Show Me The Money, The Taxes
Last Friday morning, at 8AM the House Finance Committee held a falsely titled hearing involving a briefing on taxation of cannabis. The presentations by the Liquor Control Board, LCB, officials were a start-to-finish explanation of what the agency is doing, when and why, to implement I-502, Washington’s recreational cannabis use initiative. There was barely an utterance about taxation. Deputy Director Rick Garza stressed to the committee that the OFM projections for revenue from the new I-502 grow-to-sale platform is $0-2 billion over five years. He emphasized the zero. He went on to say that the LCB would rather “do this right than expedient(ly)…”
90% Of MMJ Purchases Are Fraudulent
What was new at this cannabis hearing was the unflinching declaration by Garza that over 90% of the cannabis purchased at “medical marijuana, MMJ, dispensaries is for recreational use…” This was one of the first public indictments of Washington’s, MMJ law, physicians who prescribe medicinal cannabis, and the MMJ retail sector. (MMJ dispensaries are not mentioned in the MMJ law) When follow up from legislators requested verification of the number, he had none. Garza’s defense of the percentage was that the LCB had heard the number in many of the public forums the agency has conducted as part of their implementation process and no one “has refuted or denied” the figure. So, no one has refuted an unsubstantiated accusation?
Melding MMJ and Recreational Use
Garza and LCB Director Pat Kohler, went on to explain the differences between Washington’s and Colorado’s process to implement the nation’s first recreational use laws. Over twenty states presently have MMJ laws in place. Last week Colorado’s special task force that pulled together the report suggesting how the state should run their recreational process, recommended a melding of existing MMJ growing and retailing operations with their new recreational use process. There is also a taxation suggestion, which under Colorado constitutional provisions must be passed by the voters at a general election. It is clear that Colorado, which has to pass a law to implement their new constitutional provision allowing recreational use, will be melding the two processes into one. This is a scheme that is not universally desired in Washington, but as the LCB officials told committee members, it does contribute to more security, easier regulation and enforcement, and could respect both medical and recreational use communities.
No Difference Between CBD and THC Content?
Garza also told the committee that MMJ cannabis is the same product that will be sold in Washington’s recreational stores, hinting that if the legislature had the courage, a hybrid/dual process could work here. Presentations at their own forums have disclosed a growing desire by MMJ patients for a product higher in *CBD, rather than THC, which is the active ingredient usually sought by recreational users.
There has been a lot of comment that MMJ is a false medicine, and the dispensaries are really just fronts for recreational users with bogus doctor’s use authorizations. Representative Cary Condotta, R-Wenatchee told the attendees, logically, “if someone can buy over-the-counter MMJ, with no taxes on it, it is going to be unrealistic to expect recreational use cannabis, with its (50-80%) embedded taxes (the law stipulates the tax rates) to compete in an open market.” He did not go the next step and mention, as many do, that this product already has, in place, a thriving black market with its own price points and, in most urban areas, a low probability of local law enforcement intrusion.
Indoor or Outdoor Growing?
The recreational use leakage through the MMJ dispensaries discussion was followed by a series of questions about the difference between indoor and outdoor growing of the product. Presently an authorized MMJ patient can grow up to fifteen plants for their own use, or can grow collectively with others in a “community garden”. Recreational users of cannabis cannot grow-their-own under provisions of I-502. Most experts admit that indoor growing is the only sure way to control product quantities, quality and security. Pat Kohler however, assured the committee that outdoor growing plots can be secure and provide a quality product. She sighted a growing operation she recently visited in Sunnyside which consisted of three, one-acre sized greenhouses. Telling the committee members that there was adequate security and product controls in the facilities. She seemed to be unaware that growing IN a greenhouse, is not growing OUTDOORS on a plot of ground. With most practitioners and experts siding with indoor growth, it appeared that the LCB did not want to wade into the oncoming debate. Representative Joel Kretz R-Wauconda has introduced legislation to reserve the right for producers to grow outdoors.
If expressions were any indication it appeared that committee members were surprised and may have for the first time heard that Washington tribes have not expressed an interest in cannabis retailing or production. Rick Garza told the committee that this may be because the reservations are technically on federal land, and the federal law still considers cannabis a schedule 1 controlled substance; illegal. Many reservation are “dry”, prohibiting use or sale of alcohol.
Back Up A Truck
Committee members and LCB officials repeated to each other the importance of Washington keeping its cannabis in the state for fear of the federal government clamping down. “Grown in Washington, sold in Washington and used in Washington,” was Rick Garza’s catch phrase for respecting the signals coming from Washington D.C. regarding the federal enforcement of national statutes in MMJ and recreational use states. LCB Director Pat Kohler, assured committee members that there would be purchase limits on Washington citizens, but nothing will keep a person from going from store to store to obtain desired quantities.