Seattle, WA is eliminating medical cannabis dispensaries. The city council unanimously approved the proposal, which will go into effect thirty days after Mayor Ed Murray signs it. Any medical cannabis dispensary that was issued a city business license after January 1st, 2013 will be required to cease business operations and will not be eligible to apply for a recreational cannabis license. The proposal claims it will eliminate dispensaries that habitually violate health and safety codes, although really this seems to be an underlying attempt to phase out competition for the 21 recreational dispensaries with state licensing and higher taxes.
Who Gets to Continue Operating Medical Dispensaries in Seattle
Currently, there are approximately 99 medical cannabis dispensaries in Seattle. A total of 45 of these storefronts were issued Seattle business licenses before January 1st, 2013, when recreational cannabis legalization went into effect. There are an estimated 54 cannabis storefronts in Seattle that are operating without a city business license or were issued their license after January 1st, 2013. The 45 medical dispensaries with licensing prior to 1/1/13 will be eligible to continue their business operations if they:
- are in compliance with the Medical Use of Marijuana Act
- obey city enforcement guidelines
- obtain a business tax license from the Washington State Liquor & Cannabis Board (LCB) by July 1st of 2016.
Essentially, this proposal reduces the number of total cannabis dispensaries and applies recreational cannabis taxing to all Seattle cannabis businesses, including producers and processors. This can be considered a positive step toward a more regulated cannabis market, as Washington’s recreational market operates under strict guidelines, including mandatory lab testing of all cannabis products.
Motives: Increasing Cannabis Taxes or Increasing Regulation?
As more states vote for legalized cannabis, we can expect municipalities like Seattle to continue to funnel business licenses toward recreational cannabis. The obvious incentive for cities and sates is that recreational cannabis brings in a lot more tax dollars than medical cannabis markets. The unfortunate aspect about Seattle’s recent decision is that over 50 dispensaries are being forced out of business, regardless of the quality of service they provided to their medical patients.
“Retail operations licensed by the State now offer the only legal way to sell marijuana. In contrast, many unlicensed “medical” marijuana retail operations have long since abandoned even a pretense of being a collective garden as described above, and instead simply offer the public sale of marijuana without complying with any of the requirements of Initiative 502 or RCW 69.51A.”
– Daniel T. Satterberg, King County Prosecuting Attorney
Seattle chose to group all dispensaries and producers with licensing issued after January 1st, 2013 into one category: profiteering opportunists. Seattle health officials concluded that overall, these dispensaries were violating many different health and safety codes:
- Selling without medical authentication
- Selling to underage individuals
- Allowing on-site consumption
- Ignoring fire and building codes
- Providing untested products
- Operating too close to schools or other dispensaries
All of these issues are legitimate offenses and businesses operating outside of the guidelines should be dealt with appropriately. However, Seattle’s decision to chop off nearly half of the current dispensaries may have unfairly isolated companies that were doing an incredible job of supplying medicine under Washington’s medical cannabis program. Even if these ethical businesses are the minority, they still should have had a chance to prove that they were operating in compliance.
Future Expectations as States Legalize Cannabis
As cannabis shifts out of prohibition, legal hiccups will continue to emerge. Seattle made the decision to be rather blunt about the situation, claiming that all medical dispensaries established after a certain date universally ignore the rules. A move this dramatic may point to a more discreet motive: shut down medical to shut down the competition. By fusing medical and recreational cannabis dispensaries, consumers will be funneled to cannabis with higher taxes. This will make the city as much tax money as possible, regardless of the beneficial services some of these medical dispensaries may have been providing to the community.
The primary concern is that by melding the two types of dispensaries into one, legitimate medical patients may no longer have access to their preferred medicine. Seattle has taken a stance on the relationship between medical and recreational cannabis, and while it may lead to a more regulated Seattle cannabis market, there is valid concern that this is a negative move to create more tax revenue.
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