The Pot Lottery Is a Bad Idea
Drawing Lots for Retail Licenses Guarantees Shenanigans
Last month, the state announced a proposal to hold a lottery for cannabis retail licenses if it receives more applications for pot stores than it intends to approve. The lottery will be held for each county, and the lucky few who win will essentially hold a golden ticket worth far more than the $250 application fee.
This is a terrible idea.
Arizona ran a similar lottery last year, after citizens voted to allow about 135 medical cannabis dispensaries across the state. The Arizona Department of Health Services divided the licenses among 126 so-called community health analysis areas. Some of those areas are in sparsely populated, rural parts of the state, and few people applied for those licenses. But in cities, including Phoenix and Tucson, the lottery pool was chock full of ticket buyers. The artificial scarcity in dispensary licensing led to several peculiar business dealings.
For example, some entrepreneurs made back-end agreements to work with others if any party in the pact won a license (effectively allowing a person to buy more than one lottery ticket and increase the chances of winning). But dispensary owners have filed several lawsuits concerning these types of arrangements, when one party holding a winning lottery ticket allegedly refused to abide by their back-end agreement.
In some cases, consultants who helped clients apply for licenses have ended up filing lawsuits.
Dr. Bruce Bedrick, an Arizona-based chiropractor and pot-vending-machine seller, opened a firm to help potential applicants. According to Maricopa County's online records, Bedrick and his company commenced two civil suits against clients who successfully obtained a license.
If we make the same mistake in Washington State and implement a lottery for retail cannabis licenses, we will likely see bizarre business deals, a high-stakes-poker mentality, and needless lawsuits over pot stores. I say the state should ditch the lottery proposal and instead process applications as they come, without artificially inflating the value of retail pot licenses.