Economic Engine (Washington)

Our industry creates a tremendous impact on our economy

Welcome to Washington’s medical cannabis industry—where we all wholeheartedly agree that medicinal marijuana has proven a tremendous economic boon at a time when economic boons are hard to find. And while extracting hard and fast numbers is a challenging task, CULTURE analyzed data from multiple sources to demonstrate how the cannabis cause positively impacts our state’s 125,000 medical marijuana patients . . . and beyond.

Despite having one of the oldest compassionate-use laws in the country, and despite widespread public support for that law, the Evergreen State faces incredible difficulties in wrapping its arms around the size and economic potential of its medical marijuana industry.

“Our situation here is very tricky,” says Philip Dawdy, director of the Washington Alternative Medicine Alliance, a political action committee. “Our governor’s partial veto based on the feds’ threats has left things in massive disarray in this state.”

The public wants medical marijuana. Legislators and the law-enforcement community know it’s there. Growers grow it. Dispensaries sell it. Patients buy it all the time—and in great numbers. And ancillary businesses (like hydroponics stores, security firms) make money off of it. But 14 years after voters passed Ballot Measure I-692, no statewide mechanism exists for tracking, regulating or collecting taxes from Washington’s massive medical pot trade.

That’s unfortunate, says Dawdy, who previously worked on legislation that would have regulated the industry. If the state’s legislators could just get it together, he says, Washington could realize as much as $75 million to $100 million a year in sales and business-and-occupation (B&O) tax revenue. Everyone would benefit.

“We’d be the biggest medical cannabis state in the union [if Washington had a licensing/taxation/regulatory system],” Dawdy says.

But there are things that make that difficult to achieve. Last year, Gov. Christine Gregoire signed into law parts of a medical marijuana bill that expanded patient rights, but vetoed the parts that would have set up a licensing and regulatory framework for dispensaries and a patient registry. Gregoire said she acted in response to letters from federal officials threatening state workers with arrest if they participated in such a regulatory scheme.

Some cities and counties embraced the new law, while others threw their hands up in the air and banned dispensaries and collectives outright. Even in cities where cannabis was regulated, attorneys advised their cannabis-industry clients not to pay taxes on their operations until the matter was settled.

In the end, it all amounted to the same thing: Regardless of how much money anyone is making on medical marijuana, Olympia has no official mechanism for tracking or extracting revenue from it—much less measuring its economic impact. According to Dawdy and others, some 90 percent of Washington’s medical cannabis industry remains firmly underground.

Still, indicators of the economic benefits of the industry do exist. The Seattle area is home to more than 100 dispensaries, but only a handful—10 at most—is large enough to see upwards of 100 patients a day. Of these, only about five pay state B&O taxes—the rest would rather not call such attention to themselves. But, according to Dawdy, the B&O tax revenue from just those five dispensaries total upwards of $1.25 million a year.

Since Washington’s B&O tax governing dispensaries is 10 percent, that means just five large dispensaries are generating more than $10.25 million annually for the state, which keeps a portion and parcels out the rest to Seattle and King County.

According to activists like Dawdy, as well as National Cannabis Industry Association Executive Director Aaron Smith and Dan Rush, director of the United Food and Commercial Workers’ National Medical Cannabis Division, Washington has more than 1,000 dispensaries operating in its borders, though most are concentrated in the Seattle-Tacoma-Shoreline area. Furthermore, the number of full-time employees working in Washington dispensaries, collectives and co-ops is between 2,500 and 4,000 people. These workers can earn up to $20 an hour.

And Smith says that for every one job created where the employee is directly involved with cannabis, two more ancillary jobs are created—in businesses that do a lot of work with the industry, such as the hydroponics, security and other businesses. Taking the high estimate, that’s 8,000 additional full-time jobs created by the medical marijuana boom in Washington, for a guesstimated high-end total of 12,000.

According to a CNBC report, the nation’s hydroponics industry alone generates some $400 million in sales annually, with 90 percent of that—that’s $360 million—attributed to the cannabis and medical cannabis boom.

“We’re seeing all sorts of industries benefiting from medical cannabis, from security alarm installers and safe installers to CPAs and folks that make software for point-of-sale systems,” Smith says. “You’ve got all those testing labs and attorneys and reporters from magazines. It goes on and on. It’s extremely difficult to compile all that, but we’re working on it.”

The ancillary job estimates don’t take into account the number of workers at production facilities—the growers and harvesters and bud tenders, etc. That industry operates in Washington almost entirely in the shadows.

But extrapolating Rush’s UFCW data and you get 10,000 medical cannabis production jobs in Washington, for a total of 22,000 jobs both in and around the industry.

One other certainty: this type of economic impact can only keep growing.