State cuts size, number of legal marijuana grows

SEATTLE — Washington state is dealing with a glut of would-be legal marijuana growers by cutting back on the number of licenses it issues and the maximum size of pot farms — a decision that upset some applicants who have been working to secure leases or build out warehouses with dreams of larger operations.

The state Liquor Control Board received more than 2,800 applications from people hoping to grow the weed that will supply Washington’s recreational marijuana stores when they open later this year. In all, the applications would have covered 36 million square feet of marijuana plants, vastly more than the 2 million the board wanted produced initially.

To solve the problem, the three-member board voted unanimously Wednesday to limit applicants to one license apiece, rather than three. And it decided to allow growers to produce 70 percent of the maximum growing space they applied for. For example, those who applied for three of the largest licenses — up to 90,000 square feet total — will be limited to just one license enabling them to grow 21,000 square feet, at least at first.

“Everybody recognized we had too many applicants and too much canopy,” board director Rick Garza said afterward.

The state is in uncharted territory as it tries to allow enough marijuana to be grown so that the prices will compete with the black market, but not so much that excess pot finds its way out of state — a concern the U.S. Justice Department cited when it said it would allow the legalization experiments in Washington and Colorado to go forward. In Colorado, where taxed, legal pot sales began on Jan. 1, officials licensed existing medical marijuana shops to sell weed for recreational use. There is no cap on production.

Washington expects to issue its first pot-growing licenses on March 1, Garza said.

Most of the applicants were not planning to use the full amount of space they applied for, Garza said, and so limiting the size of their growing operations or the number of their licenses didn’t much faze them. If the state turns out to need more weed, the board could boost the growers up to the full amount of a single license — 30,000 square feet instead of 21,000, for the largest grows — or eventually start issuing multiple licenses.

But the board’s decision Wednesday upset some prospective growers who applied for multiple licenses with plans of growing up to 90,000 square feet of cannabis, said Hilary Bricken, a Seattle marijuana business attorney whose clients include about 10 such growers. They have been securing leases and preparing their business plans based on the idea that they would be able to produce that much, she said.

“They are not happy,” Bricken said.

The board’s decision created whiplash for applicants: They were supposed to identify a location for their marijuana business that complied with state law on buffer zones around schools and playgrounds, and many struggled to secure lease agreements or purchase such properties. Now, some have discovered their efforts were at least partially for naught.

Dan Anglin, a spokesman for a Seattle group that is under contract to buy the 180,000-square-foot former K2 Sports building on Vashon Island, said he was stunned. The group has applied for three 30,000-square-foot licenses, and it was prepared to spend $5 million purchasing the building and preparing it for their legal marijuana and packaging operations.

Their contract is conditioned on a zoning issued being resolved. If it is, they’ll likely find themselves with a big, expensive building they can only partially use, Anglin said.

“We found what we thought was a perfect building based on the 90,000 square feet that we were planning on growing,” Anglin said. “We have to take a hard look at this.”

Garza noted that the board always reserved the right to limit grow sizes if total production exceeded 2 million square feet. Alison Holcomb, the Seattle lawyer who drafted the legal pot law, said pot growers needed to be prepared for such changes.

“The reality of the situation is that this is and has been a high-risk industry,” Holcomb said. “All along the way, the LCB has been very transparent about what its goals have been. If you did the math, you knew weeks ago we were talking about having at least 10 times as much square footage as the Liquor Control Board wanted to allow.”