Fusion, a rare minority-owned applicant in Seattle's current class of dispensaries trying to become recreational marijuana retailers under I-502, might not get to move forward with plans to open a location in downtown Seattle. According to owner Maryam Mirnateghi, on January 13 she received a notice from the Washington State Liquor and Cannabis Board (WSLCB) that there weren't enough licenses to go around. Many other Seattle-area applicants got this notice, too. For some reason, the state is allocating only 21 new licenses to this city. The notice told everyone who received it that chances of getting a license were "unlikely." The notice gave applicants 14 days to find a location in another city or sign the letter saying they "understand the risk" of proceeding. Failing to do either would result in the application being thrown out entirely.
Mirnateghi is a Priority I applicant, which means she meets the WSLCB's criteria designed to offer longtime good actors from the medical market a first crack at the crop of retail licenses the agency recently made available as part of the medical-to-retail transition mandated by SB 5052. Mirnateghi, like other applicants I spoke with, was hesitant to sign the notice.
"I feel like when I paid that fee and filled out an application for a license—I went through the process and did everything correctly. I held up my end of that contract. I don't feel it's necessary that I sign that," she said.
Many dispensaries speculated that this was the WSLCB's way of protecting itself from any liability for losses incurred by unsuccessful applicants. I asked Hilary Bricken, a local cannabis lawyer and editor of the Canna Law Blog, whether she thought this was possible. "I imagine that the WSLCB is issuing these to mitigate the risk of liability, yes, as these forms/notices presumably act as a sort of release where the WSLCB can point to the form and say, 'See? You gave us informed consent regarding your knowledge of the risk involved with the potential loss of your investment in the city of Seattle.'"
Brian Smith, the WSLCB's director of communications, assured me this wasn't the case and that the notices were a "courtesy heads-up" and that "it doesn't protect us in any way."
Mayor Ed Murray, who has caught flak in the past for his crackdown on the city's medical marijuana dispensaries, was quick to come to their defense this time around. Before the 14-day notice even hit in-boxes, he wrote to the WSLCB on January 5 to protest its limited allotment of licenses and to bemoan the fact that all 21 new licenses had been spoken for before the city had a chance to amend zoning laws.
In the letter, Murray claims that his office and the city's dispensary hopefuls were led to believe there would be no city-by-city limits on the number of new retail licenses issued. Many of these hopefuls—who are now screwed—secured locations and prepared their applications, but they delayed submitting them because their locations were dependent on the city changing the buffer zones that dictate where pot businesses can be. These buffers keep legal pot away from childcare centers, parks, arcades, etc. SB 5052 granted cities and counties the authority to reduce these buffers to as low as 100 feet (though schools and playgrounds stayed at 1,000 feet).
Aaron Varney, who owns Dockside Co-op in Fremont, told me, "You really need to see the initial e-mail [the WSLCB] sent out to applicants that told them not to rush their applications. For Seattle, that was a relief, because the state and city did not have their timelines aligned, and many in Seattle were waiting for the zoning ordinance to pass. Hence they waited to put in their applications, as they would have been kicked out if not in the proper zone/setback."
Murray singled out Mirnateghi in his letter to the state, saying: "This proposal unfairly disadvantages longtime good actors who have abided by state and local regulations. The owner is one of the few women or people of color who operates a collective garden and has waited on submitting her application—on the advice of the WSLCB—for a downtown Seattle location as it would not be compliant until the passage of my proposed legislation." He added that WSLCB officials had assured the city that "only a handful" of licenses would be processed by this January, when the city's legislation was set to go through.
Smith, the WSLCB spokesperson, acknowledged: "If you waited until Seattle was ready, you likely were too late." When asked about the state's urgency, he cited the deadline of licensing new stores by July 1. "We went with the first ones who documented readiness."
Shutting out dispensaries that applied after Seattle's ordinance passed, Murray pointed out in his letter, "is a disservice both because a store in downtown would help erode the illicit market for marijuana downtown and it is a lost opportunity for a small-business owner who has attempted in good faith to follow all the appropriate rules and regulations." It's important to note here how much all that good-faith following costs. Making an existing dispensary compliant with I-502 regulations isn't cheap. Building out a new location is even less so. Fortunes have already been sunk.
"It's very frustrating and financially damaging," said Mirnateghi. How damaging? She declined to provide a figure, replying, "Let's just say it's A LOT."
Murray's letter also raised questions about the allotment process, noting that Seattle's allotment amounted to one store per 15,900 residents, while Tacoma's and Everett's resulted in 1:12,800 and 1:10,700 ratios, respectively. He urged the WSLCB to reconsider its numbers and consider issuing Seattle more licenses.
Replying to the mayor's letter, the WSLCB stood by the calculations that led to its allotments and said that it had informed the city of the application timeline and couldn't be held responsible for the timeliness of the local legislative process. Mirnateghi wondered why, even if the WSLCB wouldn't issue more overall licenses, it wouldn't allow more licenses in Seattle specifically, considering some cities in the state are issuing bans or moratoriums on pot businesses.
"My goal is not to throw the WSLCB under the bus," Mirnateghi said. "What I really want to accomplish is a common-sense solution. If you don't want to issue more licenses than your study says, fine. There are municipalities that are instituting bans on more licenses, and there are municipalities that are asking for more licenses. That seems like a pretty simple solution."
Though Mirnateghi is not seeking legal redress, others are. A recent lawsuit filed on January 29 in Thurston County Superior Court alleges that the WSLCB's priority system didn't do its job of ushering longtime "good actors" from the medical marijuana industry into the legal system. Stay tuned.