Hopeful marijuana enterprises have trouble finding homes

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TACOMA — When hopeful pot entrepreneurs scramble for one of the coveted new state licenses to grow and sell marijuana, they will need something that might be harder to find than it sounds: An address.

Few cities and counties have decided how they will deal with marijuana legalization. Many might still be unsure by mid-October, when the Liquor Control Board will close a monthlong application period for people with dreams of participating in Washington's historic experiment.

Applicants would be left to only guess at where they might be allowed to open shop -- setting them up for potential conflicts with local governments around the state.

Ron Burke has seen the conundrum first-hand. A computer network engineer who lives in Tacoma, Burke says he has never smoked pot and in fact volunteered for a couple of years running a program that trained Civil Air Patrol crews to spot marijuana farms. But now he wants to become a grower and processor of the drug.

"I just thought it would be a lot of fun to get into this business. 'If you can't beat 'em, join 'em' kind of thing," he said.

His first choice was a dilapidated warehouse in Lakewood that seemed like a steal. He walked off the paces from a park; it was far enough away to meet a 1,000-foot distance requirement in Initiative 502, which voters passed in November to legalize recreational marijuana use.

But then he checked with Lakewood government to make sure it would give him a business license if his state license came through.

"They seemed almost appalled that I would ask," Burke said, "and then told me flat-out that of course, marijuana is federally illegal. They can't support any illegal activities in their city, so they just were not going to issue any licenses."

An official in Tacoma gave him a similar answer, he said, although city officials say they are just waiting for the City Council to set rules. Burke turned next to unincorporated Pierce County, where he wouldn't need a business license but might need permits. The County Council is considering temporarily banning marijuana businesses, which officials say would codify current practice, until it can develop rules.

Burke might not get an answer until too late. The liquor board could choose to extend the application period or reopen it later, but it's set to start Sept. 14 and end Oct. 14.

The Pierce County Council isn't likely to act until after that period. It is considering creating a committee to recommend zoning rules by Sept. 30 that could either dictate where pot businesses could go or simply make a ban permanent. It would be another three to four weeks before the council could take up the issue, council attorney Susan Long said.

Cities and counties are right to wait before making local decisions, at least until they see a revised proposal for regulations that the liquor board plans to release July 3, said Alison Holcomb, who helped write I-502.

Holcomb, drug policy director for the American Civil Liberties Union state chapter, said she is hopeful that once the rules are set and everyone can see that the pot market will be tightly controlled, local governments will be less at odds with the state.

But she admits the situation might not unfold so smoothly.

"Ultimately," she said, "it is potentially something that could wind up in the courts."

STATE TO IGNORE ZONING

University Place has a temporary ban. So does Olympia. Other cities, including Lakewood, simply don't recognize marijuana as something they can allow unless federal policy changes.

Lakewood is in a particularly tough spot, city spokesman Jeff Brewster said. "We are the closest neighbor to the largest military institution in the western U.S.," he said. "Troops that get caught smoking dope are in pretty serious trouble."

"Cities are kind of stuck in the middle of this," Brewster added. "There's no revenue in this for local municipalities. So we are in a sense wanting the feds and the state to do their jobs and reconcile the issue for us."

Local governments are expected to receive the typical sales and business taxes from marijuana companies, but they don't get a cut of the hundreds of millions of dollars in projected state revenue, which includes new kinds of taxes created by I-502.

Several local governments point to a January 2012 letter from an official in the U.S. Justice Department's Drug Enforcement Administration responding to an inquiry from Clark County, and indicating a public employee who "facilitates" state medical marijuana laws could be subject to prosecution.

Since I-502 passed, the Justice Department has kept a public silence despite requests from Washington's congressional delegation and governor to clarify its stance. That leaves a conflict shaping up between state and local regulations.

The liquor board plans to give local governments a chance to object to an applicant or a location.

Some, like University Place, plan to seek a denial of any applications in their jurisdiction. Pierce County Council Chairwoman Joyce McDonald wrote to the liquor board seeking permission for local governments to simply opt out.

But the board says the objection must show the business poses a threat to health, safety or welfare of the community. It says it wouldn't deny a license based on local zoning restrictions, bans or outright opposition.

"I've heard many local governments are saying that they will not allow marijuana businesses because marijuana is illegal federally," the board's rules coordinator, Karen McCall, wrote in response to one public inquiry. "The board can't force a local government to issue a license, but the board will not deny a marijuana license based on zoning."

Local governments still can have their own requirements for zoning or a business license, the board says.

Board chairwoman Sharon Foster said a city or county could refuse but it would mean "a much higher chance of having the black market in their community."

"This will be an issue the applicant will need to take up with the local government," McCall wrote. "There may be applicants that sue their local governments on this issue."

COULD GO TO COURT

If businesses take local governments to court, the outcome could hang on whether the state laws put in place by I-502 "pre-empt" local laws. There are different opinions on whether they do.

A local ordinance is pre-empted if state law conflicts with it, or if state regulations are so broad to leave no room for a local role, according to a paper by Carol Morris, a lawyer who represents cities.

Morris didn't take a position on whether I-502 fits the bill, but wrote that cities should review a 1998 state Supreme Court case that upheld San Juan County's ban on Jet Skis and similar motorized watercraft. Although the state had a system of licensing and taxing the vehicles, the court held that there was no state law clearly forbidding local regulation.

Courts have ruled in other cases that state law pre-empts any local laws that, say, try to ban guns on city property.

State Rep. Chris Hurst said the authors of the initiative made it clear local governments can't opt out.

"There's no gray area there," said Hurst, an Enumclaw Democrat whose House committee oversees marijuana. "They took away 100 percent of the ability of people to say we don't want this in our jurisdiction."

Pam James, a legal consultant with the Municipal Research and Services Center of Washington, also said state law takes precedence over local governments wanting to impose a ban.

"I don't think they can do it," she said of local bans, "but that has to be worked out by the courts, and it will be challenged, I'm sure, because there are a lot of people that say, 'Not in my backyard.'"

Some business owners might not have the money to pursue local governments in court. But Holcomb suggested the state attorney general might even be able to sue local governments that are in violation of state law. Attorney General Bob Ferguson's spokeswoman said it's premature to say what his office would do.

In University Place, which considers itself off limits to the new industry in order to avoid breaking federal law, City Attorney Steve Victor is prepared to defend that stance in court.

He likes his chances -- relishing the idea of seeing what federal judges think about Washington's experiment.

If someone sues, Victor said: "I would immediately move to remove that to federal court, absolutely."

MOVE TOWARD RULES

Some smaller South Sound cities, including Milton and Edgewood, have changed their laws to allow for state-licensed marijuana businesses while limiting them to certain zones.

In Seattle, where many of the new pot businesses likely will want to locate, a zoning proposal could be approved as soon as Monday.

Edgewood is trying to comply with the state law, assistant city manager Eric Phillips said.

The city, population 9,500, passed and extended a temporary law allowing state-licensed marijuana businesses in commercial areas of the city that line up with the initiative's distance requirement. That could be altered later depending on what the liquor board does, Phillips said.

The city's business license still requires compliance with federal law, he said, so there's discussion of whether to give marijuana businesses a license or perhaps just some kind of "certificate" showing conformity with zoning rules.

The city has no intent of becoming a magnet for pot sellers, Phillips said.

"We would love to see some businesses in Edgewood, but I think that's not at the top of the list," he said. "... We're looking for a sit-down family restaurant, at least one. Maybe another grocery store."

Preliminary rules in Tacoma could be in place as soon as September. City Attorney Elizabeth Pauli recommended last week that the council allow indoor growing operations in certain industrial zones as part of a new "urban horticulture" category. She called for leaving business licensing and regulation decisions for later.

The liquor board had originally set out to license only indoor and greenhouse growing, although it now is poised also to allow outdoor farms.

While the council still is mulling its options, a total ban on marijuana operations appears unlikely in Tacoma.

"We have a track record of allowing them in a regulated way," Councilwoman Lauren Walker said. "I don't see that we would be changing that policy."

That record stems from the city's efforts to regulate medical marijuana.

Tacoma allowed so-called collective gardens with restrictions but outlawed retail dispensaries, leading to 35 enforcement actions in the past year, Pauli said.

State medical marijuana law allows only for collective gardens involving no more than 10 patients, yet retail storefronts continue to thrive, even in some cities and counties that have tried to explicitly outlaw them.

Recreational marijuana sellers might also end up in a legal gray area, depending on local decisions.

But the uncertainty hasn't stopped the medical marijuana industry, noted Roger Mayer, a Puyallup real estate agent who is looking for clients in the new recreational marijuana industry.

"There's no legal way to open a dispensary, either," Mayer said, "but there's no shortage of them."