A new proposal from Seattle Mayor Ed Murray would give Seattle tighter control of marijuana businesses. It could shut down more than 50 medical dispensaries while the state goes about folding medical-marijuana businesses into the state’s recreational system.
Mayor Ed Murray on Tuesday proposed legislation that could shut down more than 50 medical-marijuana dispensaries and give the city a tighter grip on the rest of Seattle’s pot industry.
The plan would create a new business license specific to the marijuana industry and create priorities for enforcement against medical-marijuana businesses.
The mayor’s plan follows state lawmakers’ effort to fold medical marijuana into the state’s recreational system. The new state law, approved last month, calls for the Liquor Control Board (which will be renamed the Liquor and Cannabis Board) to assess the merit of medical-marijuana businesses and license those that qualify by July 2016.
The LCB is still developing the rules for grading the medical-marijuana businesses, so it’s not clear yet how many additional licenses Seattle will get or which businesses are positioned to receive those licenses.
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The mayor’s proposal addresses the transition of medical-marijuana businesses to the state’s system between now and next July. During the interim period, medical-marijuana dispensaries in good standing with the city would be allowed to continue operating until the LCB issues state licenses.
“What we’re proposing here is a responsible way to strengthen the legal market and support a pathway for many other good actors in the industry to become legal in the long term,” said Viet Shelton, a spokesman for the mayor.
If the city legislation is approved, Seattle’s Finance and Administrative Services department (FAS) could revoke some dispensaries’ business licenses. Those businesses would be subject to fines and legal action if they don’t shut down.
“Any sort of criminal action is our last resort — only if our civil remedies fail to close a noncompliant business,” said David Mendoza, the mayor’s policy adviser on marijuana.
The city would prioritize enforcement against businesses selling pot to underage buyers or people who don’t qualify as medical-marijuana patients, dispensaries being investigated by law enforcement, those manufacturing edibles that knock off mainstream brands or appeal to kids, and dispensaries that did not receive a standard city business license before Jan. 1, 2013.
The city estimates about 45 of the estimated 99 medical-marijuana storefronts received business licenses before 2013.
“Establishments open before Jan. 1, 2013 — pending they don’t fall into one of the enforcement priorities for other violations — will be allowed to operate until July 2016,” said Mendoza.
In preparing for enforcement, the city has taken steps to catalog medical-marijuana businesses and complaints or code violations against them, said Mendoza. FAS also has conducted stings on medical-marijuana business to see if they were selling illegally.
“Some stores are selling without medical authorizations,” said Mendoza. “We’re building cases against them.”
The city also listed second- and third-tier considerations that risk enforcement. Those include medical-marijuana delivery, violations of city fire and building codes, allowing on-site pot consumption, not testing marijuana sold to patients and being located within 1,000 feet of a school or playground or within 500 feet of another marijuana store or dispensary.
Businesses can appeal violations assessed by the city and can contest suspensions or revocations of their license. The Office of the Hearing Examiner, an independent body, will handle those cases.
The medical-marijuana community is split over the mayor’s proposal. Many organizations and store owners open before the January 2013 cutoff supported the mayor’s plan, with reservations about how it would be implemented. Those that opened after were upset about the development. Patient advocates expressed concerns over access.
Kari Boiter, a medical-marijuana patient, said she thought the city was taking “a hatchet approach rather than a scalpel” on medical marijuana. Boiter said she believed some of the so-called “good actors” opened after the mayor’s January 2013 deadline. She said she would have preferred the mayor’s office weighed how well businesses served patients and not when they opened.
“Patients suffer — it’s hard to find a place that’s conveniently located and has the products you need,” said Boiter. “It’s an unfair burden on the sickest and most vulnerable. Instead of looking at who those people are and their needs, we’re looking at business issues.”
Killy Nichelin, the co-owner of Iconic Cannabis, a medical-marijuana dispensary that opened after 2013, agreed with Boiter.
“It’s been all about lotteries and dates there’s no connection to quality,” said Nichelin, who decided to open a medical dispensary after he lost out in the lottery to own a recreational marijuana store.
Jeremy Kaufman, chair at the Coalition for Cannabis Standards & Ethics, a trade organization, said his group is in favor of the legislation, but has concern.
”What it kind of comes down to is Seattle’s execution,” said Kaufman, who said the people who opened medical-marijuana dispensaries after recreational pot was legalized were “the profiteers.”
“Anyone that came in to operate a cannabis business after that date, I have a hard time being sympathetic,” said Kaufman.
Philip Dawdy, a lobbyist on behalf of some medical-marijuana businesses, said the biggest contention for many businesses is how the distance rules will be handled. The mayor’s office seeks to dismantle clusters of medical dispensaries in some parts of town.
Dawdy said some stores have had to congregate because it’s difficult to find real estate where it’s legal to operate.
“You can’t operate if nobody will rent to you,” he said.
He said some clusters have generated community complaints, but others have kept a relatively low profile and shouldn’t be penalized.
The mayor’s office estimates the legislation will cost more than $800,000 to implement, not including costs to the city’s law department or Seattle Fire Department.
Where will the money come from?
“We’re finding it,” said Mendoza. City regulatory licenses for pot businesses, including those already in the state system, would cost $1,000. Growers or processors outside of Seattle that sell wholesale marijuana products to retailers would have to get a $500 license.
“We’re asking not just the places located in Seattle, but anyone selling in Seattle” to become licensed, said Mendoza. “If you’re growing in Eastern Washington and selling in Seattle, you need a regulatory business license.”
The mayor’s office hopes state lawmakers will pass a bill being considered that would share pot excise-tax money with cities. Mendoza thought the city would receive about $400,000 from the state if the lawmakers approve the measure.
The mayor’s regulations have been in the works for many months. Last November, Murray’s office outlined a similar regulatory structure for pot, but tabled the idea as talks heated up in the state Legislature about folding medical pot into the state system.
Medical-marijuana businesses have proliferated since voters legalized recreational pot in 2012. But regulations for medical collective gardens and dispensaries were so lax, the city did not know how many businesses existed. Some were not paying taxes or operating with proper permits.
Even though the City Council passed an ordinance intended to stop licensing new pot businesses, FAS did not believe it had the authority to revoke or deny business licenses. New dispensaries continued to open.
Under the mayor’s plan, the city will be able to actively enforce state pot rules, Mendoza said. It could fine businesses for disobeying rules about things as minor as improper signage or as major as selling to people under 21.
“We’re considering our own compliance checks for underage buyers,” said Mendoza.
The legislation will be sent to the City Council — which must eventually approve any new law — next week. Councilmember Nick Licata said he expects a council vote sometime later this summer.