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Originally published January 29, 2013 at 4:51 PM | Page modified February 5, 2013 at 1:09 PM

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Eager marijuana entrepreneurs are in for a long regulatory trip

In Washington’s new marijuana industry, euphoria meets regulation, writes Seattle Times opinion columnist Bruce Ramsey.

Times editorial columnist

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Monday night, Seattle Mayor Mike McGinn met marijuana entrepreneurs at the Washington Athletic Club. He wished them success. The mood was euphoric. But he and other officials are also sounding notes of caution.

The chairman of the Washington State Liquor Control Board, Sharon Foster, promises “lots of controls, regulation and enforcement.”

The reason is political. President Obama, who smoked plenty in his youth, has not yet embraced the Colorado and Washington deviations from federal rule. His attorney general, Eric Holder, has warned Gov. Jay Inslee against allowing marijuana to leak out to other states.

Inslee — who did not support Initiative 502 because of just this sort of problem, but supports it now because the voters did — wants Holder to leave his state alone. Good for him. But to placate Holder, he has to make sure the new market is screwed down tighter than the industry and its customers want.

For example, by mid-August, the Liquor Board expects to issue licenses to marijuana growers. Many existing growers have criminal records. Should they be kept out?

Let them in, said Seattle attorney Ryan Espegard of Gordon Thomas Honeywell at the Liquor Board’s Jan. 24 forum in Seattle. License them and they “will divert their product from the black market to the legal system.”

As commercial advice, that makes total sense. But if the Liquor Board does it, said the state House of Representatives’ expert on marijuana, Rep. Roger Goodman, D-Kirkland, “the federal government will intervene.”

Another issue is whether the Liquor Board should limit the number of licenses. Espegard again argued no. The new industry needs to out-compete the black market. Limiting entry hobbles it. But the board may limit entry in order to satisfy Holder that Washington is not supplying other states.

Then there is land use. I-502 limits marijuana shops within 1,000 feet of schools, parks, recreation centers, child-care centers and libraries. In Seattle, the mayor’s office has a preliminary map of what’s left, and it’s not much. There are a few spots — the Port of Seattle could have a marijuana emporium at Pier 90-91 — but only in the Sodo neighborhood is there a large area.

Finally, taxes. On an industry that is supposed to run its untaxed rival out of business, I-502 imposes a 25 percent state tax at least twice. Speaking to the Liquor Board, Philip Dawdy of the Washington Cannabis Association said, “You need to relax these taxes.”

Probably so. The chairman of the House Finance Committee in Olympia, Rep. Reuven Carlyle, D-Seattle, has said on his Web page that the marijuana tax may not raise the revenue the state expects, and that the Legislature may need to adjust it.

The Liquor Board and the Legislature have some decisions to make.

“It is almost impossible for them to get it right the first time,” says the Washington Cannabis Association’s Ezra Eickmeyer, one of the eight lobbyists now working the Legislature for the marijuana industry. “I think people have to be patient with them. It’s going to take a couple of years to get this to work out.”

Delay, red tape, uncertainty — and still there is excitement. The talk is of a statewide industry based on the craft-beer and craft-distilling model, with indoor growing of exotics like Old Toby, an ultra-high-THC strain developed for the medical market by breeder Mathew Gordon of Whidbey Island.

For McGinn, it’s another new industry, adding to what Seattle-area entrepreneurs have done with coffee, chocolate, bread, potato chips, ice cream and cupcakes.

It begins here.

Bruce Ramsey's column appears regularly on editorial pages of The Times. His email address is bramsey@seattletimes.com

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