Albert Harrison is a business man. He is proposing that the Washington State Liquor Control Board, (WSLCB) establish and authorize a privately owned and licensed Cannabis Exchange or Cannabis Clearinghouse. A producer and seller of tools used while golfing, among other things, his company, Greenbuddy Inc., has nothing to do with green or buds but it has everything to do with knowing and learning how products move through the stream of commerce. Like other business interests in and around the Cannabis issue, Harrison is in contact with prominent Olympia lobbyists and well “probably retain some professional assistance” as he works to convince the WSLCB of the advantages and need for a central clearinghouse for cannabis product.
Claiming Section 9, subsection 11 of the now codified I-502 allows for a Washington Cannabis Exchange, Harrison believes a for-profit central exchange can control product quality, source integrity, and logically the retail price. “I am first about the state making this new endeavor work. If the state does not establish a tight process for assuring product quality, origin and eventual retail price, the existing black market will continue and the initiative’s intention to produce revenue will not be met.”
Tulips, Tuna and Cannabis
After reading and learning of the passage of I-502, Harrison was watching the Tsukiji Japanese fish market auction when the idea came to him about using a similar system in Washington State to centralize and control the legal cannabis trade. “The Japanese fish clearinghouse and the Aalsmeet flower auction in Holland work similarly to monitor the integrity of the products they manage.” In a four page written proposal which is yet to be offered to the WSLCB, the cannabis exchange will “restrict the black market, maximize tax collection, provide the framework for appropriate regulation and allow proper enforcement.”
The proposal calls for a central location for receiving, grading, testing, and coding cannabis from all state licensed growers. Without the stamp or code of the exchange the product will be illegal. Harrison claims that due to its newness and historical stigma a lack of bank access and services…”poses one of the greatest threats to the success of I-502. How does the state collect all due taxes on large cash purchases?” He also thinks the legitimization and control of the product will make the enterprise an attractive financial risk for bankers and investors. Investment will spur development in businesses, and healthy competition which will insure customer choice, options, and a product that can taxed.
Benefits of an Exchange
Besides eliminating the black market and assuring product control for the point/source taxing required in the law, Harrison believes the Exchange concept will provide a single market entry point for accurate tax collection and equally provide a central location (physical location) for the beginning of the producer to retailer tracking of the product as is mandatory under the Colorado medical cannabis law.
If implemented, the Exchange could provide for predictability of prices and demand that will become evident in time. A consistent and predictable market encourages in-state investment in an unpredictable array of job producing businesses created to support the industry.
And finally, the plan calls for or allows the creation of “Trade Unions (Organizations) in order to represent their own interests. This will allow for a multi-tiered sounding board where industry standards can be flushed out, where disagreements will have a chance to correct themselves before escalation, and where concerns and solutions to problems such as black market activity can be addressed.”
Medical Marijuana, Exchanges and the Black Market
There is no doubt that an eventual recreational use retail market will benefit from strict control if it is to accomplish the intentions of I-502. With a vibrant existing black market, and a functioning medical marijuana (MMJ) system, it is apparent that the state is going to have to get its arms around the production, processing/distribution, and retail of cannabis. The melding of Washington State’s now established MMJ business and the exclusion of the black market will be key to the state controlling the product and producing the all important tax revenue. When asked, Harrison thinks the existing MMJ growers/producers will “benefit from the Exchange and its supply and demand” equalizer. Admitting that ALL Washington State cannabis product will be required to move through the Exchange, Harrison may have picked up some head wind as the established MMJ sectors gear up to defend or expand their in-place production and retail platforms. Will they see the Exchange as a regulatory benefit or an intrusion to an existing plan?
Harrison answers the question with an opinion that the MMJ law was intentionally intended to provide for self production “community gardens or collective gardens for the patients”. MMJ growers see themselves as much more than collective gardens. Some MMJ representatives are keeping their powder dry for now and not commenting on what little is known about the Exchange proposal.
Greta Carer, spokesperson for Cannabis Coalition for Standards and Ethics (CCSE) a nineteen month old patient operated group of Collective Gardens, Medicle Providers, Doctors, Lawyers and Scientists had this to say about the proposed Exchange, “It is exciting to see new innovative ways of doing business coming into the cannabis world. Legitimizing cannabis with the passage of I502 opens these doors. I cannot speak to how the LCB will respond to this proposed way of regulating except to say that they are legally required to proceed with implementation of the law as it was passed by the voters and I personally know, they are aggressively working towards that regulation. If I were to speculate; knowing they have had success with the business model regulating liquor, they will continue to play on that success on how they will regulate cannabis. Lets do all we can to support their efforts. We are at the forefront of social change. WA has taken a giant step in this reform. We will get there – but we need to be realistic about expectations, I’d prefer to see us implement something that has been proven and build on it from there. We need time before we shake up the apple-cart anymore than we already have.” CCSE website: http://www.ccsewa.org/
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