State may set pot production limits

State regulators say they need to rewrite their proposed rules for Washington’s new marijuana businesses, for the first time setting limits on production of the drug.

The changes, if approved by the state Liquor Control Board, would trigger a delay in the implementation of voter-passed Initiative 502, which legalized the recreational use of marijuana. The board would have to take time to collect more public input.

That means it could be mid-March before growers, processors and sellers have their state licenses in hand, the board said. And it could be May by the time pot can be bought in stores — at least 18 months after voters approved I-502.

Until this week, the board had planned to issue licenses three months earlier, by Dec. 1. It still will meet the law’s deadline to write the rules by that date.

The liquor board on Wednesday will consider the new timetable proposed by its staff. On Sept. 4, the board will take up the new version of the rules for the first time.

The proposal will include a statewide marijuana production limit. Liquor board deputy director Randy Simmons said it would be roughly 40 metric tons for the first year.

It also will cap how much individual growers, processors and retail stores can have on hand. Those limits still are being worked out, Simmons said.

Caps would tend to favor smaller businesses over larger operations.

I-502 allows for limits, saying the board must determine the maximum quantity a business can have on its premises.

Simmons said the board originally planned to set limits later, after receiving business plans from license applicants. But businesses suggested it should be the other way around: They needed to know what would be allowed before writing their plans.

Simmons said the comments from businesses included, “I don’t know how to write a business plan because I don’t know what the marketplace looks like that you’re creating.”

He said the board also would use this opportunity to spell out the number of retail stores allowed in each county and in areas within counties.

Both the production limits and the store caps will be based in part on a state consultant’s calculation that Washington consumes about 165 metric tons of marijuana per year.

Many of those users will continue to go to medical outlets or the black market for their marijuana, consultants say.

The board staff estimates I-502 stores will be able to capture about 25 percent of the market, or about 40 metric tons, in their first year.

Some were dismayed to learn there will be up-front caps on production. This could deter some larger businesses thinking about entering the new legal marijuana market, said Hilary Bricken, a Seattle lawyer who represents cannabis businesses.

“I’m honestly surprised that they’re taking this route,” she said of the delay and changes, “because we were under the impression that they very much wanted to get going.”

Others cautiously applauded the board’s potential action, including Alison Holcomb of the American Civil Liberties Union, who led the writing of I-502. She has said the state should err on the side of smaller operations, in part to avoid a flood of advertising and lobbying by large corporations.

Allowing too much marijuana to be produced, she said, also risks having some of the crop leave the state or go to people who can’t buy it legally.

“If we make too much, the question becomes, ‘where does that go?’” Holcomb said.