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Originally published December 31, 2013 at 8:10 PM | Page modified December 31, 2013 at 8:24 PM

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Pot law: Hazy days ahead for state

Washington state moves into uncharted territory in 2014 with the opening of recreational pot businesses. Experts say strap in for a bumpy ride.


Seattle Times staff reporter

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Washington state moves into uncharted territory in 2014 with the licensing and opening of legal recreational pot businesses.

We asked experts in the state and elsewhere to predict the year ahead for pot, not just here, but also around the country and the world.

Their overarching theme for 2014? Strap in for a bumpy ride.

Business failures, inadequate supply at first, falling prices, and a few big unknowns loom in the year ahead, according to experts.

It will be a year of culling, said Randy Simmons, the state marijuana project director, with many new pot merchants failing.

Legalization advocate Philip Dawdy sees a stormy start, as stores opening in the summer struggle with inadequate supply. It will take until autumn, Dawdy figures, for indoor and outdoor growers to get through licensing, build-out and harvest, and to begin meeting customer demand.

Simmons believes prices will be artificially high at first, and then drop as market forces drive them downward. State consultant Mark Kleiman expects that entrepreneurs who invest large amounts in growing facilities will suffer as prices in some stores will fall by year’s end to $5 per gram. (Medical marijuana sold for about $11 per gram in Washington, according to a 2013 study by consultants.)

Simmons expects a minor increase in statewide consumption in the new year and little pot tourism at first. Kleiman predicts “shamelessly aggressive marketing” by entrepreneurs but no big increase in heavy use and no big jump in abuse for several years. He believes baby boomers, giving marijuana another try, will drive an initial increase in users.

Alison Holcomb, chief author of the state’s legal pot law, said some socially conscious small businesses will dismantle stereotypes of who grows, sells and enjoys pot.

But neighbors and parents will still be jarred by the reality of seeing pot businesses operating in their midst, said Jon Caulkins, co-author with Kleiman of “Marijuana Legalization: What Everyone Needs to Know.”

Vaporizing pot will become a hot issue, Caulkins said, with officials debating whether that way of consuming — which doesn’t burn pot but heats it enough to release key chemicals — will be allowed indoors where state law prohibits smoking. Vaporizers might be the technology that gives rise to pot cafes and gives tourists a place to legally consume.

Concentrated forms of marijuana, such as butane hash oil, will come to dominate the market over herbal buds and flowers, Kleiman predicted.

Buyer’s remorse?

Caulkins expects impaired driving to become a bigger issue, particularly after initial 2013 reports from the Washington State Patrol showed a 50 percent increase in the number of drivers testing positive for pot.

Legalization critic Kevin Sabet of Project SAM (Smart Approaches to Marijuana) predicts little reduction in black-market violence, more negative incidents involving youth and pot, and an increase in DUI cases. Sabet said voters will start to realize legalization “may not be what they bargained for.”

He also sees the emergence of a Big Marijuana industry that finds a way around state restrictions on public use and promotion.

Elsewhere

Outside of Washington, Dawdy predicted a smoother rollout of legalization in Colorado, where the medical marijuana industry was already well regulated. Medical businesses will be the first allowed to move into Colorado’s recreational market, with some stores opening Jan. 1.

Simmons expects a positive change in t he way medical marijuana is perceived as more success stories are publicized by the pharmaceutical industry about products it is making. Simmons also anticipates increased study of the plant in Israel and the European Union.

Most experts expect at least one more state to legalize recreational weed in 2014, most likely Alaska, although Oregon is another strong contender. The big question is whether advocates in California rally around a legalization ballot question in 2014, or wait for 2016.

Kleiman, a UCLA professor, believes legalization would be almost certain to succeed in 2016, with the higher voter turnout that comes in a presidential election year. He’s also willing to bet an initiative similar to Washington’s, that regulates pot like alcohol, would be approved by California voters in 2014.

Sabet is less optimistic. He said legalization votes in Alaska, California, Maine and Oregon will prove a bigger challenge than thought.

Internationally, Sabet does not see any other countries following Uruguay into legalization. Instead he predicts a backlash in that small South American country. Holcomb disagrees and said two more countries will end marijuana prohibition. She also predicts a “groundbreaking international conversation” in March, when the U.N. Commission on Narcotic Drugs convenes in Vienna.

Banking, tax woes

Back in the U.S., experts said their predictions could be moot without key changes at the federal level.

Lawyer Hilary Bricken emphasized the current dilemma for pot entrepreneurs: They’re expected to behave like legitimate businesses but haven’t been given the tools most merchants use to establish legitimacy.

Banks are now loath to provide financial services — from checking accounts to credit cards — to pot merchants because of the federal prohibition of all marijuana. That means the industry operates mostly on cash, which invites crime.

Because of federal prohibition, pot businesses are also denied standard business tax deductions, in effect lowering their profits.

Without the pillars of banking and tax deductions, Bricken said, legalization could fail unless other states follow the path of Colorado and Washington, creating more political momentum for solving these two problems.

Simmons sees continued work on the banking issue next year, but not a remedy from Congress. Dawdy believes the problem will be solved. An aide to Colorado Gov. John Hickenlooper predicted a fix from the U.S. Treasury Department in early 2014.

Kleiman concludes that the banking quandary is one of the big unknowns in the year to come. The other, he believes, is the impact of legal pot on alcohol consumption.

Bob Young: 206-464-2174 or byoung@seattletimes.com

On Twitter: @potreporter



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