Pubdate: Fri, 02 May 2014
Source: Seattle Times (WA)
Copyright: 2014 The Seattle Times Company
Contact:  http://seattletimes.nwsource.com/
Details: http://www.mapinc.org/media/409
Author: Bob Young
Page: B1

LOTTERY FOR POT STORES KICKS OFF NEXT PHASE

Some Lose Costly Bets in Renting Store Sites

Bartering, Legal Action Begin Among Applicants

Some wannabe pot merchants were crestfallen and fewer jubilant 
Thursday as state officials notified applicants for retail pot stores 
about where they stood in the lottery for retail pot-store licenses.

Applicants like Anne Martens and Pete O'Neil were disappointed 
because they've been paying rent for potential store locations only 
to learn they pulled lousy numbers in the lottery.

"We lost a ton of money," said Martens, about the Northwest Seattle 
property she and her partners have rented for almost six months. 
Martens learned that the state's lottery ranked them 53rd for the 21 
store licenses in Seattle.

Others, such as Ryan Kunkel, were feeling better. Kunkel won the 
lottery for a store in Ocean Shores, where he competed against 
another applicant in a 50-50 chance for one license. "It's a license, 
right? It's a great area," said Kunkel, who also received lottery 
numbers 36 and 91 for his proposed stores in Seattle.

A lottery was necessary because the state had 1,170 applicants who 
made it through initial screening vying for 334 stores.

Full lottery results will be released Friday by the state Liquor 
Control Board, the agency implementing Washington's legal pot law.

The lottery results don't guarantee anyone a retail license and store 
yet. Applicants still must have their operations and financial plans 
approved and must pass criminal background checks. Then they have to 
build out their stores and pass final inspection before getting 
licensed. State officials expect to start issuing licenses by early July.

Kunkel predicted that this weekend would bring a flurry of activity 
as lottery losers try to strike deals with winners. "Some of the big 
hitters didn't fare well, so people will be scrambling. Today is the 
beginning of the actual 'green rush,' " Kunkel said.

Martens agreed, saying the next step for her and her partners is to 
see if they can make a deal with someone who won the lottery but is 
unhappy with their location.

John Davis, CEO of two Seattle medical-marijuana dispensaries, took 
what he called a "zen" approach to lottery results. Davis said he 
received lottery numbers 52 and 96 for store applications in Seattle. 
He plans to continue running his dispensaries, while waiting for 
other recreational store applicants to fail, or for state officials 
to increase the number of retail licenses in Seattle.

"I sold cannabis yesterday. I'll sell cannabis tomorrow. It doesn't 
change a lot for me," Davis said. "Part of me is relieved I will not 
have to enter the market on the first round."

Davis believes that when stores start to open there will be scarce 
supply of weed at first, as the state has only licensed 21 growers to 
date. And he expects more than a few amateurs will be among the 
initial store owners. "I think a lot of businesses will fail in the 
first round," he said.

O'Neil said he and his partners were "totally disappointed" by the 
lottery results. O'Neil's team has been paying rent at three 
potential locations: Bremerton, Lynnwood and Seattle. They were 
ranked 12th in Bremerton for two retail licenses. They ranked 121st 
in Seattle. And their Lynnwood application appeared to be mistakenly 
put in the Seattle lottery by state officials, he said, where it ranked 68th.

O'Neil said his partners would meet with their lawyer this weekend to 
decide next steps, including possible legal action. They're also 
considering going into the medical-marijuana business in Washington 
or Oregon. "At the end of the day," he asked, "is it worth it to litigate?"

Attorney Robert McVay, whose firm specializes in advising pot 
entrepreneurs, said some clients - who've been unhappy for months 
about the lottery - may want to sue the state now that the "chips 
have fallen" unfavorably for them.

What was different about Thursday for McVay was that some clients 
received good news from the lottery. "Today was a nice change of 
pace," he said, "where people excited about the process are finally 
coming out of the woodwork."
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MAP posted-by: Jay Bergstrom