Pubdate: Wed, 01 Jan 2014
Source: Seattle Times (WA)
Section: page A1
Copyright: 2014 The Seattle Times Company
Contact:  http://seattletimes.nwsource.com/
Details: http://www.mapinc.org/media/409
Author: Bob Young

POT LAW: HAZY DAYS AHEAD FOR STATE

Bumpy Ride Forecast When Businesses Open

Predictions Vary on Price Swings, Business Failures

Washington state moves into uncharted territory in 2014 with the
licensing and opening of legal recreational pot businesses.

We asked experts in the state and elsewhere to predict the year ahead
for pot, not just here, but also around the country and the world.

Their overarching theme for 2014? Strap in for a bumpy
ride.

Business failures, inadequate supply at first, falling prices, and a
few big unknowns loom in the year ahead, according to experts.

It will be a year of culling, said Randy Simmons, the state marijuana
project director, with many new pot merchants failing.

Legalization advocate Philip Dawdy sees a stormy start, as stores
opening in the summer struggle with inadequate supply. It will take
until autumn, Dawdy figures, for indoor and outdoor growers to get
through licensing, build-out and harvest, and to begin meeting
customer demand.

Simmons believes prices will be artificially high at first, and then
drop as market forces drive them downward. State consultant Mark
Kleiman expects that entrepreneurs who invest large amounts in growing
facilities will suffer as prices in some stores will fall by year's
end to $5 per gram. (Medical marijuana sold for about $11 per gram in
Washington, according to a 2013 study by consultants.)

Simmons expects a minor increase in statewide consumption in the new
year and little pot tourism at first. Kleiman predicts "shamelessly
aggressive marketing" by entrepreneurs but no big increase in heavy
use and no big jump in abuse for several years. He believes baby
boomers, giving marijuana another try, will drive an initial increase
in users.

Alison Holcomb, chief author of the state's legal pot law, said some
socially conscious small businesses will dismantle stereotypes of who
grows, sells and enjoys pot. But neighbors and parents will still be
jarred by the reality of seeing pot businesses operating in their
midst, said Jon Caulkins, co-author with Kleiman of "Marijuana
Legalization: What Everyone Needs to Know."

Vaporizing pot will become a hot issue, Caulkins said, with officials
debating whether that way of consuming - which doesn't burn pot but
heats it enough to release key chemicals - will be allowed indoors
where state law prohibits smoking. Vaporizers might be the technology
that gives rise to pot cafes and gives tourists a place to legally
consume.

Concentrated forms of marijuana, such as butane hash oil, will come to
dominate the market over herbal buds and flowers, Kleiman predicted.

Buyer's remorse?

Caulkins expects impaired driving to become a bigger issue,
particularly after initial 2013 reports from the Washington State
Patrol showed a 50 percent increase in the number of drivers testing
positive for pot.

Legalization critic Kevin Sabet of Project SAM (Smart Approaches to
Marijuana) predicts little reduction in black-market violence, more
negative incidents involving youth and pot, and an increase in DUI
cases. Sabet said voters will start to realize legalization "may not
be what they bargained for."

He also sees the emergence of a Big Marijuana industry that finds a
way around state restrictions on public use and promotion.

Elsewhere

Outside of Washington, Dawdy predicted a smoother rollout of
legalization in Colorado, where the medical marijuana industry was
already well regulated. Medical businesses will be the first allowed
to move into Colorado's recreational market, with some stores opening
Jan. 1.

Simmons expects a positive change in t he way medical marijuana is
perceived as more success stories are publicized by the pharmaceutical
industry about products it is making. Simmons also anticipates
increased study of the plant in Israel and the European Union.

Most experts expect at least one more state to legalize recreational
weed in 2014, most likely Alaska, although Oregon is another strong
contender. The big question is whether advocates in California rally
around a legalization ballot question in 2014, or wait for 2016.

Kleiman, a UCLA professor, believes legalization would be almost
certain to succeed in 2016, with the higher voter turnout that comes
in a presidential election year. He's also willing to bet an
initiative similar to Washington's, that regulates pot like alcohol,
would be approved by California voters in 2014.

Sabet is less optimistic. He said legalization votes in Alaska,
California, Maine and Oregon will prove a bigger challenge than thought.

Internationally, Sabet does not see any other countries following
Uruguay into legalization. Instead he predicts a backlash in that
small South American country. Holcomb disagrees and said two more
countries will end marijuana prohibition. She also predicts a
"groundbreaking international conversation" in March, when the U.N.
Commission on Narcotic Drugs convenes in Vienna.

Banking, tax woes

Back in the U.S., experts said their predictions could be moot without
key changes at the federal level.

Lawyer Hilary Bricken emphasized the current dilemma for pot
entrepreneurs: They're expected to behave like legitimate businesses
but haven't been given the tools most merchants use to establish legitimacy.

Banks are now loath to provide financial services - from checking
accounts to credit cards - to pot merchants because of the federal
prohibition of all marijuana. That means the industry operates mostly
on cash, which invites crime.

Because of federal prohibition, pot businesses are also denied
standard business tax deductions, in effect lowering their profits.

Without the pillars of banking and tax deductions, Bricken said,
legalization could fail unless other states follow the path of
Colorado and Washington, creating more political momentum for solving
these two problems.

Simmons sees continued work on the banking issue next year, but not a
remedy from Congress. Dawdy believes the problem will be solved. An
aide to Colorado Gov. John Hickenlooper predicted a fix from the U.S.
Treasury Department in early 2014.

Kleiman concludes that the banking quandary is one of the big unknowns
in the year to come. The other, he believes, is the impact of legal
pot on alcohol consumption.  
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MAP posted-by: Jo-D