I’m writing this after just returning home from the last scheduled public hearing here in Spokane on regulations regarding I-502 implementation and hosted by the Washington State Liquor Control Board (LCB). Not only were many good topics brought up and explained but it would appear I have a retraction to make regarding an earlier post.

First, the correction.

In my post from July 5th, I-502: July Revised Draft Rules, I brought up the possibility that wording added to the regulations regarding medical cannabis might cause a constitutional conflict allowing for an easy lawsuit to shut down the recreational market. That turns out to not be an issue. I was able to ask and get clarification on the subject from the board and it was made clear that we are past that point and there is no constitutional conflict even if such wording were to be added. Further, because it has been signed, for the first 2 years of the initiative it would take a 2/3 majority vote by the legislature to do such a thing.

Can the feds still shut down the market? Sure, and it was made clear more than once that those actions are well outside the realm or jurisdiction of the liquor control board and is not much they can do. But a simple conflict of multiple subjects under one initiative is not one of the ways it might be done.

Now, on to the hearing.

I was surprised that the recent federal raids on the coast were not mentioned. I would have lost money on that bet if you read my earlier posting on the subject. Judging from the audience I would say that it was already common knowledge and none needed to be reminded. A raid by the DEA was mentioned but was referring to a separate, earlier action if I heard the location right.

Outdoor growing of cannabis is basically dead on arrival for most business applications. More than once the board indicated that getting a license approval to grow just 1 acre was very unlikely. For obvious reasons it wasn’t specifically stated, “No large outdoor grows”, but it was clear this is the direction things are going. Rather remote is the possibility that a 50-100 lbs. annual yield in seed stock will operate a business much less cover startup costs for most food producers.

More’s the pity.

The topic of medical cannabis was talked about a great deal. That might seem counter productive at first but I was very glad to hear the discussion for a couple of reasons.

One, I was already in the process of writing my next post on I-502 entitled, “Washington’s Red Herring: Medical Cannabis”. There was a good deal of information heard that I will need to rewrite some of it with and other I had not known to be included. Perhaps not comprehensive but at least it will be up to date.

Second, and what I will talk about here, is a matter of context.

The articles in our newspapers paint this picture that medical dispensaries are selling to just anyone. That medical growers are really the shadow black-market suppliers in Washington and up to half of our projected tax revenues will be lost to them. To be blunt and in no uncertain terms that is not what I heard tonight at the LCB hearing.

What the LCB said was when the Governor signed off on our medical laws large sections of rules and regulations were vetoed out at the same time. This is why Washington has the most unregulated medical system in the country. The effect was essentially to wave a huge “Raid Us!” flag to federal prosecutors.

So, by sticking to their heavy regulation guns the LCB is essentially saying, “Hey look. Recreational cannabis will be even more regulated and monitored than Hanford. Whataya want?” End paraphrased quote.

Put that way, in that context directly from the LCB without a newspaper filter the extensive regulations actually make some sense. Having the former state representative sitting there who signed the medical legislation saying this is how it was, this is how it is, this is why we are proceeding this way, I’m willing to take the LCB at its word.

Do I still think the retail market will fail? Sure I do. But at least I have a clearer understanding of the method behind the madness. And in all reality if it does the blame will not be on medical cannabis or the LCB. Retail prices above the black-market standard will take care of that all by itself.

Other topics raised were the various aspects of banking, money handling and transportation, harvesting. I grouped those together since they share many of the same concerns.

Transportation has to be done in-house. That is to say the vehicle and persons operating it cannot be of a different company or contracted. The vehicle must belong to the producer, distributor or retail business. Similarly the workers operating them must be direct employees of the same whether hourly, salary or seasonal. So a contractor type business that handles transportation is not on the table. The same applies to a harvest/grooming type business where workers would be farmed out (Ha) to producers.

For banking the LCB pretty much made it clear that again this was something that did not fall under their jurisdiction. What they did do was bring along additional staff and advisers that could answer some of those questions.

Generally everything talked about is already floating around in the news sheets out there. Given the constraints and lack of established rules I thought that most concerns were addressed as well as can be expected. The only possibility I heard and not already read about is what was loosely called a state type bank but in practice would be better described as a depository. That was quickly followed up with the reiteration that these are just ideas and only emphasize that the payment/banking problems are currently being worked on.

And no, just opening a bank account in Uruguay wasn’t mentioned either.

The concerns about the organic regulations and cloning was brought up a few  times. The rooting hormone most commonly used to create viable clones is technically not organic but that wasn’t the subject. I think the context was to recommend growing only from seed to retain organic status and not hormone cloning. Basically from the point of view that seedlings rather than clones supply producers.

I’m not entirely certain. In my opinion the concept of starting a production company just sell to other producers is a lose/lose game.

Any grower with three brain cells to pool together is going to change the sex on some clones, flower them as males and harvest the pollen. If properly stored pollen lasts a good long time and doesn’t need dedicated production space. Building up your own seed stock from strains that grow best under your particular business model indoors or out is just sound planning and added insurance against the future. With a market this heavily regulated purchasing clones or seedlings from another producer is a constantly recurring expense that is entirely unnecessary.

The one concern about organics that I did catch clearly was that the license application window coming up would allow starting plants from anywhere. Once into the system and tracking started that window would then close. If clones are not viable organics then where is a producer startup to turn? The answer was essentially the same thing I posted earlier, that it was a minor problem that should allow for a quick fix.

That fairly sums up the general topics discussed. On the whole I thought it went well and found it to be informative and worth the walk downtown rather than pray for parking. I obviously question the viability of the recreational market as proposed but found nothing wrong with with the LCB, additional staff or advisers. Given the scope of the task at hand I think they are doing a pretty good job. I’ll just end this post by thanking them for once again coming to Spokane for these hearings.

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August 6, 2013

 cannabis you pick sign and field

Drag all the boxes down rows of strawberries you want. We’ll be one field over with a step ladder.

Can you imagine the  giant cannabis maze it gets turned into after harvest? The snack and beverage stand next to the exit would make money hand over fist.

If only.

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A recent article in my local newspaper about legal cannabis under I-502 not only gets things wrong from the start but manages to insult every voting supporter in Washington state at the same time.

The title of the article, “Washington faces marijuana legalization roadblocks”,  (Spokesman-Review 7/28/13), starts with the false premise that recreational cannabis is not legal here and then wanders randomly from there on. The article never really gets around to listing any of these roadblocks to legalization presumably because it already is so. Washington RCW 69.50.360

The story moves on from the misleading title to then question the integrity of all the supporters and voters that cast ballots favoring this initiative;

     “When more than 1.7 million Washington residents voted to make marijuana legal for adults last November, most probably didn’t give much thought to how that would work. Some may have wondered who would grow it and who would sell it. A few may have questioned how those businesses would set up and operate. But the discussions likely tended more toward Cheech & Chong than Dun & Bradstreet.”

Really? Voters here give so little thought to our ballot issues that we are just mindless drones comparable to Cheech? I suppose the few who possibly questioned how these businesses might work are the Chongs.

I really don’t care what the personal political views of this newspaper’s owners are on I-502. As a Washington State voter I find the statement to be rather insulting regardless of how I cast my ballot.

As the sole regional newspaper covering Eastern Washington and North Idaho if their own readership is so tragically misinformed of the real facts then it presumably has only itself to blame.

Reading the rest of the article does seem to support that conclusion if this is the type of reporting we had to go on back in 2012. Or lack thereof depending on how you want to look at it. Once our misleading premise is established and Washington voters discredited, the article then wanders off into several additional subjects at once.

How will it be tested, how to label, how is it checked for potency, how is it packaged and of course all the while how are we discouraging use by minors.

You know, that’s an awful lot of “how to” questions for a bunch of brain-dead Washingtonians that only a paragraph before voted by mindless reflex with a majority casting “Yes” ballots on accident.

My favorite of them is,

“… How will legal marijuana grown in Washington be tracked and kept from “leaking” into the black markets in surrounding states?”

I find that an awfully curious question for the Spokesman to print. According to the articles I’ve been reading in this newspaper for the last 20 years Spokane is a gross importer of cannabis. Since when do we have extra to export?

I suppose that makes me a Cheech since exporting was another “how to” I didn’t consider at the ballot box. Just another zombie that read exporting wasn’t allowed under I-502 and considered it settled. If only my local news source had accurately reported on those concerns back then I’d be a Chong today.

I consider it an opportunity lost.

The last record setting regional cannabis ring that I remember reading about in the Spokesman Review was not based here. It was based in North Idaho. And they were just the ones distributing the goods after bringing it in from Canada. Where, of course, it was then brought into and sold here in Washington. Not the other way around.

Even without focusing on that particular network there is still story after story from my newspaper regarding cannabis smuggled down from British Columbia directly into Washington. I don’t remember reading any stories recently about cannabis being widely smuggled INTO Canada from the Spokane area. Those guys up there are pretty much self sufficient already from our commercial point of view.

So is North Idaho for that matter. “Falling domestic and Canadian supply in North Idaho strains Spokane area growers,” is not a headline I remember reading. Ever.

Nor are there many local stories about flooded Oregon markets burdened with our home grown cannabis. More than one Spokesman article have reported on California and Oregon recreational cannabis moving into Spokane markets however.

The article then dismisses its own printed contradictions and continues on by raising, “The biggest question of all.” Banking and paying bills.

Yes, I know, what the hell does that have to do with packaging, child access, testing or any of the other supposed “how to” roadblocks already mentioned? Nothing really. I suppose this is just the hot button topic among the 19 Chongs that possibly considered I-502, however briefly, before voting.

About a third of the main article focuses on how troubling it is to open a bank account for these businesses. There is a highlighted instance of how one entrepreneur paid in cash while tying up the payment desk for hours while employees had to count the money. Pretty much a long winded woe-is-me musing about how the revenue department will need larger staffing and more security to protect cannabis cash payers.

Only while in the office of course. Getting there cash payers would still be on their own.

Love it.

By now the article has gone past insulting just voters and pretty much includes the paper’s entire readership. I can’t be the only one who has paid taxes with a money order. If there is some archaic rule preventing people from doing that in Washington Revenue offices it isn’t brought up in the story.

Neither is opening an offshore account with a bank that will take your business. Nor is a one-use debit card prepaid in cash. State insured credit unions? How do you even get fined for not paying taxes that the revenue office refuses to accept in the first place? How has the medical industry been paying taxes for the last 17 years?

“How to” questions like those are obviously not considered by the Cheech readers here in Spokane and not brought up. All the Chongs must live west of the Cascades and read the Seattle Times.

This article’s only ray of coherent sunshine is a small insert about the organic regulations proposed under I-502. Most recreational cannabis is projected as being grown from clones. The rooting agent used to grow mature plants from cuttings technically isn’t organic.

Good point.

The article raises the question, answers it as a minor problem most likely to be fixed, continues into further nonsense about testing for purity, then switches immediately to the 1970 Controlled Substances Act. And if that wasn’t enough to keep a reader spinning the entire rest of the section has nothing to do with any of it while trying to explain how testing for potency will prevent explosions.

Not kidding.

Excessive testing regulations will somehow keep black-market producers from also burning down illegal grow rooms. Yeah, I know, state regulations don’t apply to black-market growers, hence the term “black-market” and in all reality these regulations will prevent nothing of the sort. But we have an article with a deadline to write here and don’t have time for rational thought.

The entire testing section of I-502 should honestly be scrapped. That opinion isn’t shared by the Spokesman but in the real world if a retail store sells a bad product it goes out of business from the competition that has a good product. No testing required. It’s called free market capitalism.

In any event, current consumers who might question the quality of retail cannabis are just going to continue buying from the same old reliable, tax-free, non-regulated, organic, less expensive, same potency, black-market producer they already have been. It’s called repeat business.

We approach the ending in this long winded nothing article with a vague attempt at relevance. The scary specter of outdoor fields planted by large producers is used to question the viability of small scale companies;

     “Bigger companies might have an advantage for growing in outdoor fields, which would be the likely source of lower-priced, lower-potency products, said Green, a former real estate appraiser. Smaller operators who control their indoor environments might compete for the high-quality market, he said.”

Other than a useful abject example of why cannabis producers shouldn’t ask real estate appraisers for business advice I don’t see any basis for the argument. None is provided by the article following that paragraph either.

Along with lower potency and lower price the author could of added lower yield, slower growth, environmental risks, weather damage, a single annual production window, predation by birds, omnivores and other animals not to mention harmful cross-pollination with weak or barren strains. All are risks that indoor and greenhouse production companies simply do not face.

How about insects?

I find it interesting that the same article that brought up the organic restrictions for growing clones forgets it here considering the impressive range of insecticides, pesticides and fungicide  chemicals other outdoor crops get to dust fields with. An indoor infestation can be quarantined and removed without loosing an entire crop far more simply and cheaply when dispersed among several greenhouses or rooms.

The real economic opportunity for Washington field farmers is hemp production that does not have a recreational or medical use. As simply an industrial product it is still illegal, banned and is currently not covered under I-502. We can’t use our domestic hemp but we can import it for use from Canada.

Makes sense.

Also means less profit for outdoor Washington fields that produce the same usable stalk fiber, even if less per acre, through recreational production. No mentioning any of that.

How about winter? Too obvious for us flatline Spokane Cheech readers? Something to be said about an indoor crop that can be harvested all year long while employing steady non-seasonal workers. See above about good product, reliable supply, free markets and repeat customers.

Now, for the 19 Chongs west of the Cascades on the coast who might have actually thought first about voting for I-502, then did so, winters mean extra rain. Which obviously means even more cannabis gets grown right? Even if the wind does blow a little more than usual. Seriously, when was the last time a cannabis crop was invaded by clams? Seagulls don’t even eat cannabis plants do they? Winter?

Not a problem.

In the real world outside of this article for the rest of Washington state 6’ of snow makes even the simplest of weeding chores rather problematic. Not to mention pointless, profitless, purposeless and other words that start with P such as pucking preposterous.

Two glaring article omissions are the final reporting insults to injury ending this story.

First, the vast majority of concerns raised in the article, however feeble, could be fixed by just letting citizens grow their own and calling it good. No mentioning that by the Spokesman.

Second, any concerns or questions the original article might have left a reader with remain. As a newspaper reporting on this topic one would imagine that would be a good time to make sure people knew the last upcoming public hearing regarding the proposed rules for Initiative 502 implementation by the LCB in Spokane is;

August 8
Spokane Convention Center
Ballroom 100A
334 West Spokane Falls Blvd
Spokane, WA 99201
6:00 p.m. – 9:00 p.m.

Maybe even go a step further and include information about the last hearings for the rest of the state on the 6th and 7th by providing listings or a link online (like this). Hell no. Much simpler to only report on it after the fact on the 9th. Informed voters are dangerous don’t ‘cha know. Just look at the I-502 legislation for Pete’s sake.

Yes we can all see that this paper continues to use the negative Mexican slang marijuana rather than the correct cannabis terminology. Yes, the recent Federal DEA raids on state cannabis businesses are not even mentioned at all. Yes, anymore, the Spokesman-Review is just an example of how to professionally scrapbook AP Reports together with a comics section.

Seriously though, if the Spokesman insists on presenting itself as a news source then it really should look at its own reporting and objectivity problems first before questioning my integrity as a voter.

Even if I do like Cheech and Chong bits.

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Just in time to start applying for retail cannabis licenses under I-502 in Washington state, federal agents raided several medical dispensaries Wednesday in a possible preview of things to come.

Neither story as reported by Q13 or King5 indicated what, if any, state resources were used in conjunction with the raids.

Even though medical cannabis has been legal in Washington since 1998 said reports indicate that these raids are the cumulation of a 2 year long investigation resulting in agents seizing $2500 worth of medical cannabis. Roughly 14 ounces depending on the exact sales price.

14 ounces.

This in a state that approved recreational cannabis under Initiative 502 during 2012 and is conservatively projecting a legal retail production figure in the 90 ton range for 2014. That’s 2,880,000 retail ounces for anyone keeping score.

When the feds indicated they, “… had bigger fish to fry,” apparently goldfish was the starting point being discussed. Holding up a minnow and posing for pictures isn’t exactly what we had in mind. Here in the pacific northwest we would call that bait. Perhaps the fishing is not as good where the DEA lives.

Details about forthcoming charges or reasons for the raids so far have been withheld. Though I doubt viewer ratings is among them. If the DEA wanted to impress Washington voters it would be securing the border against B.C. smugglers that are undermining our retail market eh?

Unfortunately, these raids do raise the specter of what might happen once retail cannabis production, distribution and retail companies begin to operate later this year.

I suppose the first corporation to open more than one franchise outlet will be the next big raid. The headlines are not hard to imagine as they shut down, “… an illegal state wide distribution ring,” while exposing separately taxed processor and transportation networks to boot. Just pitching one case after another underhand to federal attorneys.

It’s easy to imagine that mass raids without state law enforcement support would be impractical or a drain on federal prosecutors state wide. However photocopying IRS and inventory records a year from now from a legal market would cost more ink than overtime in my opinion. 24/7 inside/outside video coverage in 45 day blocks of time is a convenient regulatory touch added to any case, free of charge. The lab testing THC content for labeling regs authenticates recorded video content rather well. Also free of charge to prosecutors since the producer pays for that.

Neat huh?

The continued lack of action from our state representatives certainly isn’t helping things along either. It will be interesting to see how that plays out during the next election season. If the personal beliefs of our politicians do not allow them to represent their voters then we really do need to elect people that may disagree but will still do the job they applied for in the first place.

As an abstract I don’t see these raids doing much good even if these clinics were operating in violation of state regs somehow. Black-market producers are only going to be further encouraged to remain so. A potentially discouraged legal market might be unable to meet retail demand. That can only result in increased black-market production as the financial rewards grow with each grow.

If the federal government insists on shutting down our retail market in the coming months then the only way to decrease illegal black-market activity left to Washington state voters is to just let people grow their own and call it good. Let the feds knock door to door after that.

The last in a series of public hearings held by the Washington State Liquor Control Board (LCB) about regulations regarding I-502 are scheduled for August 6th, 7th and 8th. While we have to wait and see what affect these raids might have on license applications it is easy to assume that questions regarding them will be brought up.

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The revised draft of regulations for I-502 has been released by the Washington State Liquor Control Board (LCB) and is available as a PDF from the state website.

Grabbing headlines under the new regulations is our “Produced in Washington” icon has been removed from the proposal. No immediate replacement was included with the new labeling revisions but the LCB has indicated it is already working on a new logo that does not tarnish our state image. Rumors we might use Idaho’s image instead in retaliation for years of lost tobacco tax revenue are unconfirmed.

Idaho Green

Another new change being reported is that outdoor growing will be allowed under the new revisions. Why exactly that is getting so much print when nothing outside grows here during the winter is a mystery. The new rules would also require an 8′ solid fence and 24 hour video surveillance so you can watch deer jump over and rabbits go under to eat your plants.

How a lower yielding, slower growing, at risk to the elements outdoor crop restricted to an annual grow window east of the Cascades would even pay for the fencing alone remains unexplained by media reports.

Hemp production that does have a profit potential outdoors in Eastern Washington is not covered under I-502. Stalks that could be used as a secondary industrial product must instead be destroyed by the producer/distributor further reducing profit potential for both indoor and outdoor grows.

Also not covered under I-502 is Medical cannabis, and for a very good reason. Under the Washington State Constitution an initiative can only address one subject at a time. If two subjects are addressed under one initiative it then becomes unconstitutional and is deemed void.

For this reason I am very distressed when the LCB starts talking about adding new regulations under these draft rules regulating medically prescribed cannabis. If the LCB is allowed to do so then that opens the door to a later lawsuit halting the initiative. I-502 would then be addressing both recreational cannabis and medical cannabis making the entire initiative unconstitutional and void.

We wouldn’t have to worry about the Feds stepping in later since the new laws would already have been rolled back to 2012 making recreational cannabis illegal again.

Besides, our Liquor Control Board has no place regulating the medical prescription industry to begin with. Simply because there is a recreational use for a certain product is a very weak excuse that does not stand up. Where does medical cannabis end and prescription painkillers start? I am surprised that Washington state doctors are not raising a fuss about that.

And as if thousands upon thousands of dollars in cameras and computer servers isn’t enough to tip your budget we have another change. All Financiers of these new businesses must meet a three month residency requirement. That means no funding from outside the state is allowed making it even harder to get one started.

All in all the revised draft rules for I-502 is in my estimation a line by line guarantee that the retail market will fail after the opening surge. Over priced retail cannabis and no home growing allowed is only going to encourage a larger black-market than we had before.


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I-502: Show me the money

April 12, 2013

If you were working a $30,000 a year job would you quit in exchange for a $15,000 a year job? The answer to that for most of us would be no, yet Washington State’s I-502 assumes black-market cannabis producers will do just exactly that.

Abbreviations, conversions and the math I used to reach the following figures have been included at the end of this article.

I-502 is the Washington State initiative from 2012 that legalized cannabis for recreational use, retail sale and of course to be taxed by the state. In a prior article I brought up the DUI aspect of I-502 and the 5 nanogram intoxication level. In this article I will take a look at tax revenues and shutting down black-market producers, both subjects having been presented to voters as reason for casting a ballot favoring this measure rather than opposed.

The rate of cannabis consumption needs to be looked at first when talking about taxes and production. Even though it has no real comparison with tobacco, news reports and this initiative have used it, so, for this article I shall also. To compare the two lets look at a single pound of cannabis.

1 pound of cannabis = 16 ounces = 128 eighths = 448 grams = 896 half gram joints, smoked once a day, every day, day after day, week after week, every month, month after month, without pause, ever, takes about 2.5 years to consume.

A non-filtered 100 mm length tobacco cigarette on average weights .68 grams. Your typical pack-a-day smoker during the same time period will consume about 27.2 pounds worth of cigarettes.

1 .oz, or 56 joints, is the legal possession limit and represents one purchase every two months for someone who consumes a joint every single day. As a social weekend activity, say two joints each weekend, that 1 .oz purchase is made once every seven months. For a casual user of 3-6 times a month, call it an annual purchase.

The common tobacco model should raise some obvious red flags when used to project tax revenue. Even a cursory glance shows that it will be either high or absurdly delusional. Using the above cannabis consumption rates, a realistic “cash windfall” tax projection for my city, per average user is $4.44 annually.

Our city’s council members could pan-handle more than that during lunch breaks downtown.

The only meaningful tax projection I can see stemming from I-502 is not in earnings but savings from all the arrests, bookings, court dates and imprisonments that will no longer take place. I think that would make a more coherent and factual argument when using cash as a reason to support this initiative.

Going back over the last 50 years of prohibition and taking out every budget increase that used “marijuana” to justify itself is huge, and no longer needed. Showing how all our property taxes are going to go down with reduced law enforcement budgets would get more public support I’m sure.

However, even if I-502 turns out to be, at best, revenue neutral, we will still be putting the black-market producers out of business right? That is the other main reason being pitched to support I-502.

For starters, unlike tobacco that can be bought anywhere, anytime, retail cannabis outlets are going to be few, far between and heavily regulated. That might not be much of a factor for someone living in the Seattle area that has a local transit system, but for the rest of the state it is worth including into the equation.

Not many people are going to drive 3 hours round-trip into town and back to pick up only the 1 ounce possession limit. People living in rural Washington can’t even do a Costco type run where they pool together money and a shopping list for whomever is going. Each person must go themselves or carpool. So obviously, anyone who can’t, does not own a car or simply won’t spend $400 per ounce, all things considered, is going to buy from the current black-market.

Tax projections supporting I-502 assume 100% of cannabis consumed in Washington State will be purchased from legal retail stores. This, in a state where 40% of all tobacco cigarettes and 100% of all recreational cannabis consumed is ALREADY being purchased from the black-market.

So, three hours on the road, gas money, snow and all the rest to buy your legal ounce? Or, call up the gal you’re getting it from already, have it delivered to your door and then go halves on a pizza once she gets there.

Real tough choice.

Since the passage of I-502, the suggested starting retail price of $12 per gram has been reported numerous times and works out to $42.00 per eighth. At first glance this seems comparable to the black-market price of $11.42 per gram or $40.00 per eighth. And most users I feel when given the choice are going to purchase from a retail store if it’s only a few dollars difference.

The math after that starts to break down though. Currently in Washington State an ounce of cannabis on the black-market is $240. Unlike the black-market, legal retail stores don’t give bulk purchase discounts and will cost $336 per ounce, or $362.88 after 8% sales tax. What consumer is going to willingly pay $122 more for the exact same product just for giggles?

Really, I would like to know. I have this floating bridge for sale you see…

Anyway, the disparity compounds even further when looking at a one pound purchase. Currently in Washington State a black-market producer can expect, at minimum, $2500 per pound. A pound purchased from a legal retail outlet will cost $5376 per pound at $12 per gram, with sales tax, $5806 per pound.

Now what black-market producer is going to stop what they are already doing, register as a legal producer, and make half of what they were before? As I started this article off with, who is going to quit a $30,000 a year job for a $15,000 one?

A legally produced pound of product will earn the licensed producer $1344 per pound. For a black-market producer making $2500 per pound who becomes legal they will have to produce twice the product as before just to get back up to $0.

After that point all the startup costs such as permits, building leases, zoning inspections, barb wire fences, certified guard towers, licensed machine gun operators, 24 hour a day video surveillance, time share on the aerial drone monitoring your growing district and god knows what else all have to be paid for by producing even more product.

The projected starting annual sales figure of 180,000 pounds of product is based on current usage models and accounts for no increase in costs under a legal system. Doubling production to break even and then tripling it to cover overhead and profits means that a staggering 540,000 pounds, or 270 tons, would need to be produced and then sold annually through legal outlets.

Which does leave the unanswered question of who the hell is going to buy all this dope?

In order for the state to render a black-market pointless it would need to sell at a net retail price of $8.60 per gram, $30.10 per eighth, just to start taking over market share. And then go down from there. However, even at $8.60 per gram, that still leaves a legal price of $3852 per .lb compared with a black-market price of $2500 per .lb which works out to only $5.58 per gram.

Less than half the suggested legal starting price of $12.

The current model being pitched to the public for supporting I-502 is to match the black-market price, then jack that price up over 200% in order to undercut them.

Doomed to fail.

In my opinion the only market projected to get a “cash windfall” from the current version of I-502 is the black one.

If Washington is really serious about severely reducing black-market cannabis production then it should allow people to simply grow their own and adopt a hands off laissez-fair approach to legal retail.

Without this option a consumer is faced with only two choices;

(A) Pay over 200% more for your product

(B) Call up your usual supplier and ask her what she wants on her pizza.


1 pound (.lb)
1 ounce (.oz)
1 eighth of an ounce (1/8th)
1 gram (g)


3.5 grams per eighth
8 eighths per ounce
16 ounces per pound

Producer to Consumer Chain

* $14 per 1/8th = $1792 .lb = Producer $1344 / State $448 (25% tax)
* $1792 + 30% distributor markup = $2329.60 + 25% tax = $2912 .lb = Distributor $537.60 / State $582.40
* $2912 + 30% retail markup = $3785.60 + 25% tax = $4732 .lb = Retailer $873.60 / State $946.40
* $4732 + 8% sales tax = $5110.56 .lb, $319.41 .oz, $39.93 1/8, $11.41 g

legal retail price of $39.93 1/8th * black-market $40.00
legal retail price of $319.41 .oz * black-market $240.00
legal retail price of $5110.56 .lb * black-market $2500

Local sales tax revenue $378.56 per .lb ($23.66 per .oz)
State tax revenue $1976.80 per .lb ($123.55 per .oz)
* 6.5% of local sales tax goes to the state also

Gross Income Totals

legal producer earns $1344 .lb
legal distributor earns $537.60 .lb
legal retailer earns $873.60 .lb
black-market producer earns $2500 .lb

All prices assume a very high quality, medical grade product. A pound of common brown bud, or ditch weed, costs only about $100 or .23¢ a gram.

This article was originally published April 11, 2013 and was rewritten after accounting errors were pointed out by some helpful readers. Thank you!

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     3 opinions about recent news topics that have caught my eye.

Hindenburg Mystery Solved?

     Personally, I thought this mystery had been solved back in 2000, but new headlines are announcing the results of a research team in England claiming the spark starting the fire was from static electricity. The articles are short on facts, being presented as a teaser for a documentary on British Channel 4 rather than an actual news story.

     Whether from static, lightning, conductor or bomb I have been under the impression that what started the fire was secondary to why it consumed the ship so fast. The public broadcast back in 2000 pointed out the powdered aluminum used to give the ship its distinct silver exterior. Watching the video of the disaster even reminds me of a water balloon popping in ultra slow motion. The skin just goes and the interior water sits there for a moment before splashing out. Who really cares what started the fire? Just don’t paint the outside of your ship with solid state rocket fuel.

     What “new” facts come to light we shall see. Fires happen, our modern marvel of today, the Boeing 787 Dreamliner comes to mind and this is 76 years later. If the Hindenburg’s hull had maintained structural integrity even for 30 more seconds that might of let it descend enough and burned off enough gas for at least a chance of survivors. Unlikely, but better than the zero chance those poor buggers had. Hopefully this new study goes into some of that.

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Cannabis Legalization

     Living up here in Washington State this has been a never ending source of amusement since I-502 was passed by voters back in December. Recent in the headlines is the debate over impaired driving, with this “5 nanogram” number being thrown around.

     I find the lack of facts on the issue to be extremely frustrating as a voter. 3 months later and story after story keeps posting up this 5 nanogram number as if it is supposed to mean something. Where is the supporting information? What is the level detected in a blood test 10 minutes after smoking? What is the level 3 hours after smoking? The next day? Where did this 5 nano-number come from in the first place? 7 days after smoking a person might test 5 nanograms so where did these week-long-high buds come from? And are they for sale in Washington?

     CNN recently did a story with at least some information about impaired driving and blood nanogram levels in it. According to that source, after smoking a joint the average level from the test subjects was about 25 nanograms. That is far and above the 5 nanograms opponents of legalization are asking for and this is the only report I have seen with at least some facts in it.

     Both sides of this issue really need to do a better job of informing voters with facts. If supporters of this testing level want my vote then show me the blood test studies so I can make up my own mind as the informed voter I am supposed to be.  As it is now, by all measure I can see, the 5 nanogram level amounts to a zero use policy which is in violation of state law legalizing consumption.

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North Korea
     “Those who cannot remember the past are condemned to repeat it” ~ George Santayana ~

     A new leader, a nuclear bomb test and the 38th parallel all rolled into one. While I do feel the Korean War is given the short shaft in our history books, bombing the ass end of this country back into the stone age (again) hopefully will not be needed to refresh some memories.

     I struggle with the reasons why North Korea continues on the path that it does with the international community through its foreign policy. All things considered, the rest of the world is surprisingly tolerant of rogue states. Just play nice and for the most part oppressors are allowed to do whatever.

     After 12 years of police actions in the anti-terror war, rather than be war weary I feel many would see a conflict with North Korea as a refreshing change of pace. Actual borders? Physical territory to occupy? Achievable objectives? A uniformed enemy to target? A South Korea to take over already right there? It would be the most intense six hours of combat the world has ever seen as the U.S. military just blew off steam.

     Ok, that is overly simplistic, but recent actions taken by the North are doing more to provoke an action rather than prevent one. North Korea would be far better served by opening borders to trade, immigration and tourism. Securing a place for itself with the international community through peaceful means is the right way for Kim Jong Un to retain power.

     China is the reason the North still exists and the politics of 1953 are different than today. Recent expansionist actions in the South China Sea does make one wonder if China would be better served in that strategy by allowing the North to end. A unified Korea would presumably see the withdrawal of U.S. forces from the Korean peninsula leaving a small country of little threat even if it is headed by the South.

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The opinions expressed in The West Report are the author’s own. Facts, Relevance or Claims of lucidity are purely coincidental.