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article imageWashington State releases regulations for legal marijuana

By Matthew DeLuca     Jun 27, 2013 in Politics
A little over a month ago, the Washington State Liquor Control Board released an initial draft of the regulations and restrictions that will govern the newly legal marijuana industry in Washington State.
Under Initiative 502, the initiative legalizing the use of marijuana for recreational use by adults, which was passed by Washington voters last November, the Washington State Liquor Control Board is responsible for establishing the requirements and restrictions for licensing, regulation and taxation of the marijuana industry.
The law specifically grants the WSLCB the ability to impose regulatory guidelines regarding issues such as, the facilities and equipment used in marijuana production, the packaging and labeling standards for retail sale, the potency and quality levels of the marijuana and finally the security and screening requirements for employees and licensees. Under the law, by December 1, 2013, the Liquor Control Board is required to specifically implement protocols and processes for license application and renewal for marijuana producers and retailers, determine a limit for the amount of licensed retailers and determining the maximum quantity of marijuana, marijuana facilities may have on the premises at a given time. With the release of this first draft on marijuana industry regulations, the process of determining and implementing an administrative regime to manage the newly formed marijuana industry is beginning to take shape. The regulations were subject to a public comment period, which ended on June 10, that allowed Washingtonians to voice their concerns or recommendation for the guidelines. The board plans to file its revised rules on July 3 and a public hearing on the changes to the regulations will be held on August 7. According to the proposed time line released by the Washington State Liquor Control Board, the Board will begin accepting applications for all license types, related to the marijuana industry, by September 14.
The regulations released by the WSLCB seek to track marijuana from “seed to sale,” as to prevent diversion of legally produced marijuana into the illegal market within and outside Washington State. According to Bloomberg News, Mark Kleiman, a public policy professor at the University of California, Los Angeles, who has consulted Washington policy-makers on marijuana issues, stated that “the rule that the state can’t require the retailer to keep records of their purchasers seemed to encourage purchase for out of state shipment...The Washington statute, [seed to sale tracking], was designed to keep the whole matter in-state and the board is certainly very concerned about that.”
The Board has additionally adopted a point-based system to determine if applicants seeking licensure for participation in the marijuana industry, as growers distributors or retailers, are eligible based on their previous criminal history. The point system ascribes point values to various criminal offenses--any applicant seeking a marijuana license, must not have accrued more than 8 points based on the scale established by the Board. The current system allows for up to two marijuana possession misdemeanors to be waived from consideration. Certain Federal marijuana charges may be ignored on a case-by-case basis, and the system would apply to all entrepreneurs, employees and financiers.
The initial regulations also include stipulations on the transportation of marijuana products, the security of marijuana facilities and the proper labeling of products and signage for retail establishments. In addition to tracking marijuana inventories and outputs, marijuana businesses are required to have 24 hour video surveillance of their facilities. Marijuana retailers are barred from producing advertisements that are intended to appeal to those under 21. Marijuana products must also be marked with warning labels and must display the official seal, signifying compliance with Washington’s marijuana tracking and monitoring regulations.
The newly released regulations, which are by no means set in stone as of yet, could have potential impacts on the size and scope of the marijuana industry in Washington, including how effective the initiative is in producing and collecting additional tax revenues. The issue of local resistance to marijuana businesses and the lack of access to credit and banking services within the marijuana industry could cripple the burgeoning industry’s ability to establish a foothold and ensure access to viable markets.
Under the regulations, and written into the language of the initiative, local city and county governments have 20 days after an application is submitted to object to the licensing of a marijuana business within their municipal borders. The guidelines limit the number of retailers allowed per county, but do not limit the number of licensed growers or processors. This protocol may limit the potential impact of the law, especially in conservative municipalities that are likely to oppose the expansion of legal marijuana into their towns and cities.
Similarly, the continued Federal illegality of marijuana makes it problematic for banking and financial institutions to do business with the marijuana sector because assets and proceeds from the sale of marijuana are subject to seizure by federal authorities under the Controlled Substances Act. Banks that become involved in the marijuana industry fear that they will face scrutiny for money laundering. The lack of access to credit, the inability to accept debit or credit card payment and the need to have large amounts of cash on hand, are all problematic outcomes that result from the separation of marijuana businesses from the banking and financial services it needs to become a fully functioning industry. The centrality of cash in the market for marijuana, even the legal market, has become evident in the Medical Marijuana industry in Washington, and this hindrance could seriously impede the states ability to track and measure sales and calculate tax on marijuana businesses.
Colorado, which also voted to legalize marijuana for recreational use last November, is currently going through a similar process of determining how to regulate and manage the new marijuana industry. Governor John Hickenlooper recently signed into law a series of bills to regulate the marijuana industry. Despite the progress being made in both states, drastic steps still need to be taken both at the state level and, more importantly, at the federal level to ensure that these bills can actually be effectively implemented. Supporters of legal marijuana believe prohibition has gone on long enough--clinging to outdated laws will only prevent states from collecting mass amounts of tax revenue that could be extremely important in the current tight, fiscal environment.
More about Marijuana, Legalize marijuana, marijuana legalization, Marijuana possession, Washington
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