Spokane Journal of Business

Bye-bye to medical marijuana dispensaries

Deadline elevates concerns for customer patients

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-—LeAnn Bjerken
Kathy DePriest, owner of Evergreen Premier Medical LLC, said she expects to close her operation today.

Senate Bill 5052, the Washington measure to close all medical cannabis dispensaries not licensed with the state’s Liquor and Cannabis Board, will take effect this Friday, July 1.

Signed into law by Gov. Jay Inslee this past April, the bill, now titled the Cannabis Patient Protection Act, will integrate the state’s medical marijuana market with the current regulated retail market, while also reducing the amount of cannabis qualified patients can possess and cultivate. 

Mikhail Carpenter, a spokesman for the state’s liquor and cannabis board, says it’s difficult to tell how many dispensaries will close as a result of the new law, because prior to the new integrated system they were unregulated and no definitive count was kept. 

“Our consultants were able to identify between 350 and 400 dispensaries,” says Carpenter. “However estimates vary as to how many were previously operating in the state because the industry had no regulatory oversight.”

 “The estimated number was constantly changing as some closed doors and others appeared, and again those were just the ones they could identify,” he says.  

Kathy DePriest, owner of the Spokane medical marijuana dispensary Evergreen Premier Medical LLC, says her business, located at 2225 E. Sprague, has been open since May 2014, but she planned to close it today, June 30. 

“When the licensing period opened in October, we all thought it was intended to allow medical dispensaries to transition first and then for retail shops to apply, but the Liquor and Cannabis Board made that nearly impossible,” she asserts. 

The state’s licensing application system gave first priority to applicants who applied for a marijuana retail license prior to July 1, 2014, or who operated or were employed by a medical marijuana collective garden prior to Jan. 1, 2013. They also were required to have maintained a state and local business license, and have a demonstrated history of paying applicable state taxes and fees. 

DePriest says the process to meet licensing criteria was difficult, and that by the time she was able to secure was what is called Priority 1 status, the board had already allowed for retail shops to apply for licenses, and there were none left to grant.

“A lot of these dispensaries like mine have been fully compliant and paying our taxes from the beginning, having already been through the city of Spokane’s requirements, which are much stricter than the state’s,” she contends. 

Last December, the state board said it would increase the number of retail stores statewide from 334 to 556, in order to ensure patients would have access to medical marijuana.

Carpenter says the board expects to license those 222 new retailers from the most recent round of licensing. He adds, however, that in the priority criteria, licensees had to have operated a dispensary first or to have been employed by a dispensary in good standing, so that doesn’t mean all 222 new licenses will be existing dispensaries. 

“It’s important to note that we do not make a distinction between dispensaries and stores; there are no dispensaries in the regulated system,” says Carpenter. “All stores are marijuana retailers. However, some of them have applied for a medical marijuana endorsement on their license, which allows them to serve the medical community.”  

Carpenter says the board will continue to issue licenses until all of the allocated licenses are allotted, although reaching the total allowed 556 operating stores is unlikely due to bans and moratoriums in cities throughout the state. 

He says the option to apply for a medical endorsement is at the discretion of the licensee, and the board will continue to issue those as well. 

Previously, medical patients were allowed to possess 24 ounces of cannabis, and cultivate up to 15 plants. The new law states that if an individual joins a patient registry, they can possess three ounces of cannabis and can cultivate up to six plants. If they chose not to join the registry, their possession limit is just once ounce, and their cultivation limit is four plants.

DePriest says she feels retail shops just aren’t prepared to handle the needs of patients who’ve become accustomed to buying from medical dispensaries. 

“I’ve already had patients tell me retail employees aren’t knowledgeable enough,” she says.

Furthermore, she says she is concerned as to whether those shops that have received the state’s endorsement for sale of medical marijuana to patients will even make use of it.

 “I think most retail shops aren’t interested in taking time to educate staff and discuss conditions one-on-one with medical patients, because they are already making more than enough money selling it recreationally,” DePriest says. 

The state board’s weekly report for June 22 lists 384 retail licenses, 148 producer licenses, 111 processor licenses, and 753 producer/processor licenses that have been granted in the state. 

Currently, the agency lists 31 active retail licenses in Spokane County, with 149 still pending. The agency lists a total of 17 retailers that hold medical endorsements in the county so far.

According to its website, the State Department of Health also has been working to help ensure medical marijuana patients are protected, by helping to compose three main components of the new law, including a consultant certification program, an authorization database, and product compliance requirements.

David Johnson, public relations officer for the department, says part of its role is to ensure marijuana is safe and labeling correctly for patients requiring its use as medicine. 

“Our certified consultants have been working to make sure all products meet the established requirements,” he says.  

Johnson confirms the department also has been consulting with the state liquor and cannabis board about marijuana endorsement requirements for retail stores, developing continuing education for health care professionals who authorize medical marijuana use, and making recommendations to the legislature about establishing marijuana specialty clinics and rescheduling marijuana.

Although Evergreen Premier Medical is closing, DePriest says she will maintain her lease for another month, in hopes of being able to reopen again soon. 

“We’re hoping this injunction goes through,” she says, referring to a series of lawsuits being led by a group of Seattle attorneys. The lawsuits seek to place an injunction on the new law, preventing it from taking effect.  

“Otherwise, I guess we’ll just have to hope somehow they decide to extend the deadline for medical dispensaries, or allow for more retail license allotments in the city,” she says. 

In addition to trouble with licensing, DePriest says she is also one of a growing number of area shop owners who are being sued for breaking their leases. She previously had agreed to lease a larger space just next door for her business, and now finds herself unable to do so. 

“So many of us had committed to leases thinking we’d be granted a license, but now have to close and find other employment for our staff,” she says. “What breaks my heart is that the patients have nowhere to go. All we can do now is advise them to stock up, and give them a list of retail shops in their area.”

The WSLCB reported $260 million in marijuana sales for the state’s 2015 fiscal year, which ended last June 30. Those sales generated $65 million in taxes. Currently, the board is projecting total sales of $934 million for the 2016 fiscal year, which should generate $179 million in taxes. 

The agency reported Spokane County generated $37 million in marijuana sales and $9 million in taxes last year, and it estimates that will rise to $100 million in sales and $21 million in taxes for the latest fiscal year.

LeAnn Bjerken
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Reporter LeAnn Bjerken covers health care at the Journal of Business. A Minnesota native and cat lover, she enjoys beachside vacations and writing poetry. LeAnn has worked for the Journal since 2015.

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