Blending Two Systems that Don’t Mix Well

It’s
no secret that Washington is struggling to harmonize its two cannabis
industries. Why? Because the vast amount of medical cannabis access points that
exist in the state are competing with the very few number of licensed retail
storefronts. Medical cannabis “as is” is pretty much undermining
Washington’s experimentation with recreational cannabis where current medical cannabis
operators have no state oversight, almost non-existent state tax burdens, and
almost no barriers to entry or regulation.

Most
recently in Olympia, two bills have emerged that both take a swipe at
“fixing” Washington’s dual cannabis systems. Whichever bill prevails
(and even if neither goes anywhere), one thing is for sure, regulation is
coming to Washington’s medical cannabis scene. Even though both bills pose a
good amount of regulation and oversight for medical cannabis, they do so
through very different mechanisms. Senator Ann Rivers is the author of Senate
Bill 5052. SB-5052 mandates that the state retain a separate medical cannabis
system, distinct from I-502. The highlights of that bill are:

·        
Medical
cannabis dispensaries can only vend concentrates, oils and cannabis-infused
products to qualifying patients. These dispensaries will be prohibited from
distributing any raw cannabis flower to patients.

·        
State
licensing of medical cannabis facilities would be required.

·        
Medical
cannabis products would be sales tax free.

·        
Tightening
restrictions on licensed health care providers who authorize the medical use of
cannabis.

·        
Collective
gardens as we now know them would be significantly scaled down. They would be
limited to four people, one garden per tax parcel. The gardens would have to
register their location with the state, and they would not be allowed within 25
miles of a medical cannabis store.

·        
Patients
or their providers could grow up to six plants at home.

In
contrast to the Rivers’ bill, Senator Jeanne Kohl-Welles’ medical cannabis bill
contemplates altogether rolling medical cannabis into I-502, eliminating
collective gardens and medical cannabis access points, in addition to making
some fixes to I-502’s current structure. Some highlights of Senate Bill
6178 are:

·        
Collective
gardens would be phased out by August 1, 2016, but medical growers who have
business licenses and are paying taxes could apply to grow in the new
“single” system.

·        
Removal
of the state’s limit on recreational stores, so current medical cannabis access
point managers could apply to own a store.

·        
Consolidation
of I-502’s excise taxes into one tax paid at the retail point of sale. This is
in addition to changing the nature of these taxes so that they’re deductible on
the Federal level (which they’re currently not).

·        
Patient-focused,
high-CBD products would be given a tax break. In special cases, such
as those patients seeking high-THC cannabis for specific medical problems
or parents who want access for their kids, patients could get medical
exemptions from the Department of Health.

·        
Delivery
would be allowed under I-502.

·        
Encouraging
local governments to allow cannabis businesses by sharing revenue only with
those jurisdictions that participate in the industry.

No
one can say right now which bill will emerge victorious, if at all. Both
present significant changes to a well-entrenched medical cannabis industry and
that’s bound to cause some pushback. Either way, this time next year, it’s safe
to say that Washington will very likely have a brand new, regulated medical cannabis
industry.