Weedless in Seattle: Washingtons looming pot shortage As state begins legal sales next month, sky-high taxes and lack of product could mean prices twice as much as what smokers pay on the black market. A young cannabis plant grows at The Joint Cooperative in Seattle. © Cliff DesPeaux/ReutersBy Jacob Sullum, Forbes Forbes Washingtons state-licensed pot stores are expected to start opening next month, but they wont have much to sell. A slow state licensing process for marijuana producers, combined with the difficulty of obtaining local approval for grow operations, will result in shortages that are apt to be more severe than those seen in Colorado after recreational sales began there in January. The result could be prices almost twice as high as those charged by medical marijuana dispensaries and black-market dealers. The Washington State Liquor Control Board plans to award 20 or so retail licenses July 7, meaning the first stores could open as soon as July 8. Eventually there are supposed to be 334 outlets across the state, although that plan looks doubtful in light of temporary or permanent bans by about 90 local governments. Meanwhile, as of last Tuesday, the LCB has awarded just 62 marijuana production licenses; more than 2,500 applications from would-be growers are still pending. Scott ONeil, who expects to receive a retail license on July 7 and open a pot store in Spokane the next day, knows where his supply will come from. He has a contract to buy marijuana from his friend and former employer Sean Green, a medical marijuana supplier who received Washingtons very first cannabis cultivation license back in March. Greens grow operation is located in the same building as ONeils store, which will do business under Greens Kouchlock Productions brand. But not every retailer will be lucky enough to have such a close relationship with a grower who is already harvesting marijuana. There will be high demand and only a handful of people growing, ONeil says. Its going to take at least a year to sort it out, get everybody up and running. In addition to shortages, pot store customers will face taxes that are projected to make retail prices about 60 percent higher than they would otherwise be. Add to those factors the costs of establishing businesses that comply with state and local regulations, and the upshot, as explained in a recent Reason magazine story about legalization in Washington, is that prices for legal pot will be substantially higher than current black-market prices. $15-25 a gram How much higher? Seattle Post-Intelligencer reporter Jake Ellison, based on interviews with growers and retailers, estimates that prices per gram (after taxes) will range from $15 to $25 (with some higher spikes and brief lows, possibly at $12 a gram). Assuming a 30 percent discount for buying an entire ounce (which seems reasonable, based on prices charged by stores in Colorado), that range amounts to something like $300 to $500 per ounce. Our products are all top shelf, and we are asking $2,800 per pound, one grower told Ellison. We are asking the retailers we work with to cap their price at $420 per ounce to consumers. We are avoiding the temptation of price gouging. money.msn/investing/post--weedless-in-seattle-washingtons-looming-pot-shortage
Posted on: Sat, 28 Jun 2014 02:08:09 +0000
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