State to limit pot grower licenses

Tri-City HeraldFebruary 19, 2014 

Legalizing Marijuana

A marijuana plant grows at the River Rock marijuana growing facility in Denver, Wednesday, Oct. 23, 2013.

BRENNAN LINSLEY — ASSOCIATED PRESS

— Eight prospective Tri-City area marijuana growers may only get one of the licenses they applied for -- if any.

The Washington State Liquor Control Board announced Wednesday that businesses will only be able to get one license to grow marijuana, instead of up to three.

And the licenses they do get will be limited to 70 percent of the maximum amount that can be grown. So the largest growers will be limited to 21,000 square feet instead of 30,000 square feet, said Randy Simmons, Liquor Control Board deputy director.

State officials originally planned to allow only 2 million square feet -- about 46 acres -- to be cultivated. Then they got slammed with more than 2,800 applications to grow an estimated 35 million square feet.

"We are going to have a rollout of this marketplace as opposed to a grand opening," Simmons said.

The state will need to watch demand when stores begin selling legal recreational pot, Simmons said. Colorado ended up having a higher demand than anticipated.

It will take some time to get customers to buy from licensed retailers instead of the black market, Simmons said. Washington is only aiming to absorb about 25 percent of that market by the end of the year.

About 25 percent of potential buyers in the estimated market are younger than the age of 21, Simmons said. Legal stores won't be able to serve those customers since it remains illegal for them to use pot. And another 19 percent are medical marijuana users, which is not a market Initiative 502 set up the recreational system to serve.

State Attorney General Bob Ferguson said in an opinion last month that cities and counties can choose to ban recreational marijuana businesses. The Liquor Control Board will still issue licenses in those communities, but a business would still have to meet local requirements to open, Simmons said.

Kennewick, Pasco, Richland and West Richland have temporary moratoriums on pot-related businesses within city limits. The four city councils have not decided where those businesses may be allowed in city boundaries, if at all.

Some city residents have encouraged local cities to ban pot-related businesses. Potential marijuana business owners have asked cities to decide carefully, but decide soon.

Benton and Franklin counties are allowing marijuana businesses to open if they meet state requirements.

The state will start issuing producer and processor licenses in March. Simmons said they already have about 20 potential licensees ready for final inspections, which enforcement officers will begin next week.

Once a license is issued, growers will have a 15-day grace to bring in any existing plants and get them into a state tracking system, Simmons said.

"We are not asking them where those plants are coming from," he said.

Officials expect the plants will come from medicinal grows and illegal ones. Simmons said the goal is to move growers from the illicit market into the regulated one.

The state has received applications from about 67 companies to grow marijuana at 76 locations in Benton and Franklin counties.

The state decision to allow only one license instead of three means applicants will have to choose which license is considered. That affects Red Mountain Natural Products of Benton City, Bohemian Enterprises of Prosser, Cordus of Benton City, Green Point of Benton City, Hemp Masters of Kennewick and Mesa, Kevin J. Hastie of Kennewick, Mapletree of Prosser and Royal Greens of Prosser and Yakima.

Businesses can choose to withdraw the other producer license applications and get their application fees returned, or can have them put on hold to be considered if more licenses need to be issued, Simmons said.

There will also be an option to withdraw extra processor licenses, since one processor can serve multiple growers, Simmons said. Companies that applied for more than one processor license can get a refund on the extra licenses.

Those who grow and process their own pot will not have to pay the tax on grower to processor sales, Simmons said.

The state has received about 51 applications to process marijuana in Benton and Franklin counties, most from businesses that also want to grow it, according to recently released state data. Of those, two businesses have applied for two processor licenses instead of one.

The state also has received 46 applications for retail locations in Benton and Franklin counties.

Kennewick received the most, at 22, followed by Pasco at 11, Richland at 8, Prosser at three and West Richland at two.

The liquor control board plans to allow up to four stores each in Kennewick and Pasco, three in Richland, one in West Richland, two in Benton County outside the three larger cities and one in Franklin County outside Pasco.

Not all stores will be able to open by June, but Simmons said, "we want to get something open in June." The board plans to determine how a lottery for retail stores will work in about two weeks, Simmons said.

Those who applied for a retail license will not have an option to get a refund on their application fee unless they have been licensed in a place that has a ban or a moratorium on pot businesses, Simmons said. If the business chooses to withdraw in that situation, there will be a refund.

-- To submit business news, go to bit.ly/bizformtch.

-- Kristi Pihl: 582-1512; kpihl@tricityherald.com

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