Washington may have legalized weed, but there’s no guarantee you’ll get a license to sell it. Government regulations could end up strangling shop owners right out of business.
The marijuana market in Washington state is currently flooded over–there’s too much pot, and too few buyers. Less than a year ago, the same shops couldn’t get enough marijuana to satisfy their needs.
According to the Associate Press’ report, marijuana growers in the state harvested 31,000 pounds this season. Only one fifth of it has been sold at legal shops.
Why the disparity? A large part of the problem is the paucity of shops, due to strict licensing rules—few businesses have been able to open, while dozens are still waiting for approval.
Medical marijuana shops, meanwhile, are much easier to open and are less heavily taxed. This forces the higher-priced recreational marijuana shops to compete with cheap medical marijuana and black market options. The recreational stores currently sell for about $23 to $25 per gram—twice as much as a medical dispensary.
Convenience is also a factor. The legal stores are few and far between, but the dispensaries are everywhere. “I don’t know a lot of people who are going to drive 20 miles to get beer, let alone buy their pot,” an attorney representing marijuana businesses told Vox.com. “It’s really easy to get your medical card for a couple hundred bucks and then get really cheap pot after that.”
All the licensing red tape has also left growers in the lurch. They vastly outnumber shops: 270 growers are licensed in the states, versus just 85 stores.
“Every grower I know has got surplus inventory and they’re concerned about it,” said one grower, who has only managed to sell half of his harvest. “I don’t know anybody getting rich.”
And at the more local level, regulations sometimes get even worse. Some cities and counties have bans on marijuana stores, further shrinking opportunities for more legal shops to open.
The Liquor Control Board expects 100 more licensed stores to be able to open in the coming months, and argues part of the blame lies with the nature of marijuana harvesting: when the yearly crop comes all at once, it will always temporarily overwhelm the market with a surplus.
Colorado is having the opposite problem. There, it’s the growers that face the greater regulatory burden: they have to prove there is demand for more marijuana before they can grow. As a result, their shops can’t fill their demand for weed fast enough.
