stores will provide nothing but more red ink for the taxpayers by the end of 2014. Every State legislator I know, and that’s quite a few, are not that stupid. They are well aware by now that there won’t be any profits for any under the current tax structure and that this has to be changed in the next session.
The state taxes alone amount to around 75% (sales, B&O, excise) and the Federal tax adds another 39.8%. That means that at $40 per gram, the gross (not net) profit margin after taxes, is a miserable $2.16….or around 5%. Any accountant will tell you that they can’t possibly survive on a grow profit margin that low.
But that’s not their biggest problem, however. How many people do you know who smoke marijuana, and can currently buy it for $10 or less per gram, are EVER going to shell out four or five times as much for the same (or worse) quality product than they’re smoking right now?
Of course we all know the answer to that question. If you’re a smart ass who just has to argue that there will be a few people that stupid, please let me know if you think there will actually be enough of these stupid people to ever keep these stores from going broke. If you really believe that, I’d love to make a little wager with you.
Even THAT is not the biggest problem. While the legislator KNOW, with absolute certainty, that the only way to salvage anything from the LCB model will require a drastic lowering of these excise and sales taxes, “knowing” and “doing” are two very different things.
This 75% tax (25%+25%+10%….cumulatively) must be reduced to no more than 15% if I-502 has any chance whatsoever of surviving. Now picture the state legislature lowering any tax by 60%….at the same time the cities and the counties are trying to extort their share of these taxes out of the legislature in trade for removing their moratoriums preventing these stores from opening. Colorado has already publicly admitted that their $20 tax is causing them to lose business to the black market there and they know that it must be reduced.
We’ve already heard that wailing from the LCB and the law enforcement lobby that the recreational system can’t compete with medical (which was the exact opposite of what Alison Holcomb argued during the 502 debates), and the system will fail unless patient are all forced to pay these exorbitant taxes as the recreational users.
But that argument doesn’t hold water either. The LCB has already estimated that medical is only 10% of the total market for marijuana in Washington. The means that the black market owns the other 90%. This means that, no matter what dastardly things you try to force on patients, that 90% is still not going to be paying the taxes and the LCB will never be able to compete…..but they conveniently forgot to mention how they plan on stopping the black market.
The original plan was to have prices that were so low that the black market couldn’t possibly compete with the legal market. Obviously, this was nothing more than a lie by Holcomb to sell the initiative to voters. Even Holcomb wasn’t stupid enough to think a 75% would somehow lower prices to the point where the black market would disappear. But we have a lot of stupid voters in this state and no one actually read the initiative….that or they couldn’t operate a calculator.
You can’t blame us patients as we watch this poorly written piece of legislation go down in flames….just as we predicted. The fact that they couldn’t throw us on the same sinking ship last year only gives us more reason to celebrate the demise of the LCB system.
We can’t wait to see the cities, counties and the law enforcement lobby scrambling for their own piece of the ever-shrinking I-502 tax pie. The lack of any new revenue come January, when the session starts, will make this all the more humorous.
Steve Sarich
Cannabis Action Coalition
[email protected]
Terry • Sep 30, 2014 at 6:15 pm
Checked the latest revenue figures?
The state is raking in tax collections and stores can’t keep product on shelves. You are right, there are a lot of people in Washington who aren’t that bright and appear willing to shell out four times the price than needed for a product. The LCB model will survive because that’s how Olympia works. They’ll use a law enforcement approach and target non-licensed growers, distributors and users. They have a database now that includes the test results of every batch of weed grown for legal sale in the state and can easily determine if weed they confiscate was taxed. This isn’t going away and makes me believe that continuing a thriving black market was intended all along.