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Originally published Thursday, May 1, 2014 at 8:24 PM

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Pot-store lottery losers, winners plot next moves

Some wannabe pot merchants were crestfallen and fewer jubilant Thursday as state officials notified applicants for retail pot stores where they stood in the lottery for retail pot-store licenses.


Seattle Times staff reporter

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Some wannabe pot merchants were crestfallen and fewer jubilant Thursday as state officials notified applicants for retail pot stores about where they stood in the lottery for retail pot-store licenses.

Applicants like Anne Martens and Pete O’Neil were disappointed because they’ve been paying rent for potential store locations only to learn they pulled lousy numbers in the lottery.

“We lost a ton of money,” said Martens, about the Northwest Seattle property she and her partners have rented for almost six months. Martens learned that the state’s lottery ranked them 53rd for the 21 store licenses in Seattle.

Others, such as Ryan Kunkel, were feeling better. Kunkel won the lottery for a store in Ocean Shores, where he competed against another applicant in a 50-50 chance for one license. “It’s a license, right? It’s a great area,” said Kunkel, who also received lottery numbers 36 and 91 for his proposed stores in Seattle.

A lottery was necessary because the state had 1,170 applicants who made it through initial screening vying for 334 stores.

Full lottery results will be released Friday by the state Liquor Control Board, the agency implementing Washington’s legal pot law.

The lottery results don’t guarantee anyone a retail license and store yet. Applicants still must have their operations and financial plans approved and must pass criminal background checks. Then they have to build out their stores and pass final inspection before getting licensed. State officials expect to start issuing licenses by early July.

Kunkel predicted that this weekend would bring a flurry of activity as lottery losers try to strike deals with winners. “Some of the big hitters didn’t fare well, so people will be scrambling. Today is the beginning of the actual ‘green rush,’ ” Kunkel said.

Martens agreed, saying the next step for her and her partners is to see if they can make a deal with someone who won the lottery but is unhappy with their location.

John Davis, CEO of two Seattle medical-marijuana dispensaries, took what he called a “zen” approach to lottery results. Davis said he received lottery numbers 52 and 96 for store applications in Seattle. He plans to continue running his dispensaries, while waiting for other recreational store applicants to fail, or for state officials to increase the number of retail licenses in Seattle.

“I sold cannabis yesterday. I’ll sell cannabis tomorrow. It doesn’t change a lot for me,” Davis said. “Part of me is relieved I will not have to enter the market on the first round.”

Davis believes that when stores start to open there will be scarce supply of weed at first, as the state has only licensed 21 growers to date. And he expects more than a few amateurs will be among the initial store owners. “I think a lot of businesses will fail in the first round,” he said.

O’Neil said he and his partners were “totally disappointed” by the lottery results. O’Neil’s team has been paying rent at three potential locations: Bremerton, Lynnwood and Seattle. They were ranked 12th in Bremerton for two retail licenses. They ranked 121st in Seattle. And their Lynnwood application appeared to be mistakenly put in the Seattle lottery by state officials, he said, where it ranked 68th.

O’Neil said his partners would meet with their lawyer this weekend to decide next steps, including possible legal action. They’re also considering going into the medical- marijuana business in Washington or Oregon. “At the end of the day,” he asked, “is it worth it to litigate?”

Attorney Robert McVay, whose firm specializes in advising pot entrepreneurs, said some clients — who’ve been unhappy for months about the lottery — may want to sue the state now that the “chips have fallen” unfavorably for them.

What was different about Thursday for McVay was that some clients received good news from the lottery. “Today was a nice change of pace,” he said, “where people excited about the process are finally coming out of the woodwork.”

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

On Twitter: @potreporter



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