The city has generated most of the sales of recreational marijuana in Whatcom County, ringing up $23 million of the total $28 million in the county, the director of the Washington State Liquor and Cannabis Board said Wednesday, Feb. 24.
Bellingham’s share so far was part of the overview Rick Garza, of the LCB, provided of the recreational marijuana industry since state voters approved Initiative 502 in 2012. The measure legalized pot for adults 21 and older, and created regulations and licensing for the new industry.
The city has the highest concentration of pot stores in the county.
Average daily sales statewide now total about $2.7 million, Garza told the audience at the Bellingham City Club presentation titled “Pot and Public Policy: Washington’s Marijuana Industry.”
Bellingham attorney Heather Wolf, who advises clients in Whatcom County and the state who want to get into the marijuana business, also spoke. They gave a wide-ranging overview that included economic impact; regulations to keep pot away from minors; challenges and policy changes, with the next big regulatory one occurring in July when unregulated medical marijuana operations are rolled into the regulated recreational pot market.
Pot is expected to generate $1.24 billion in this state over the next five years, Garza said of revenue forecasts.
Since July 8, 2014 — the first day of legal recreational pot sales in Washington state — nearly $800 million has been generated in total sales statewide, with about $168 million generated in excise tax revenue alone.
Yes, there are grocery bags full of cash traveling around. We’ve got to come up with some banking alternatives.
Heather Wolf, attorney who advises clients on the recreational pot industry
As of Feb. 17, the LCB had issued 846 grower and processor licenses statewide, and 254 retail licenses.
More are on the way. As part of folding medical into recreational sales, the state Liquor and Cannabis Board increased the number of stores statewide from the current 334 to a new cap of 556.
Banking, zoning remain issues
Garza and Wolf also discussed the hurdles faced by those getting into the industry. Those included local bans and moratoriums on such businesses, different zoning rules that further restrict where such businesses can go in the cities and counties that do allow them, and marijuana still being illegal under federal law.
Wolf said 88 cities and eight counties have said no to marijuana businesses.
“It’s really difficult for the industry to succeed,” Wolf said of the impact of such widespread bans. “It’s naive to think marijuana sales are not going to happen if you don’t allow these businesses to operate.”
She said there needed to be a level playing field against the black market and that would happen only if such bans were lifted.
Marijuana remaining illegal under federal law creates a number of problems for marijuana businesses.
“Number 1 is probably banking,” Wolf said.
No bank will do business with pot entrepreneurs so that has prevented them from opening accounts or obtaining loans, requiring most getting into the industry to borrow from friends and family.
There are four regional credit unions providing banking for the state’s pot retailers, about 57 percent of whom use them, Garza said.
The credit unions are selective and can be difficult to get into, Wolf said.
“Yes, there are grocery bags full of cash traveling around. It’s a big problem. We’ve got to come up with some banking alternatives,” Wolf said, with one possibility being tribes operating financial institutions to serve the pot industry.
That could change as more measures to legalize marijuana go before voters including in California, which has the seventh largest economy in the world.
Being illegal under federal law also creates other problems for the state’s pot pioneers. That includes, for an industry that’s heavily taxed, not being able to take a federal tax exemption for business expenses, and not being able to access federal bankruptcy laws.
“There is no bankruptcy protection for these marijuana businesses,” Wolf said, “so there’s no debtor relief for these businesses.”