Is the WSLCB attempting to manipulate Washington’s legal marijuana prices?
Washington voters approved Initiative 502 in November 2012 and charged the state’s liquor industry supervisor, the Washington State Liquor Control Board (WSLCB), with the tasks of I-502 implementation and with regulating and supervising Washington’s new marijuana industry. The Board has done an impressive job and overcome a variety of unforeseen challenges that further complicated I-502’s already harried rollout.On July 8th, 2014 Washington’s first 25 adult use, recreational marijuana stores opened. As of October 14, 2014 66 of the eventual 334 retail licenses have been approved and cleared for opening. And that’s a big problem.
Ironically, it’s the WSLCB’s sluggardly pace of licensure that is I-502’s greatest nemesis. The Board’s poky approval rate continues to hamper Washington’s pot program more significantly than any other market factor.
The slow rate of license approvals by the WSLCB, and its impact on I-502 stakeholders, has been a frequent subject in past issues of Flip-Side Magazine. If you followed any of those stories, you’re likely aware that when those first recreational stores opened up in July there were only 10 growers in the state of Washington that had 90 days or more to grow marijuana between the day they received their license and opening day. Between early March, when the Board issued their first marijuana grower license to Kouchlock Productions in Spokane, and July 8th, the Board averaged 3.1 grower license approvals per week.
However, one week after opening day for retail stores in Washington, the WSLCB approved a whopping 25 growers and has continued to approve double-digit growers almost every week since July 8th. The Board’s dramatic increase in the rate at which they approved growers since July 8th appeared to indicate that they understood that their previous leisurely pace had a devastating effect on I-502’s ramp-up inventory and was likely the driving characteristic behind the exorbitant retail prices retailers are still charging for legal marijuana in the state. That the WSLCB would increase weekly marijuana grower approvals by over 400% seemed to inform that they finally acknowledged how important those approvals were to increasing legal marijuana inventory and decreasing end-user prices.
However, what previously appeared to be a bureaucracy correcting the internal processes kinking up licensure cadence has recently taken on a more disturbing possibility.
Since July 8th’s opening day the Board has approved only 41 additional retail licenses, an absurdly slow pace of under 3 per week and a tempo that will stretch approval of all 334 retail stores to a span of almost 2 years. While the Board has approved 41 additional retail licenses over the last 14 weeks, it has approved 159 grow licenses during that same time period. The Board approved just one retail license and 15 grower licenses for the week of October 14th. As of October 14th, there are 245 licensed marijuana producers in Washington and just 66 retail licenses.
If it weren’t for the fact that the Board had already gone through a cycle which clearly demonstrated to them the impact weekly license approval rates have on Washington’s cannabis industry, you could chalk the current bungling of retailer approvals up to bureaucratic incompetence. However, it’s tough to ignore the potentially corrective influence the Board’s current approval scheme could have on I-502 marijuana prices. As I stated last month, quite soon another 200 Washington state pot farmers will bring their first harvests to market, and once again the Washington State Liquor Control Board’s glacial approval rate is going to wreak havoc on I-502 stakeholders.
If the Board does not greatly accelerate the rate at which retail licenses are approved I-502 marijuana inventory will soon vastly exceed the distribution capacity of existing retailers and wholesale prices, already gently easing, will drop dramatically. While it’s tempting for you retail licensees to greet that scenario with alacrity, the potentially devastating and unintended consequences to the production side of Washington’s marijuana industry could work against your success in the long run.
I would encourage every single current I-502 licensee to send their LCB rep an email demanding that the Board immediately prioritize retail license approvals.
