Strictly Business: Local effects of legalizing marijuana

By Gordon Oliver, Columbian Business Editor



If Washington voters approve Initiative 502 to legalize recreational marijuana sales — an increasingly likely outcome — they’ll at least be generating new business for lawyers who will try to resolve huge conflicts between state and federal drug laws.

But if and when that smoke settles, the initiative could also create new business opportunities for farmers, property owners, and retailers. And transport of marijuana from legalized Washington to Oregon (if Oregon’s own legalization measure fails) would open another box of legal issues regarding enforcement of drug transport laws.

The initiative would legalize one ounce of marijuana for people 21 and older and create a seed-to-store state-regulated monopoly. No one knows the level of potential demand for recreational marijuana, which is already heavily used but little discussed in most social circles.

Faced with making their best guess, state officials predict the marijuana retailers will draw 363,000 customers and produce sales of 85 metric tons of pot in 2013. That would add up to $560 million in new tax revenue for the state annually, by the state’s estimates. State officials chose a familiar number for their estimate of potential retail outlets: 328. That’s how many liquor stores operated in the state before liquor sales were privatized last summer.

If the initiative becomes law , the Liquor Control Board would begin issuing grower, processor, and retailer licenses in December 2013. But predicting the federal response to Washington’s legalization measure, before or after the start of retail sales, is just a guessing game.

The worse-case scenario is hardly reassuring to property owners who might consider renting to marijuana retailers.

Alison Holcomb, campaign director for the pro-initiative New Approach Washington, notes that federal law allows for seizure of property if the property owner knowingly engages in marijuana sales. She hopes the federal government would back off in response to a voter-approved measure.

Deborah Ewing, a managing broker with Eric Fuller & Associates in Vancouver, points to other practical considerations from a property owner’s vantage point. On the spectrum of public acceptance, many owners would likely consider such businesses to fall in a gray area: not the most favorable of retail shops, perhaps with enough stigma to make it difficult to attract other tenants for new or renewed leases. The shops would, in other words, likely land in second or third-tier shopping malls.

The initiative raises plenty of other legal and workplace issues. Some critics say the legalized marijuana use could threaten federal funding tied to requirements for a drug-free workplace, for instance. And some groups that favor legalization say the measure doesn’t go far enough, leaving the same legal penalties for posession of more than an ounce.

But big social change raises big questions, and Americans’ frustration with drug laws has been building for decades. Not everyone thinks that marijuana legalization is a step in the right direction in our struggle with drug abuse and related social problems. It will be up to the state’s voters to decide whether they’re ready to challenge the status quo and take on the power of the federal government.