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Field observations of the developing legal recreational cannabis economy in Washington State
Accepted Manuscript Title: Field Observations of the Developing Legal Recreational Cannabis Economy in Washington State Author: Eric L. Jensen Aaron Roussell PII: DOI: Reference:
S0955-3959(16)30055-X http://dx.doi.org/doi:10.1016/j.drugpo.2016.02.023 DRUPOL 1743
To appear in:
International Journal of Drug Policy
Received date: Revised date: Accepted date:
15-12-2015 18-2-2016 20-2-2016
Please cite this article as: Jensen, E. L., and Roussell, A.,Field Observations of the Developing Legal Recreational Cannabis Economy in Washington State, International Journal of Drug Policy (2016), http://dx.doi.org/10.1016/j.drugpo.2016.02.023 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
FIELD OBSERVATIONS OF THE DEVELOPING LEGAL RECREATIONAL CANNABIS ECONOMY IN WASHINGTON STATE Eric L. Jensen*
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Department of Political Science University of Idaho
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875 Perimeter Drive
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MS 3165 Moscow, Idaho 83844-3165
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[email protected]
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Aaron Roussell*
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Washington State University
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Department of Criminal Justice and Criminology Johnson Tower 701; P.O. Box 644872
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Pullman, WA 99164-4872 [email protected] Corresponding Author
Author Note:
*Author ordering is alphabetical; authors contributed equally to this manuscript. The authors would like to thank the owners, proprietors, managers, and staff of the various facilities we 1
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visited for being so free with their time and generous in their explanations. We particularly thank Michael Nevas and Aaron Stancik. We also congratulate the people of Washington State for legalizing a substance valuable to humanity and removing a significant path into the criminal
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legal system.
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FIELD OBSERVATIONS OF THE DEVELOPING LEGAL RECREATIONAL CANNABIS
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ECONOMY IN WASHINGTON STATE
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ABSTRACT
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BACKGROUND: Washington State legalized the sale of recreational cannabis in 2012. This paper describes the unfolding of the market regulatory regime in an eastern portion of the state,
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including field descriptions to illustrate the setting.
METHODS: We made observations and conducted interviews of the local supply chain
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the state director of the regulatory board.
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comprising a producer/processor, analytic facility, and retail establishments as well as querying
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RESULTS: Interviews and observations of facilities suggest an overwhelming concern for black
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market diversion drives state regulatory efforts. The ongoing dialogue between market actors and the state has resulted in a more equitable distribution of profits at different stages in the process. State safety regulations have thus far been shifted to independent laboratories. Banks and insurance companies have slowly begun making inroads into the industry, despite federal prohibition.
CONCLUSION: The law was conceived as a social justice remedy, but the bulk of the legal and regulatory activity surrounds cannabis marketplace management. This has been characterized by 3
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concerns for black market diversion, producer/processor profits, and a hands-off approach to safety regulation. Minor cannabis violations as a pathway to criminal justice system involvement have been reduced substantially but disproportionate enforcement upon racial/ethnic minorities
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continues.
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KEYWORDS: Cannabis legalization, cannabis cultivation, cannabis testing, cannabis economy,
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Washington State
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FIELD OBSERVATIONS OF THE DEVELOPING LEGAL RECREATIONAL CANNABIS
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ECONOMY IN WASHINGTON STATE
Introduction
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On November 6, 2012 the voters of the State of Washington passed Initiative 502 (I-502)
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which legalized, regulated, and taxed the production, retail sale, possession, and use of
recreational cannabis beginning in July, 2014.
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recreational cannabis for adults. This law went into effect 30 days later with retail sales of
Initiative 502 was written from a social justice perspective (Garza, 2015) and was
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sponsored by the American Civil Liberties Union (ACLU) of Washington. This social justice
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perspective recognizes the War on Drugs as misguided and costly; it is a failed policy.
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Specifically, the War on Drugs “has undermined civil liberties in many ways—eroding protections against unlawful searches and seizures, imposing overly harsh sentences on
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individuals, disproportionately impacting communities of color” (ACLU of Washington, n.d.a). The application of a public health approach to cannabis regulation, mirroring in some ways that of alcohol, was intended to eliminate these harmful consequences and it seems appropriate to judge its success in part by the alleviation of such concerns. In this article, we focus on the legalization of cannabis in Washington, specifically one local supply chain in eastern Washington. Pullman is a small rural college town (population ~32,000) about 8 miles from Moscow, Idaho, another small college town just across the state line 5
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(population ~24,000). We provide descriptive information on the supply chain in this locality while raising questions and providing insight regarding the regulatory regime and emerging cannabis industrialism that drug policy researchers must address going forward. We would note
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that the ramifications of legalization may vary widely—both across states (for information on the Colorado context, see Subritzky, Pettigrew, & Lenton, 2016) as well as across population
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densities and political contexts. The west side of Washington State, for instance, is far denser and
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wealthier, while the east side of the state has more in common with its politically conservative neighbor, Idaho.
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By enacting a legalization regime, Washington has abruptly taken cannabis consumption from the constraints of a black market setting into an emergent consumer marketplace. The best
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historical analogue in US society is alcohol, but cannabis is a unique case insofar as the re-
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authorization of alcohol sales after the repeal of Prohibition occurred over eighty years ago in
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very different political-economic and technological contexts. Room (2011) suggests that the responsibilization of the “moderate drinker” has emerged
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as the neoliberal paradigm which resolves the concern for sobriety with the expansion of markets for consumer goods which may lead to a form of psychological dependence—i.e., those purchases which reinforce similar future purchases through the creation of a need or taste. Such a reallocation of responsibility—as compared to regimes organized around prohibition, medicalization, or consumption reduction through strong regulatory controls—places the responsibility squarely on the individual in a classical liberal sense while enabling the substance to be treated as a vehicle for profit. The resolution between concern for reducing harms and 6
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maximizing profit is devolved to the choices made by the individual consumer. Although social justice was the foundation of I-502, we suggest that Room’s individual responsibilization within an expanding market is the framework in which Washington’s cannabis regulation is unfolding.
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Below we present information gleaned from observations and discussions with a variety of industry insiders (owner/operators, growers, lab scientists, and consumers), between October
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2014 and September 2015 at a 1) cannabis cultivation site, 2) an analytical testing facility, and 3)
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two retail facilities. We do not claim rigor in our methodology or sampling techniques, but hope that the timely provision of such information will help apprise the international drug policy
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community of the basic landscape of legalization in Washington and inspire future research. In the conclusion, we assess the congruence of the Washington legalization approach with a social
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justice perspective and its relationship to market pressures and a conservative backlash.
Regulation and Surveillance
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Cannabis Cultivation
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The passage of I-502 represented the express wish of Washington voters to create a market for recreational cannabis use for those aged 21 years and over, rather than a medicalization (already in place) or decriminalization regime. In specifying that cannabis be treated as a regulable intoxicating substance like alcohol and tobacco, I-502 required that legalized recreational cannabis be cultivated in facilities licensed, regulated, and inspected by the Washington State Liquor Control Board (WSLCB; later renamed the Washington State Liquor and Cannabis Board). Licenses to produce, process, and sell cannabis in a retail facility were 7
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granted within an initial time window. About 100 retailers and about 600 producer/processors were originally licensed—our sites were included in this first wave, although the state is reopening the retail license window to correct for license imbalances by jurisdiction.
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In Washington, Tier 1 cannabis producers are allowed to grow two thousand square feet (185.8 square meters) of dedicated plant canopy. Tier 2 producers are allowed to grow between
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two thousand and ten thousand square feet (929.0 square meters) of dedicated plant canopy. Tier
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3 producers are allowed to grow between ten thousand and thirty thousand square feet (2,787.1 square meters) of dedicated plant canopy. Moonlight Alchemy is a Tier 2 cannabis cultivation
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facility located between wheat and lentil fields on the outskirts of Pullman.
Moonlight Alchemy’s cultivation occurs in a newly built, nondescript warehouse-like
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building. With no signs announcing its presence and confusing street numbering, the building is
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difficult to find. It shares space with a hard cider (sidra) production facility, although the two
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facilities do not have mutual access. Moonlight Alchemy’s half of the building is surrounded by an eight-foot metal wall with a locked door, while posted signs prohibit those under 21 years of
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age from entering and display the inside phone number. Visitors must call and receive clearance to enter. The regulations required on the cannabis side of the grounds provide a sharp contrast to the cider processing facility—apples lie out in crates, there’s no fence and no cameras, and the big outside doors are open such that operations can be seen at a glance while walking past. Spare and functional, the anteroom is not arranged for guests. Tanks of CO2 and yellow and white full body protection suits line the institutionally white walls with other miscellaneous equipment under a whiteboard covered with a colored-marker schedule of time sensitive tasks. 8
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One co-owner is an electrical engineer. With no previous experience in growing cannabis, he approached the facility design as an engineering challenge, accommodating specific requirements for heating/cooling, lighting, humidity, watering, and cyclical regulation of the
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plants. The grower is also a co-owner. A former kindergarten teacher, he has nine years of
experience growing medicinal cannabis in Montana. He co-owns Green Matter as well, a Tier 1
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cannabis production facility in Spokane, Washington. He is the only owner currently directly
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involved in cultivation process. The other two co-owners also own the adjacent cider operation. All production facilities report to their regional WSLCB officer who visits at regular
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intervals to monitor compliance. One co-owner is concerned that the regulatory schema and enforcement apparatus are purposely vague and provide regulators with broad latitude to give the
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state the power to terminate undesirable producers through endless fines.
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Security for cannabis growing facilities is a major issue for the WSLCB. The rules
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governing production stipulate a number of requirements for visitors that the owners find burdensome, but abide by strictly. Each visitor must wear a visitor badge and sign a guestbook
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with time in, time out, and contact information. All spaces within the facility are filmed by at least two surveillance cameras; there is no “dead space” which is not redundantly covered. This required the installation of forty-six cameras in the rather small Moonlight Alchemy facility. The regulators’ wide enforcement discretion (there is no appeals process) and lack of understanding of cannabis production combine to create a regulatory system focused largely on surveillance—the approach is unrelated to the specifics of the product and could be applied to apples or t-shirts with equal facility. “Biotrack”, the state traceability system, logs everything 9
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from watering to transplanting to waste destruction to retail and processing transportation. Together with the elaborate camera setup, Biotrack is the system to which the WSLCB pays close attention, monitoring the movement, sale, and disposal of the product.
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Diversion to the black market is a major concern. Indeed, growers are not allowed to
divert even a tiny portion of their retail production for their own use, and must buy their own
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product from retailers. Alternative methods to procure for growers include “private medical
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gardens” for those with medical clearance to grow and “employee lots”. Employee lots comprise portions of a facility’s growing space dedicated to employees’ personal production; the product
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can then be purchased with a standard employee discount, which also must be logged through Biotrack.
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Production
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Moonlight Alchemy’s indoor growing space, located through a short hallway after the
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anteroom, is fairly small. Cannabis production occurs in three stages. The first occurs in the indoor nursery, where genetic clones of the mother plant are taken and planted in tiny pots so
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that the roots grow and dangle into a moist nutrient solution. After attaining a certain size, they are transplanted twice into ever-larger containers with a soil made from coconut shells that drain and breathe better than dirt. The top level is a layer of processed glass. Smooth to the human touch, it acts as a physical barrier to the larvae of various pests. The first part of this growth process takes about two weeks.
When the plants are of sufficient maturity, they are taken to the flowering room or outside, depending on their ultimate retail destination. Space is reserved in the fenced-in areas in 10
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the front and the rear of the building for outdoor cultivation. Indoor growth produces a higher quality product, but comes with obvious space limitations. Outdoor growth is less limiting and less expensive but the uncontrolled conditions mean that a portion of the active cannabinoids can
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be lost through exposure to the elements—both brushed off by wind, rain, and passersby, and partly activated by the sun. Budding takes eight to nine weeks. When cultivated indoors,
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temperature, light, and humidity are all closely regulated. When the buds are mature the plant is
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harvested and taken to the drying room where it hangs upside down and desiccates for two to three weeks. Plants can then be sorted into attractive Grade A buds for smoking, while the
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remainder, including the outdoor harvest, eventually makes up pre-rolled joints, waxes, kief, hash, and other cannabis-infused products such as edibles and lotions (see Subritzky et al, 2016
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for further discussion of methods of consumption).
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Contaminants
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Air-borne bacteria and other contaminants—what the grower refers to as “bioburden”— build up on agricultural products routinely, but resin glands (“trichomes”) present on cannabis
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flowers are especially sticky. The framers of I-502 included requirements for product testing as a safety mechanism, dovetailing with basic requirements of agricultural products. The grower states that regulators have applied the strictest possible standards, expecting nearly zero bioburden when testing a cannabis lot, which he argues is a difficult if not impossible standard to meet. Lacking the expertise to conduct these tests, the WSLCB relies upon independent laboratories. Laboratories that are following the WSLCB’s guidelines are failing approximately 15%-25% of cannabis lots for microbial bioburden. 11
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According to this grower, the net effect is to insulate the state against product safety concerns by providing unrealistic standards, while allowing producers and laboratories to accept full liability if they want to bring the product to market. In response, some cannabis-specific labs
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have “evolved” a set of standards that they use to approve cannabis samples under the “manual pass” exception the grower stated. Laboratories thus certify that the microbial analysis may
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indicate failure, but that the analyst determined the sample to be safe after considering it by hand.
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Realizing that this displacement of state liability threatens their business interests, in this grower’s opinion laboratories have begun preparing for the inevitable lawsuits should a
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consumer get sick and blame the parties responsible for ensuring cannabis safety standards. Testing is serious business for producers. If a crop sample fails, the lot is not allowed to
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go to retail. Retesting is allowed, however, which in common practice allows most crops to
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proceed to market. If the testing ultimately fails the sample, the crop can still be produced as
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hash or used in edibles, but the final product must be retested yet again. If it fails the retest, the crop must be destroyed, a considerable expense.
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Although much of the cannabis growing process is transplanted directly from traditional commercial agricultural practice, the regulation of cannabis in Washington has been subjected to atypical prohibitions on pesticides. Whereas traditional agricultural products are subjected to testing and regulation, the outright bans on most pesticides have resulted in some creative workarounds. The Washington Secretary of Health admits that the state is pioneering new territory in the regulation of pesticides and other contaminants in recreational cannabis. That is, while established research guides the rules that govern pesticides for other agricultural products, there 12
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is little guidance on the potential dangers of ingesting pesticides by smoking (Wiesman, 2015; see also Daley, Lampach, & Sguerra, 2013). As noted in a 2013 report to the WSLCB, “there are severe gaps in the knowledge about Cannabis, since formal agricultural research hasn’t been
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permitted for this crop for nearly 100 years” (Daley, Lampach, & Sguerra, 2013, p. 33).
These concerns, of course, conflict with market efficiency. The co-owner implies that
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some producers currently cheat since regulators prohibit rather than regulate and test pesticide
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levels. In crises, growers will cut corners using established methods from conventional agriculture to avoid losing entire crops. As he puts it, “No one sacrifices a crop if there are
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chemical options.” There is a list of acceptable pesticides but testing for them is not required until July, 2016 (personal communication, Aaron Stancik, December 4, 2015).
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Political Economics
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The co-owners expressed concern regarding the substantial taxes placed on recreational
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cannabis in Washington, believing that these taxes greatly constrain their profits. I-502 required that the business responsible at each stage of the process—the grower, the processor, and the
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retail outlet—pay a 25% tax on the value of the cannabis. The structure of these regulations tended to benefit the retail outlets uniquely and they marked up prices by 300-400%. In July, 2015, the recreational cannabis tax structure changed to ameliorate this problem. It appears that the recreational producers were an important force behind this change in taxation policy (personal communication, Rick Garza, October 22, 2015). Under the new law, the customer pays a 37% tax on the cannabis in addition to approximately 7% sales tax, whereas the producers,
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processors, and retail outlets pay no taxes on the product. Whether this new policy will increase producer profits is unclear, as is any net consumer price change. As purely recreational producers, Moonlight Alchemy’s main concern is the untaxed
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nature of the medicinal cannabis market. At this point in the economic cycle, they contend that those who cultivate medicinally make a disproportionate share of the profits and are subject to
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significantly less regulation. Medicinal growers thus profited tax-free while subsidizing their
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preparations to shift to the recreational market, and avoided additional regulations that recreational growers face. This situation will change as the new regulations controlling medicinal
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cannabis enacted in 2015 will go into effect in July 2016.
Producers have also proliferated since 2013, resulting in reductions in the wholesale
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price per gram. When retail sales of recreational cannabis began there was not enough product to
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fill the demand—combined with the 25% tax structure, this resulted in high prices. The WSLCB
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reported the retail price per gram in early 2015 to have dropped to an average of $15 statewide (from ~$30 in 2014). The potential increase in use cannot yet be assessed under this regulatory
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regime (much less a pre/post implementation comparison), but the price divergences between the black market, medical market, and recreational market seem to be diminishing (e.g., Kleiman, 1989).
Two main concerns for the industry are banking and insurance for the facility and the product itself (Subritzky, et al, 2016). Although cannabis production is state-regulated, the entire industry continues to be regarded as drug trafficking at the federal level. Federally-insured banks are not allowed to handle “drug money.” Contrary to concerns regarding financial skittishness of 14
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local Federal Deposit Insurance Corporation (FDIC)-insured banks, however, several banks have decided to provide services at every level of the Washington cannabis production process. Cannabis banking costs a monthly fee that most businesses are not required to pay. The co-owner
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has noticed that retailers tend to do business with a small group of banks, while
producer/processors do business with another set, most likely because they have all developed
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and proliferated idiosyncratic rules for each stage of the process and banks have found it
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profitable to extend horizontally across the market.
Insurance companies are also taking the risk, gambling that federal law will leave the
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state-licensed production process alone or eventually move to incorporate it. Industry actors are advised to keep every scrap of state-generated official paper, under the theory that if culpability
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becomes a legal issue, it is somewhat diminished if companies were following state directives.
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Insurance companies are now looking at training inspectors to assess cannabis production
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facilities to produce more accurate actuarial estimates in support of these efforts. Laboratory Testing of Cannabis
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The Scientific Director of the Pullman cannabis testing laboratory holds a doctorate in chemistry and the Laboratory Manager holds a bachelor’s degree in microbiology. The lab is located in a relatively new office building in a quiet section of town and looks rather small from the outside. Visitors must buzz at the front door, and wait for staff to admit them. The waiting room is largely bare and opened into a hallway, which split into a large laboratory for analyses and several smaller rooms used for offices, sample logging, and storage. There are a number of surveillance cameras in the facility as required by the WSLCB. 15
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The Director presented his gas chromatography apparatus, an expensive system that measures various chemical components of cannabis samples. He showed us chromatogram printouts of different cannabis strains, indicating spikes on the horizontal axis depicting the
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levels of various terpenes, and discussed the aromatic characteristics these impart to their
respective strains. Cannabinoids and cannabinoid receptors (endocannabinoids) are produced
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naturally in the human body and have a diverse array of effects on such things as appetite, pain,
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mood, and motor skills—it is this system that is accessed by ingesting cannabis. Terpenes, organic hydrocarbons found in organisms as diverse as hops, tree resin, and termites, affect the
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quality and flavor of the intoxication as well as potentially enhancing medical benefits. Although such distinctions between varietals include the basic sativa and indica strains, these divisions are
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merely a beginning—depending on various chemotypes, there could be dozens of classifications.
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This lab tests for potency and the levels of particular cannabinoids such as THCA, THC, CBDA,
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CBD, CBN, CBGA, and CGB, providing these results to the producer as required by law. The lab also conducts the microbial tests on the samples for yeast and mold, coliform, E.coli,
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salmonella, total aerobic bacteria, and enterobacteriaceae but does not practice the manual pass exemption.
The Green Light District: Retail Stores
The first retail recreational cannabis store in Pullman opened in October, 2014 behind a furniture wholesaler. The second store opened eight months later directly across the street due to tight cannabis zoning regulations. Located in a business zoning district about a half mile from the edge of the Washington State University campus, the two shops are quite different. A six-foot 16
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high chicken wire fence topped with barbed wire surrounds the first shop and signs direct patrons to go around the back past the furniture store. The second has no fence, but instead has a welcome sign and a path leading from its back parking lot to the front door. When they opened,
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both shops checked personal identification to ensure that entering customers were 21 years of age or over. Both shops now normally check IDs at purchase. The age of 21 years to purchase
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and possess recreational cannabis was established since this is also the standard legal age for
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alcohol purchase and consumption in the US. Similar to the cultivation facility and the testing lab, the “pot shops” have numerous surveillance cameras as required by state regulations. The
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older of the shops has 16 surveillance cameras in a relatively small space.
According to sales data released by the WSLCB, the first shop to open in this area has
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been quite successful and sales have grown considerably since its opening. The number of
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cannabis strains on the shelves has also increased from four to six to twenty or more at any given
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time. The older of the shops has expanded its inventory from initially offering only bud, prerolled joints, and shake (trim leaf and crumbs) to include wax (an extract), edibles, pipes,
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vaporizer inserts, lotions, bath salts, personal lubricants, and other topical products (for more detail, see Subritzky et al, 2016). Bud can be purchased in amounts from one gram up to one ounce (28.3 grams). The newer shop has a smaller range of products available, but a wider array of varieties and their prices are slightly lower. Both shops provide small glass bottles with holes in the top to enable customers to sample the aroma of each strain before purchase. In both stores, all cannabis strains are labeled with their trade names, the THC content, and the price. Strains are listed on an information sheet that describes the predominance of different cannabinoids and the 17
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attributes these may have, including euphoric, soporific, analgesic, and anxiety reductive effects as well as more general concerns such as taste, feel, and overall affect. On several of our field visits, we noticed that the clientele in the shops tends to be older
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than a late-college age population (21+); staff in the older shop confirmed this, placing the
average age of customers at more than 40 years. The newer shop seems to skew toward slightly
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younger customers perhaps because of its lower prices. The generally older age distribution of
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the customers is surprising given the proximity of two universities with a total student population of more than 30,000, but it may be that black market prices and on-campus dealing remain
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preferable to the younger age group. Future research should investigate this possibility. Despite the reported success of Moonlight Alchemy and other producers partnering with
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local FDIC banks, shop owners continue to deal only in cash. It is unclear when or if this will
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change, but both locations have dealt with this constraint by installing automatic teller machines
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inside their premises. The older of the retail outlets pays its employees in cash as well. Discussion
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This paper is a case study of a local cannabis supply chain embedded within the legalized regulatory regime of Washington State. Such a close examination of the ways in which an innovative policy initiative impacts local actors is valuable, but care must be taken in applying these lessons outside the area. The west side of Washington, with its larger concentrated population and more tolerant culture, may experience different levels of enforcement attention at the individual and industry level among other effects.
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Overall, cannabis consumption in Washington State is certainly safer than it has ever been and an entire stream of criminal cases has been preempted—these are unequivocally positive achievements. Apart from the will of the voters in enacting the new law, however, the
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role of the state has been mainly to facilitate economic opportunity, minimizing its
responsibilities with respect to safety regulation and those already caught up in the state criminal
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legal apparatus. As may be expected with such a remarkable change in drug policy, elements of
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resistance continue. Ten of the thirty-nine counties in Washington have banned retail recreational cannabis outlets as have sixty-two independent cities, particularly in eastern Washington’s more
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conservative jurisdictions (Darnell, 2015). Despite this, Rick Garza, the Director of the WSLCB, maintains that all state residents live within an hour of a cannabis retail outlet (October 22,
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2015). Lawsuits have been filed in some of these jurisdictions seeking to overturn the bans.
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At least one of the social justice goals of the authors of I-502 has been achieved. Between
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2009 and 2012, there was an annual average of 6,779 misdemeanor cannabis court filings against persons twenty-one years of age and over. In 2013, these filings decreased to 120. The ACLU
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suggests that the remaining filings are likely the result of individuals exceeding the one ounce of cannabis for personal possession allowed under I-502. “The data strongly suggest that I-502 has achieved one of its primary goals—to free up police and prosecutorial resources. These resources can now be used for other important public safety concerns” (ACLU, n.d.a.). From 2000-2010 jurisdictions in Washington spent nearly $211.5 million on cannabis enforcement (ACLU, n.d.b.).
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On the other hand, although the War on Drugs has been waged disproportionately against racial minorities, the legalization of cannabis is not a panacea for racial disparity in the criminal legal system. In Washington, an African American adult continues to be 2.8 times more likely to
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have a misdemeanor cannabis charge filed against him or her than does an Anglo American adult (ACLU, n.d.a.).
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An important historical issue that remains to be rectified is the nullification of past
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cannabis convictions. Post-hoc initiatives to nullify past convictions may fail to fully address the concern unless they consider the ways in which cannabis enforcement has been used as a law
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enforcement instrument to effect compliance, adjudication, and social control (c.f., Geller & Fagan, 2010). This issue was raised in the 2015 legislative session. A bill was introduced into a
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legislative committee which would have expunged past misdemeanor cannabis convictions for
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adults but it was not moved out of committee for the full legislature to consider (Alexander,
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2015). Partially in response to this failure to act and because of the racial/ethnic disparity in cannabis convictions, the City of Spokane has begun allowing residents to apply for their past
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misdemeanor convictions to be vacated (Brunt, 2015). As a contrast to Room’s (2011) “responsibilization” perspective, it is important to consider who is and who is not covered by the political imaginary of public policy (Bourgois & Schonberg, 2009; James, 1996). In addition to the resistance to expungement, a legislative bill in the 2015 legislative session contained an overlooked clause mandating that persons under twenty-one years of age be charged with a felony for possession of small amounts of cannabis (Stone, 2015a). This provision, inserted quietly by the bill’s rural, conservative sponsor was intended “to deter minors 20
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from trying an adult drug” (Stone, 2015b). This charge was previously a misdemeanor, so this represents a major regression in severity as well as a continuing resort to deterrence logic. The clause only gained local media attention when a prosecutor in a politically conservative county
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charged two minors under this law. Largely due to pressure from a local newspaper, the
prosecutor eventually reduced the charges to misdemeanors. We are not aware of charges being
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filed under this felony provision in any other county in the state and it appears that it has not
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come to the attention of most state law enforcement agencies or they have simply chosen to ignore it. It appears this law may be “fixed” in the next legislative session (Stone, 2015c).
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One of the cornerstones of a public health approach is concern for product safety and testing for contaminants. Until recently, consumers of cannabis purchased from the illicit market
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without any controls over product safety. Under the Washington system, contaminant assessment
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remains nearly entirely in the realm of the producer and third-party laboratories. The independent
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lab we visited takes seriously the health of consumers, but in setting controversial standards and outsourcing its regulatory obligations, the state has essentially abdicated concern to the industry-
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laboratory nexus and seems willing to let these entities assume the legal liability. When assessing this schema, we must recall that the WSLCB has no existing regimes to consult—this is new ground, and the issue is almost certain to be litigated regardless of the state’s approach. The original Initiative 502 that chartered the legal cannabis market was predicated on social justice and consumer safety. We argue that the unfolding regulatory schema seems more congruent with Room’s (2011) presentation of the responsibilized self-regulating drinker to enhance profit and reduce state responsibility, rather than a direct focus on the foregoing 21
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concerns although there is significant overlap. The political compromise taking place in Washington State makes room for commodification and profit maximization while placing the onus on the individual to self-regulate. The taxation shifts have been largely in the service of
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profit redistribution, while the license-granting schema has benefitted venture capitalists unafraid of federal repercussions. Their gamble so far is paying off. State regulatory efforts are mainly
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geared toward preventing illegal diversion and thus the maintenance of profits in a manner that is
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politically supportable and minimizes state liability. Those adjudicated under the previous prohibition regime have not been addressed by this empowerment of capital interests. Producers,
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on the other hand, although considered “drug traffickers” at the federal level, are accumulating stakes in economic conformity as they build relationships with the federally insured banking
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system and carve out new niches within the national insurance sector. The predictive power of
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Room’s perspective will turn on the continued channeling of cannabis use into the commercial
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market (i.e., starving the medical, personal production, and black markets through various means), the legal resolutions regarding permissible advertisement (Subritzky, Pettigrew, &
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Lenton, 2016), and the offloading of liability for cannabis health concerns onto the individual.
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References Alexander, R. (2015). Spokane considering throwing out minor pot possession convictions. The Spokesman-Review, October 20, 2015. Available at:
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http://www.spokesman.com/stories/2015/oct/20/spokane-considering-throwing-out
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minor-pot-possess/
American Civil Liberties of Washington. (n.d.a.). Initiative 502 Washington’s New Marijuana
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Law. Accessed November 6, 2015 from https://www.aclu-wa.org.issues/drug policy
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American Civil Liberties of Washington. (n.d.b.). What your county is spending on marijuana law enforcement. Accessed December 2, 2015 from https://www.aclu-wa-.org/what-
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your-county-spending-marijuana-law-enforcement.
Bourgois, P., & Schonberg, J. (2009). Righteous dopefiend: Homelessness, addiction, and
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poverty in urban America. Berkeley, CA: University of California Press.
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Brunt, J. (2015). Spokane will vacate marijuana possession convictions. The Spokesman-Review.
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November 9, 2015. Available at
http://www.spokesman.com/stories/2015/nov/09/spokane-will-vacate-marijuana possession-convictio/
Daley, P., Lampach, D., & Sguerra, S. (2013). Testing Cannabis for contaminants. BOTEC Analysis Corporation. September. Accessed November 20, 2015 from https:// liq.wa.gov/marijuana/botec_report Darnell, A.J. (2015). I-502 Evaluation plan and preliminary report on implementation.
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(Document Number 15-09-3201). Olympia, WA: Washington State Institute for Public Policy. Garza, R. (2015). Marijuana legalization: Implementing Initiative 502 in Washington.
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Presentation at the Thomas S. Foley Institute for Public Policy and Public Service. Pullman, Washington: Washington State University. October 22, 2015.
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Geller, A., & Fagan, J. (2010). Pot as pretext: Marijuana, race, and the new disorder in New
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York City street policing. Journal of Empirical Legal Studies, 7, 591–633.
James, J. (1996). Resisting state violence: Radicalism, gender, and race in U.S. culture.
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Minneapolis, MN: University of Minnesota Press.
Kleiman, M. (1989). Marijuana: Costs of abuse, costs of control. Westport, CT: Greenwood
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Publishing Group.
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Room, R. (2011). Addiction and personal responsibility as solutions to the contradictions of
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neoliberal consumerism. Critical Public Health, 21, 2, 141–151. Stone, M. (2015a). New law makes pot possession a felony for minors. The Lewiston Tribune.
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September 17, 2015, 1A and 5A.
Stone, M. (2015b). Youth pot felonies ‘slipped in under the radar.’ The Lewiston Tribune. September 18, 2015, 1A and7A. Stone, M. (2015c). Mercy for minors with marijuana? Felony charges for three Asotin County teens likely to be downgraded to misdemeanors. The Lewiston Tribune. September 19, 2015, 1A and 5A.
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Subritzky, T., Pettigrew, S., & Lenton, S. (2016). Issues in the implementation and evolution of the commercial recreational cannabis market in Colorado. International Journal of Drug Policy, 27, 1-12.
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Wiesman, J. (2015). Marijuana and your health. Presentation at the Thomas S. Foley Institute for Public Policy and Public Service. Pullman, Washington: Washington State University.
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November 12, 2015.
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S0955-3959(16)30055-X http://dx.doi.org/doi:10.1016/j.drugpo.2016.02.023 DRUPOL 1743
To appear in:
International Journal of Drug Policy
Received date: Revised date: Accepted date:
15-12-2015 18-2-2016 20-2-2016
Please cite this article as: Jensen, E. L., and Roussell, A.,Field Observations of the Developing Legal Recreational Cannabis Economy in Washington State, International Journal of Drug Policy (2016), http://dx.doi.org/10.1016/j.drugpo.2016.02.023 This is a PDF file of an unedited manuscript that has been accepted for publication. As a service to our customers we are providing this early version of the manuscript. The manuscript will undergo copyediting, typesetting, and review of the resulting proof before it is published in its final form. Please note that during the production process errors may be discovered which could affect the content, and all legal disclaimers that apply to the journal pertain.
FIELD OBSERVATIONS OF THE DEVELOPING LEGAL RECREATIONAL CANNABIS ECONOMY IN WASHINGTON STATE Eric L. Jensen*
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Department of Political Science University of Idaho
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875 Perimeter Drive
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MS 3165 Moscow, Idaho 83844-3165
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[email protected]
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Aaron Roussell*
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Washington State University
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Department of Criminal Justice and Criminology Johnson Tower 701; P.O. Box 644872
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Pullman, WA 99164-4872 [email protected] Corresponding Author
Author Note:
*Author ordering is alphabetical; authors contributed equally to this manuscript. The authors would like to thank the owners, proprietors, managers, and staff of the various facilities we 1
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visited for being so free with their time and generous in their explanations. We particularly thank Michael Nevas and Aaron Stancik. We also congratulate the people of Washington State for legalizing a substance valuable to humanity and removing a significant path into the criminal
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legal system.
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FIELD OBSERVATIONS OF THE DEVELOPING LEGAL RECREATIONAL CANNABIS
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ECONOMY IN WASHINGTON STATE
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ABSTRACT
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BACKGROUND: Washington State legalized the sale of recreational cannabis in 2012. This paper describes the unfolding of the market regulatory regime in an eastern portion of the state,
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including field descriptions to illustrate the setting.
METHODS: We made observations and conducted interviews of the local supply chain
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the state director of the regulatory board.
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comprising a producer/processor, analytic facility, and retail establishments as well as querying
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RESULTS: Interviews and observations of facilities suggest an overwhelming concern for black
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market diversion drives state regulatory efforts. The ongoing dialogue between market actors and the state has resulted in a more equitable distribution of profits at different stages in the process. State safety regulations have thus far been shifted to independent laboratories. Banks and insurance companies have slowly begun making inroads into the industry, despite federal prohibition.
CONCLUSION: The law was conceived as a social justice remedy, but the bulk of the legal and regulatory activity surrounds cannabis marketplace management. This has been characterized by 3
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concerns for black market diversion, producer/processor profits, and a hands-off approach to safety regulation. Minor cannabis violations as a pathway to criminal justice system involvement have been reduced substantially but disproportionate enforcement upon racial/ethnic minorities
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continues.
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KEYWORDS: Cannabis legalization, cannabis cultivation, cannabis testing, cannabis economy,
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Washington State
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FIELD OBSERVATIONS OF THE DEVELOPING LEGAL RECREATIONAL CANNABIS
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ECONOMY IN WASHINGTON STATE
Introduction
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On November 6, 2012 the voters of the State of Washington passed Initiative 502 (I-502)
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which legalized, regulated, and taxed the production, retail sale, possession, and use of
recreational cannabis beginning in July, 2014.
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recreational cannabis for adults. This law went into effect 30 days later with retail sales of
Initiative 502 was written from a social justice perspective (Garza, 2015) and was
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sponsored by the American Civil Liberties Union (ACLU) of Washington. This social justice
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perspective recognizes the War on Drugs as misguided and costly; it is a failed policy.
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Specifically, the War on Drugs “has undermined civil liberties in many ways—eroding protections against unlawful searches and seizures, imposing overly harsh sentences on
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individuals, disproportionately impacting communities of color” (ACLU of Washington, n.d.a). The application of a public health approach to cannabis regulation, mirroring in some ways that of alcohol, was intended to eliminate these harmful consequences and it seems appropriate to judge its success in part by the alleviation of such concerns. In this article, we focus on the legalization of cannabis in Washington, specifically one local supply chain in eastern Washington. Pullman is a small rural college town (population ~32,000) about 8 miles from Moscow, Idaho, another small college town just across the state line 5
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(population ~24,000). We provide descriptive information on the supply chain in this locality while raising questions and providing insight regarding the regulatory regime and emerging cannabis industrialism that drug policy researchers must address going forward. We would note
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that the ramifications of legalization may vary widely—both across states (for information on the Colorado context, see Subritzky, Pettigrew, & Lenton, 2016) as well as across population
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densities and political contexts. The west side of Washington State, for instance, is far denser and
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wealthier, while the east side of the state has more in common with its politically conservative neighbor, Idaho.
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By enacting a legalization regime, Washington has abruptly taken cannabis consumption from the constraints of a black market setting into an emergent consumer marketplace. The best
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historical analogue in US society is alcohol, but cannabis is a unique case insofar as the re-
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authorization of alcohol sales after the repeal of Prohibition occurred over eighty years ago in
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very different political-economic and technological contexts. Room (2011) suggests that the responsibilization of the “moderate drinker” has emerged
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as the neoliberal paradigm which resolves the concern for sobriety with the expansion of markets for consumer goods which may lead to a form of psychological dependence—i.e., those purchases which reinforce similar future purchases through the creation of a need or taste. Such a reallocation of responsibility—as compared to regimes organized around prohibition, medicalization, or consumption reduction through strong regulatory controls—places the responsibility squarely on the individual in a classical liberal sense while enabling the substance to be treated as a vehicle for profit. The resolution between concern for reducing harms and 6
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maximizing profit is devolved to the choices made by the individual consumer. Although social justice was the foundation of I-502, we suggest that Room’s individual responsibilization within an expanding market is the framework in which Washington’s cannabis regulation is unfolding.
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Below we present information gleaned from observations and discussions with a variety of industry insiders (owner/operators, growers, lab scientists, and consumers), between October
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2014 and September 2015 at a 1) cannabis cultivation site, 2) an analytical testing facility, and 3)
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two retail facilities. We do not claim rigor in our methodology or sampling techniques, but hope that the timely provision of such information will help apprise the international drug policy
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community of the basic landscape of legalization in Washington and inspire future research. In the conclusion, we assess the congruence of the Washington legalization approach with a social
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justice perspective and its relationship to market pressures and a conservative backlash.
Regulation and Surveillance
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Cannabis Cultivation
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The passage of I-502 represented the express wish of Washington voters to create a market for recreational cannabis use for those aged 21 years and over, rather than a medicalization (already in place) or decriminalization regime. In specifying that cannabis be treated as a regulable intoxicating substance like alcohol and tobacco, I-502 required that legalized recreational cannabis be cultivated in facilities licensed, regulated, and inspected by the Washington State Liquor Control Board (WSLCB; later renamed the Washington State Liquor and Cannabis Board). Licenses to produce, process, and sell cannabis in a retail facility were 7
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granted within an initial time window. About 100 retailers and about 600 producer/processors were originally licensed—our sites were included in this first wave, although the state is reopening the retail license window to correct for license imbalances by jurisdiction.
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In Washington, Tier 1 cannabis producers are allowed to grow two thousand square feet (185.8 square meters) of dedicated plant canopy. Tier 2 producers are allowed to grow between
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two thousand and ten thousand square feet (929.0 square meters) of dedicated plant canopy. Tier
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3 producers are allowed to grow between ten thousand and thirty thousand square feet (2,787.1 square meters) of dedicated plant canopy. Moonlight Alchemy is a Tier 2 cannabis cultivation
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facility located between wheat and lentil fields on the outskirts of Pullman.
Moonlight Alchemy’s cultivation occurs in a newly built, nondescript warehouse-like
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building. With no signs announcing its presence and confusing street numbering, the building is
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difficult to find. It shares space with a hard cider (sidra) production facility, although the two
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facilities do not have mutual access. Moonlight Alchemy’s half of the building is surrounded by an eight-foot metal wall with a locked door, while posted signs prohibit those under 21 years of
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age from entering and display the inside phone number. Visitors must call and receive clearance to enter. The regulations required on the cannabis side of the grounds provide a sharp contrast to the cider processing facility—apples lie out in crates, there’s no fence and no cameras, and the big outside doors are open such that operations can be seen at a glance while walking past. Spare and functional, the anteroom is not arranged for guests. Tanks of CO2 and yellow and white full body protection suits line the institutionally white walls with other miscellaneous equipment under a whiteboard covered with a colored-marker schedule of time sensitive tasks. 8
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One co-owner is an electrical engineer. With no previous experience in growing cannabis, he approached the facility design as an engineering challenge, accommodating specific requirements for heating/cooling, lighting, humidity, watering, and cyclical regulation of the
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plants. The grower is also a co-owner. A former kindergarten teacher, he has nine years of
experience growing medicinal cannabis in Montana. He co-owns Green Matter as well, a Tier 1
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cannabis production facility in Spokane, Washington. He is the only owner currently directly
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involved in cultivation process. The other two co-owners also own the adjacent cider operation. All production facilities report to their regional WSLCB officer who visits at regular
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intervals to monitor compliance. One co-owner is concerned that the regulatory schema and enforcement apparatus are purposely vague and provide regulators with broad latitude to give the
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state the power to terminate undesirable producers through endless fines.
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Security for cannabis growing facilities is a major issue for the WSLCB. The rules
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governing production stipulate a number of requirements for visitors that the owners find burdensome, but abide by strictly. Each visitor must wear a visitor badge and sign a guestbook
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with time in, time out, and contact information. All spaces within the facility are filmed by at least two surveillance cameras; there is no “dead space” which is not redundantly covered. This required the installation of forty-six cameras in the rather small Moonlight Alchemy facility. The regulators’ wide enforcement discretion (there is no appeals process) and lack of understanding of cannabis production combine to create a regulatory system focused largely on surveillance—the approach is unrelated to the specifics of the product and could be applied to apples or t-shirts with equal facility. “Biotrack”, the state traceability system, logs everything 9
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from watering to transplanting to waste destruction to retail and processing transportation. Together with the elaborate camera setup, Biotrack is the system to which the WSLCB pays close attention, monitoring the movement, sale, and disposal of the product.
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Diversion to the black market is a major concern. Indeed, growers are not allowed to
divert even a tiny portion of their retail production for their own use, and must buy their own
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product from retailers. Alternative methods to procure for growers include “private medical
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gardens” for those with medical clearance to grow and “employee lots”. Employee lots comprise portions of a facility’s growing space dedicated to employees’ personal production; the product
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can then be purchased with a standard employee discount, which also must be logged through Biotrack.
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Production
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Moonlight Alchemy’s indoor growing space, located through a short hallway after the
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anteroom, is fairly small. Cannabis production occurs in three stages. The first occurs in the indoor nursery, where genetic clones of the mother plant are taken and planted in tiny pots so
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that the roots grow and dangle into a moist nutrient solution. After attaining a certain size, they are transplanted twice into ever-larger containers with a soil made from coconut shells that drain and breathe better than dirt. The top level is a layer of processed glass. Smooth to the human touch, it acts as a physical barrier to the larvae of various pests. The first part of this growth process takes about two weeks.
When the plants are of sufficient maturity, they are taken to the flowering room or outside, depending on their ultimate retail destination. Space is reserved in the fenced-in areas in 10
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the front and the rear of the building for outdoor cultivation. Indoor growth produces a higher quality product, but comes with obvious space limitations. Outdoor growth is less limiting and less expensive but the uncontrolled conditions mean that a portion of the active cannabinoids can
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be lost through exposure to the elements—both brushed off by wind, rain, and passersby, and partly activated by the sun. Budding takes eight to nine weeks. When cultivated indoors,
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temperature, light, and humidity are all closely regulated. When the buds are mature the plant is
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harvested and taken to the drying room where it hangs upside down and desiccates for two to three weeks. Plants can then be sorted into attractive Grade A buds for smoking, while the
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remainder, including the outdoor harvest, eventually makes up pre-rolled joints, waxes, kief, hash, and other cannabis-infused products such as edibles and lotions (see Subritzky et al, 2016
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for further discussion of methods of consumption).
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Contaminants
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Air-borne bacteria and other contaminants—what the grower refers to as “bioburden”— build up on agricultural products routinely, but resin glands (“trichomes”) present on cannabis
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flowers are especially sticky. The framers of I-502 included requirements for product testing as a safety mechanism, dovetailing with basic requirements of agricultural products. The grower states that regulators have applied the strictest possible standards, expecting nearly zero bioburden when testing a cannabis lot, which he argues is a difficult if not impossible standard to meet. Lacking the expertise to conduct these tests, the WSLCB relies upon independent laboratories. Laboratories that are following the WSLCB’s guidelines are failing approximately 15%-25% of cannabis lots for microbial bioburden. 11
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According to this grower, the net effect is to insulate the state against product safety concerns by providing unrealistic standards, while allowing producers and laboratories to accept full liability if they want to bring the product to market. In response, some cannabis-specific labs
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have “evolved” a set of standards that they use to approve cannabis samples under the “manual pass” exception the grower stated. Laboratories thus certify that the microbial analysis may
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indicate failure, but that the analyst determined the sample to be safe after considering it by hand.
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Realizing that this displacement of state liability threatens their business interests, in this grower’s opinion laboratories have begun preparing for the inevitable lawsuits should a
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consumer get sick and blame the parties responsible for ensuring cannabis safety standards. Testing is serious business for producers. If a crop sample fails, the lot is not allowed to
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go to retail. Retesting is allowed, however, which in common practice allows most crops to
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proceed to market. If the testing ultimately fails the sample, the crop can still be produced as
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hash or used in edibles, but the final product must be retested yet again. If it fails the retest, the crop must be destroyed, a considerable expense.
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Although much of the cannabis growing process is transplanted directly from traditional commercial agricultural practice, the regulation of cannabis in Washington has been subjected to atypical prohibitions on pesticides. Whereas traditional agricultural products are subjected to testing and regulation, the outright bans on most pesticides have resulted in some creative workarounds. The Washington Secretary of Health admits that the state is pioneering new territory in the regulation of pesticides and other contaminants in recreational cannabis. That is, while established research guides the rules that govern pesticides for other agricultural products, there 12
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is little guidance on the potential dangers of ingesting pesticides by smoking (Wiesman, 2015; see also Daley, Lampach, & Sguerra, 2013). As noted in a 2013 report to the WSLCB, “there are severe gaps in the knowledge about Cannabis, since formal agricultural research hasn’t been
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permitted for this crop for nearly 100 years” (Daley, Lampach, & Sguerra, 2013, p. 33).
These concerns, of course, conflict with market efficiency. The co-owner implies that
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some producers currently cheat since regulators prohibit rather than regulate and test pesticide
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levels. In crises, growers will cut corners using established methods from conventional agriculture to avoid losing entire crops. As he puts it, “No one sacrifices a crop if there are
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chemical options.” There is a list of acceptable pesticides but testing for them is not required until July, 2016 (personal communication, Aaron Stancik, December 4, 2015).
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Political Economics
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The co-owners expressed concern regarding the substantial taxes placed on recreational
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cannabis in Washington, believing that these taxes greatly constrain their profits. I-502 required that the business responsible at each stage of the process—the grower, the processor, and the
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retail outlet—pay a 25% tax on the value of the cannabis. The structure of these regulations tended to benefit the retail outlets uniquely and they marked up prices by 300-400%. In July, 2015, the recreational cannabis tax structure changed to ameliorate this problem. It appears that the recreational producers were an important force behind this change in taxation policy (personal communication, Rick Garza, October 22, 2015). Under the new law, the customer pays a 37% tax on the cannabis in addition to approximately 7% sales tax, whereas the producers,
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processors, and retail outlets pay no taxes on the product. Whether this new policy will increase producer profits is unclear, as is any net consumer price change. As purely recreational producers, Moonlight Alchemy’s main concern is the untaxed
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nature of the medicinal cannabis market. At this point in the economic cycle, they contend that those who cultivate medicinally make a disproportionate share of the profits and are subject to
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significantly less regulation. Medicinal growers thus profited tax-free while subsidizing their
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preparations to shift to the recreational market, and avoided additional regulations that recreational growers face. This situation will change as the new regulations controlling medicinal
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cannabis enacted in 2015 will go into effect in July 2016.
Producers have also proliferated since 2013, resulting in reductions in the wholesale
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price per gram. When retail sales of recreational cannabis began there was not enough product to
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fill the demand—combined with the 25% tax structure, this resulted in high prices. The WSLCB
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reported the retail price per gram in early 2015 to have dropped to an average of $15 statewide (from ~$30 in 2014). The potential increase in use cannot yet be assessed under this regulatory
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regime (much less a pre/post implementation comparison), but the price divergences between the black market, medical market, and recreational market seem to be diminishing (e.g., Kleiman, 1989).
Two main concerns for the industry are banking and insurance for the facility and the product itself (Subritzky, et al, 2016). Although cannabis production is state-regulated, the entire industry continues to be regarded as drug trafficking at the federal level. Federally-insured banks are not allowed to handle “drug money.” Contrary to concerns regarding financial skittishness of 14
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local Federal Deposit Insurance Corporation (FDIC)-insured banks, however, several banks have decided to provide services at every level of the Washington cannabis production process. Cannabis banking costs a monthly fee that most businesses are not required to pay. The co-owner
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has noticed that retailers tend to do business with a small group of banks, while
producer/processors do business with another set, most likely because they have all developed
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and proliferated idiosyncratic rules for each stage of the process and banks have found it
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profitable to extend horizontally across the market.
Insurance companies are also taking the risk, gambling that federal law will leave the
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state-licensed production process alone or eventually move to incorporate it. Industry actors are advised to keep every scrap of state-generated official paper, under the theory that if culpability
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becomes a legal issue, it is somewhat diminished if companies were following state directives.
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Insurance companies are now looking at training inspectors to assess cannabis production
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facilities to produce more accurate actuarial estimates in support of these efforts. Laboratory Testing of Cannabis
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The Scientific Director of the Pullman cannabis testing laboratory holds a doctorate in chemistry and the Laboratory Manager holds a bachelor’s degree in microbiology. The lab is located in a relatively new office building in a quiet section of town and looks rather small from the outside. Visitors must buzz at the front door, and wait for staff to admit them. The waiting room is largely bare and opened into a hallway, which split into a large laboratory for analyses and several smaller rooms used for offices, sample logging, and storage. There are a number of surveillance cameras in the facility as required by the WSLCB. 15
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The Director presented his gas chromatography apparatus, an expensive system that measures various chemical components of cannabis samples. He showed us chromatogram printouts of different cannabis strains, indicating spikes on the horizontal axis depicting the
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levels of various terpenes, and discussed the aromatic characteristics these impart to their
respective strains. Cannabinoids and cannabinoid receptors (endocannabinoids) are produced
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naturally in the human body and have a diverse array of effects on such things as appetite, pain,
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mood, and motor skills—it is this system that is accessed by ingesting cannabis. Terpenes, organic hydrocarbons found in organisms as diverse as hops, tree resin, and termites, affect the
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quality and flavor of the intoxication as well as potentially enhancing medical benefits. Although such distinctions between varietals include the basic sativa and indica strains, these divisions are
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merely a beginning—depending on various chemotypes, there could be dozens of classifications.
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This lab tests for potency and the levels of particular cannabinoids such as THCA, THC, CBDA,
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CBD, CBN, CBGA, and CGB, providing these results to the producer as required by law. The lab also conducts the microbial tests on the samples for yeast and mold, coliform, E.coli,
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salmonella, total aerobic bacteria, and enterobacteriaceae but does not practice the manual pass exemption.
The Green Light District: Retail Stores
The first retail recreational cannabis store in Pullman opened in October, 2014 behind a furniture wholesaler. The second store opened eight months later directly across the street due to tight cannabis zoning regulations. Located in a business zoning district about a half mile from the edge of the Washington State University campus, the two shops are quite different. A six-foot 16
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high chicken wire fence topped with barbed wire surrounds the first shop and signs direct patrons to go around the back past the furniture store. The second has no fence, but instead has a welcome sign and a path leading from its back parking lot to the front door. When they opened,
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both shops checked personal identification to ensure that entering customers were 21 years of age or over. Both shops now normally check IDs at purchase. The age of 21 years to purchase
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and possess recreational cannabis was established since this is also the standard legal age for
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alcohol purchase and consumption in the US. Similar to the cultivation facility and the testing lab, the “pot shops” have numerous surveillance cameras as required by state regulations. The
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older of the shops has 16 surveillance cameras in a relatively small space.
According to sales data released by the WSLCB, the first shop to open in this area has
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been quite successful and sales have grown considerably since its opening. The number of
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cannabis strains on the shelves has also increased from four to six to twenty or more at any given
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time. The older of the shops has expanded its inventory from initially offering only bud, prerolled joints, and shake (trim leaf and crumbs) to include wax (an extract), edibles, pipes,
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vaporizer inserts, lotions, bath salts, personal lubricants, and other topical products (for more detail, see Subritzky et al, 2016). Bud can be purchased in amounts from one gram up to one ounce (28.3 grams). The newer shop has a smaller range of products available, but a wider array of varieties and their prices are slightly lower. Both shops provide small glass bottles with holes in the top to enable customers to sample the aroma of each strain before purchase. In both stores, all cannabis strains are labeled with their trade names, the THC content, and the price. Strains are listed on an information sheet that describes the predominance of different cannabinoids and the 17
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attributes these may have, including euphoric, soporific, analgesic, and anxiety reductive effects as well as more general concerns such as taste, feel, and overall affect. On several of our field visits, we noticed that the clientele in the shops tends to be older
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than a late-college age population (21+); staff in the older shop confirmed this, placing the
average age of customers at more than 40 years. The newer shop seems to skew toward slightly
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younger customers perhaps because of its lower prices. The generally older age distribution of
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the customers is surprising given the proximity of two universities with a total student population of more than 30,000, but it may be that black market prices and on-campus dealing remain
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preferable to the younger age group. Future research should investigate this possibility. Despite the reported success of Moonlight Alchemy and other producers partnering with
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local FDIC banks, shop owners continue to deal only in cash. It is unclear when or if this will
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change, but both locations have dealt with this constraint by installing automatic teller machines
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inside their premises. The older of the retail outlets pays its employees in cash as well. Discussion
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This paper is a case study of a local cannabis supply chain embedded within the legalized regulatory regime of Washington State. Such a close examination of the ways in which an innovative policy initiative impacts local actors is valuable, but care must be taken in applying these lessons outside the area. The west side of Washington, with its larger concentrated population and more tolerant culture, may experience different levels of enforcement attention at the individual and industry level among other effects.
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Overall, cannabis consumption in Washington State is certainly safer than it has ever been and an entire stream of criminal cases has been preempted—these are unequivocally positive achievements. Apart from the will of the voters in enacting the new law, however, the
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role of the state has been mainly to facilitate economic opportunity, minimizing its
responsibilities with respect to safety regulation and those already caught up in the state criminal
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legal apparatus. As may be expected with such a remarkable change in drug policy, elements of
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resistance continue. Ten of the thirty-nine counties in Washington have banned retail recreational cannabis outlets as have sixty-two independent cities, particularly in eastern Washington’s more
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conservative jurisdictions (Darnell, 2015). Despite this, Rick Garza, the Director of the WSLCB, maintains that all state residents live within an hour of a cannabis retail outlet (October 22,
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2015). Lawsuits have been filed in some of these jurisdictions seeking to overturn the bans.
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At least one of the social justice goals of the authors of I-502 has been achieved. Between
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2009 and 2012, there was an annual average of 6,779 misdemeanor cannabis court filings against persons twenty-one years of age and over. In 2013, these filings decreased to 120. The ACLU
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suggests that the remaining filings are likely the result of individuals exceeding the one ounce of cannabis for personal possession allowed under I-502. “The data strongly suggest that I-502 has achieved one of its primary goals—to free up police and prosecutorial resources. These resources can now be used for other important public safety concerns” (ACLU, n.d.a.). From 2000-2010 jurisdictions in Washington spent nearly $211.5 million on cannabis enforcement (ACLU, n.d.b.).
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On the other hand, although the War on Drugs has been waged disproportionately against racial minorities, the legalization of cannabis is not a panacea for racial disparity in the criminal legal system. In Washington, an African American adult continues to be 2.8 times more likely to
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have a misdemeanor cannabis charge filed against him or her than does an Anglo American adult (ACLU, n.d.a.).
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An important historical issue that remains to be rectified is the nullification of past
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cannabis convictions. Post-hoc initiatives to nullify past convictions may fail to fully address the concern unless they consider the ways in which cannabis enforcement has been used as a law
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enforcement instrument to effect compliance, adjudication, and social control (c.f., Geller & Fagan, 2010). This issue was raised in the 2015 legislative session. A bill was introduced into a
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legislative committee which would have expunged past misdemeanor cannabis convictions for
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adults but it was not moved out of committee for the full legislature to consider (Alexander,
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2015). Partially in response to this failure to act and because of the racial/ethnic disparity in cannabis convictions, the City of Spokane has begun allowing residents to apply for their past
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misdemeanor convictions to be vacated (Brunt, 2015). As a contrast to Room’s (2011) “responsibilization” perspective, it is important to consider who is and who is not covered by the political imaginary of public policy (Bourgois & Schonberg, 2009; James, 1996). In addition to the resistance to expungement, a legislative bill in the 2015 legislative session contained an overlooked clause mandating that persons under twenty-one years of age be charged with a felony for possession of small amounts of cannabis (Stone, 2015a). This provision, inserted quietly by the bill’s rural, conservative sponsor was intended “to deter minors 20
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from trying an adult drug” (Stone, 2015b). This charge was previously a misdemeanor, so this represents a major regression in severity as well as a continuing resort to deterrence logic. The clause only gained local media attention when a prosecutor in a politically conservative county
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charged two minors under this law. Largely due to pressure from a local newspaper, the
prosecutor eventually reduced the charges to misdemeanors. We are not aware of charges being
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filed under this felony provision in any other county in the state and it appears that it has not
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come to the attention of most state law enforcement agencies or they have simply chosen to ignore it. It appears this law may be “fixed” in the next legislative session (Stone, 2015c).
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One of the cornerstones of a public health approach is concern for product safety and testing for contaminants. Until recently, consumers of cannabis purchased from the illicit market
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without any controls over product safety. Under the Washington system, contaminant assessment
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remains nearly entirely in the realm of the producer and third-party laboratories. The independent
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lab we visited takes seriously the health of consumers, but in setting controversial standards and outsourcing its regulatory obligations, the state has essentially abdicated concern to the industry-
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laboratory nexus and seems willing to let these entities assume the legal liability. When assessing this schema, we must recall that the WSLCB has no existing regimes to consult—this is new ground, and the issue is almost certain to be litigated regardless of the state’s approach. The original Initiative 502 that chartered the legal cannabis market was predicated on social justice and consumer safety. We argue that the unfolding regulatory schema seems more congruent with Room’s (2011) presentation of the responsibilized self-regulating drinker to enhance profit and reduce state responsibility, rather than a direct focus on the foregoing 21
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concerns although there is significant overlap. The political compromise taking place in Washington State makes room for commodification and profit maximization while placing the onus on the individual to self-regulate. The taxation shifts have been largely in the service of
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profit redistribution, while the license-granting schema has benefitted venture capitalists unafraid of federal repercussions. Their gamble so far is paying off. State regulatory efforts are mainly
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geared toward preventing illegal diversion and thus the maintenance of profits in a manner that is
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politically supportable and minimizes state liability. Those adjudicated under the previous prohibition regime have not been addressed by this empowerment of capital interests. Producers,
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on the other hand, although considered “drug traffickers” at the federal level, are accumulating stakes in economic conformity as they build relationships with the federally insured banking
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system and carve out new niches within the national insurance sector. The predictive power of
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Room’s perspective will turn on the continued channeling of cannabis use into the commercial
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market (i.e., starving the medical, personal production, and black markets through various means), the legal resolutions regarding permissible advertisement (Subritzky, Pettigrew, &
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Lenton, 2016), and the offloading of liability for cannabis health concerns onto the individual.
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References Alexander, R. (2015). Spokane considering throwing out minor pot possession convictions. The Spokesman-Review, October 20, 2015. Available at:
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http://www.spokesman.com/stories/2015/oct/20/spokane-considering-throwing-out
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minor-pot-possess/
American Civil Liberties of Washington. (n.d.a.). Initiative 502 Washington’s New Marijuana
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Law. Accessed November 6, 2015 from https://www.aclu-wa.org.issues/drug policy
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American Civil Liberties of Washington. (n.d.b.). What your county is spending on marijuana law enforcement. Accessed December 2, 2015 from https://www.aclu-wa-.org/what-
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your-county-spending-marijuana-law-enforcement.
Bourgois, P., & Schonberg, J. (2009). Righteous dopefiend: Homelessness, addiction, and
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poverty in urban America. Berkeley, CA: University of California Press.
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Brunt, J. (2015). Spokane will vacate marijuana possession convictions. The Spokesman-Review.
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November 9, 2015. Available at
http://www.spokesman.com/stories/2015/nov/09/spokane-will-vacate-marijuana possession-convictio/
Daley, P., Lampach, D., & Sguerra, S. (2013). Testing Cannabis for contaminants. BOTEC Analysis Corporation. September. Accessed November 20, 2015 from https:// liq.wa.gov/marijuana/botec_report Darnell, A.J. (2015). I-502 Evaluation plan and preliminary report on implementation.
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(Document Number 15-09-3201). Olympia, WA: Washington State Institute for Public Policy. Garza, R. (2015). Marijuana legalization: Implementing Initiative 502 in Washington.
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Presentation at the Thomas S. Foley Institute for Public Policy and Public Service. Pullman, Washington: Washington State University. October 22, 2015.
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Geller, A., & Fagan, J. (2010). Pot as pretext: Marijuana, race, and the new disorder in New
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York City street policing. Journal of Empirical Legal Studies, 7, 591–633.
James, J. (1996). Resisting state violence: Radicalism, gender, and race in U.S. culture.
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Minneapolis, MN: University of Minnesota Press.
Kleiman, M. (1989). Marijuana: Costs of abuse, costs of control. Westport, CT: Greenwood
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Room, R. (2011). Addiction and personal responsibility as solutions to the contradictions of
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neoliberal consumerism. Critical Public Health, 21, 2, 141–151. Stone, M. (2015a). New law makes pot possession a felony for minors. The Lewiston Tribune.
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September 17, 2015, 1A and 5A.
Stone, M. (2015b). Youth pot felonies ‘slipped in under the radar.’ The Lewiston Tribune. September 18, 2015, 1A and7A. Stone, M. (2015c). Mercy for minors with marijuana? Felony charges for three Asotin County teens likely to be downgraded to misdemeanors. The Lewiston Tribune. September 19, 2015, 1A and 5A.
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Subritzky, T., Pettigrew, S., & Lenton, S. (2016). Issues in the implementation and evolution of the commercial recreational cannabis market in Colorado. International Journal of Drug Policy, 27, 1-12.
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Wiesman, J. (2015). Marijuana and your health. Presentation at the Thomas S. Foley Institute for Public Policy and Public Service. Pullman, Washington: Washington State University.
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