The Beginning and the End of Washington’s Wild MMJ Market

This week, hundreds of marijuana dispensaries will be shuttered. How did that happen?

The evening of November 6, 2012, will live long in the memories of many progressive Seattleites. It was a night of raucous celebration in the heart of Seattle as a singular mass of bodies danced at the corner of Pike Street and 10th Avenue.

In the tide of humanity, a middle-aged man with a gray beard and a plaid blue shirt sprayed the crowd around him with champagne. People kissed and danced, screamed and cheered, laughed and exchanged high-fives. A Barack Obama impersonator made the rounds, allowing celebrants to take pictures beside him. Musicians with various horns crawled through the crowd as well, trumpeting their joy to the skies. The pungent scent of cannabis faded in and out.

The celebration was on account of three things: Barack Obama, gay marriage, and legal pot. On this election night, the nation’s first African-American president had just won re-election, and Washington state voters had chosen, through ballot initiative, to legalize same-sex marriage and recreational cannabis. Each of those victories would have been unthinkable even 10 years before, so it makes sense that people took to the streets to mark the occasion.

But not everyone was celebrating. While Washington’s vote to legalize recreational marijuana—along with a similar measure in Colorado that passed on the same night—was a watershed moment in our country’s retreat from the War on Drugs, it was also the beginning of the end of the state’s medical-marijuana (MMJ) culture. That culture had existed for 14 years, made legitimate by another unlikely political victory and fostered by the medical-marijuana dispensaries that dotted the state. Those dispensaries were gray-market affairs, but the new recreational system of pot stores would be more regimented than a Marine on a diet. MMJ advocates warned that sooner or later the recreational system would replace the patchwork system of medical providers, potentially making it harder for patients to get their medicine. In 2015, the state legislature proved them right by passing the Cannabis Patient Protection Act, or CaPPA, which grants a small minority of dispensaries I-502 licenses while requiring that the rest, at long last, close their doors.

“I like the part about nobody having their life fucked up,” says lawyer and pot advocate Jeff Steinborn, looking back on I-502, which he opposed at the time. “I do not like the way the market’s been controlled—they’re regulating it like plutonium, with the result that it’s really the province of the wealthy to get into this market.

“I don’t like the prices I’m seeing, and I particularly do not like what’s happened to the patients… . They’re screwed. If you’re a real patient for whom this is a life-changing medicine, you probably can’t afford it unless you hung onto your old connections, which has been my advice all along: ‘Don’t burn your connections, you’re going to need him or her pretty soon.’ ”

For many, pretty soon is Friday, July 1. On that day, the vast majority of the state’s dispensaries will be forced to turn out the neon marijuana light and close up shop, ending an era that helped thousands of patients, confounded many politicians, and launched the legalization movement.

But how did we get here?

For nearly a century, the United States has waged a War on Drugs. By heavily penalizing the use or possession of street drugs, the federal government has excelled at frightening the mainstream and criminalizing people on the edge.

At the center of the War, both rhetorically and in practice, is cannabis, decried by federal authorities as a dangerous, highly addictive substance that inexorably leads to harder drugs and, ultimately, more crime. In 1937, Congress effectively banned cannabis with the Marijuana Tax Act, and doubled down in 1970 with the Controlled Substances Act, which includes cannabis in its most dangerous tier of drugs. Officials claimed that these measures were undertaken in the interest of public health and safety, but that narrative has recently started to fray as historical documentation has shown that in both instances, drug prohibition was used by cynical officials both to target minorities and to justify expanded policing.

Even before those revelations, the War was facing growing resistance by a public that was seeing benefits in some of the drugs that were viewed as a scourge on our culture—in particular, cannabis. In the words of journalist John Geluardi in Cannabiz: The Explosive Rise of the Medical Marijuana Industry, “While the Beats and hippies certainly popularized marijuana use, the medical-marijuana movement’s direct precursor was San Francisco’s gay-rights movement of the 1970s.”

When AIDS began to decimate gay men in the 1980s, Geluardi says, the potheads among them treated the associated “wasting syndrome” with cannabis. In other words, they treated nausea with the munchies. As a result, a generation of seasoned activists were ready and willing to push MMJ initiatives in the 1990s. Joining them was a generation of baby boomers who’d experimented with pot in college and were just reaching the age when they faced cancer (and chemotherapy), glaucoma, and other ailments that MMJ happens to alleviate.

In Washington state, the 1995 arrest of Joanna McKee was the match that lit the fuse toward legalization. McKee smoked cannabis, she told The Seattle Times, to assuage muscle spasms, migraines, and epilepsy from head and back injuries. She shared her pot with patients suffering from AIDS, cancer, and multiple sclerosis in a Bainbridge Island operation called Green Cross Patient Co-Op. The police busted her with more than 160 plants, but a judge let her off, ruling the search warrant had been invalid. The same year, Tacoma attorney and terminal cancer patient Ralph Seeley convinced a Superior Court judge in Pierce County that doctors should be able to prescribe cannabis. In 1997, Seeley watched the state Supreme Court overturn that decision and saw his own I-685, which would have decriminalized the medical use of cannabis and other Schedule I drugs, as well as paroling drug prisoners, fail at the ballot box.

One of Seeley’s colleagues on I-685 was Dr. Rob Killian, who according to the Times prescribed MMJ to some of his hospice patients. After the failed drug-decriminalization initiative, he drafted another, eschewing prisoner paroles and concentrating only on decriminalizing medical cannabis among patients who indisputably needed it. Actually, “decriminalize” is a slight overstatement: This initiative, I-692, merely provided an “affirmative defense” doctors and patients could use in court. That modest approach won I-692 the Times’ editorial board’s endorsement: “Should patients with terminal illnesses or debilitating pain be allowed to smoke marijuana prescribed by their doctors without fear of criminal prosecution? … Voters should say yes to this responsible and compassionate measure that puts an intensely private medical decision in the hands of those who know what’s best for their health: doctors and patients.”

Of course, even as it won mainstream sympathy, pot for pain control was not without opposition. I-692’s critics argued that because it decriminalized cannabis without creating a way to legally obtain the stuff, the initiative would open the door to dangerously unregulated medicine via the underground drug market. In a guest editorial in the Times, No on I-692 campaign co-chair Dr. Susan Garcia-Swain wrote, “Those of us opposed to this initiative are not trying to be moral authoritarians. This is about public safety and ensuring protections against bad medicine … The proposed ‘cure’ would be worse than the disease.”

Despite such protests, the spectacle of suffering patients yearning for relief from their pain proved a compelling argument for Washington voters, who in 1998 approved I-692 by a wide margin. Seeley never saw those results. He died just 10 months prior to the vote. [Ed. note: We still should parole drug prisoners. Call it the Ralph Seeley Act.]

The next major victory in the fight for medical-marijuana access came the following year when U.S. Attorney Kate Pflaumer, the highest-ranking federal prosecutor in western Washington, wrote a letter to Seattle police stating that she was not interested in prosecuting legitimate medical-marijuana patients, alleviating some fears of prosecution for what was and remains a federal crime. In 2000, the Capitol Hill MMJ distributor Compassion in Action announced it would start giving out photo ID cards and create a 24-hour phone line through which police could verify someone’s patient status, though neither service had any legal weight. Through the aughts, doctors’ offices dedicated exclusively to providing MMJ approval notes—or “green cards,” as they’re colloquially known—appeared.

But there were problems. Police kept arresting some patients and growers, in part because of the ambiguity in I-692 about how much cannabis patients could possess. The law itself allowed for a “60-day supply,” which depending on the user could mean anything from a few grams to several ounces or more. Another complication arose because I-692 didn’t say anything about where MMJ patients could get their medicine, other than that a “designated caregiver” could assist them. According to High Times, this led to the proliferation of dispensaries where patients would come in, sign a form declaring one of the dispensary workers their designated caregiver, buy their pot (or rather, receive their pot free and then make a “donation” to the dispensary, so that neither was breaking federal law by buying or selling a controlled substance), and then in their next breath sign another note revoking the dispensary worker’s status as their designated caregiver. The next patient in line would step up to the counter, sign a note, etc. “This plainly illegal operation of dispensaries led to some raids and much anger from the medical activist community,” writes reporter Russ Belville.

In response, state legislators passed SB 5073 in 2011, allowing “collective gardens for the purpose of producing, processing, transporting, and delivering cannabis for medical use.” The bill capped collectives at 10 patients, 45 plants, and 72 ounces of cannabis each, and created a 15-day waiting period before a designated provider could switch patients. The bill was also supposed to more clearly define dispensaries and create a registry of Washington MMJ patients, but under pressure from federal attorneys—who threatened in a letter that “state employees who conducted activities mandated by the Washington legislative proposals would not be immune from liability” to federal prosecution—Governor Christine Gregoire line-vetoed those sections of the bill. “I cannot disregard federal law on the chance that state employees will not be prosecuted,” she said. “What would I say to them if they are?”

Insofar as it was meant to rein in revolving-door dispensaries, the partly gutted bill was a flop. Belville writes that dispensaries “switched from being ‘providers for one patient at a time’ to being ‘collective gardens for 10 patients at a time,’ and continued operations as storefront dispensaries without missing a beat. When a patient comes in, he becomes Patient #1 in the collective, the existing patients slide down a slot in the list, and patient number 10 is dropped from the collective.”

But legislators’ impotence at regulating MMJ was about to be obviated. The following November, Washington would vote to legalize recreational cannabis via I-502. As the Weekly’s Nina Shapiro reported at the time (“Alison Holcomb: Pot Mama,” Sept. 26, 2012), the woman who can take the most credit for I-502’s passage is Alison Holcomb. A former law partner of Jeff Steinborn (the ornery pot lawyer quoted above), Holcomb worked on the 2003 campaign to make pot Seattle police’s lowest priority. A colleague in the ACLU recruited her to manage their cannabis project, and Holcomb in turn recruited travel guru Rick Steves to host the very-Seattle-titled TV segment “Marijuana: It’s Time for a Conversation.”

In 2010, writes Shapiro, Holcomb began planning for what became I-502. Earlier that year, she’d fallen out with Steinborn and other pot advocates who were running a broad drug-decriminalization initiative. Holcomb and the ACLU opposed it, believing it had zero chance of passing and would hurt more modest reform attempts. As a result, Steinborn and company were absent from the conversation. In their place were national heavyweights in the cannabis-reform movement whom Holcomb courted with impressive polling data that showed that the ACLU’s initiative could win. “It needed to look as much like a hard-alcohol model as possible,” Holcomb told Shapiro, in order to win over mainstream voters who were used to thinking of booze as a safe drug.

Veteran activist Steve Sarich called I-502 a “Trojan horse.” One of the proposed law’s most objectionable aspects, Sarich said, was that anyone found with 5 nanograms of THC (the main active chemical in pot) in their bloodstream would be guilty of driving under the influence (DUI). The problem? Because of the way THC is stored in the body, blood tests aren’t a reliable way of checking whether someone is intoxicated. As NPR has reported, light users could pass the test even though they drove stoned, while a regular user could be completely sober but still test positive for THC. Others pointed to potential harm to the MMJ market. In an editorial published on pot blog Toke of the Town, Ezra Eickmeyer of Safe Access Alliance warned that I-502 would increase the cost of MMJ, reduce access to MMJ retailers, put users under 21 years of age at risk of prosecution, and drive patients to the black market. “In trying too hard to appease law enforcement and other opponents of legalization,” he wrote, “I-502 creates a list of brand-new threats to medical-cannabis patients and providers.”

During their campaign, proponents of recreational legalization emphasized that I-502 “does not change the Washington State Medical Use of Cannabis Act,” in the words of their campaign website. And that was true: I-502 made no mention of medical marijuana. On the other hand, once I-502 passed, anytime pot was sold outside of an I-502 store, the state coffers would forgo precious tax revenue. And don’t forget the feds, whose potential raids hung over the heads of state leaders like the sword of Damocles. In short, once Washington had a well-defined, heavily regulated recreational-marijuana market, it was only a matter of time before state legislators decided to fold existing MMJ dispensaries—not quite legal, and barely regulated—into I-502.

Voters didn’t seem to mind. I-502 passed in Washington state by an 11 percent margin, and the party began.

It would be one thing if moving medical into the recreational system simply meant that dispensaries would have to pay more taxes and file more paperwork. But the facts on the ground presented a whole other existential dilemma for the medical-marijuana community. There are, after all, far more dispensaries than I-502 licenses. After the passage of the CaPPA last year, 222 dispensaries were granted licenses to sell, bringing the statewide total number of I-502 stores to 556. As for the other 1,812 dispensaries who also applied to become I-502 stores? Tough luck.

“These stores are being forced to simply shut their doors,” says MMJ advocate Kari Boiter. “We’re putting a whole lot of people out of work.”

Contrasted against the freewheeling culture of dispensaries—which range from stylish urban boutiques to shady backroom drug markets—the rigorous regulations for recreational reefer are positively militaristic. I-502 divides the pot economy into three parts: producers (pot farms), processors (everything after curing and before sale), and distributors (pot shops). You can own licenses for producing and processing or for retail, but not both. All facilities must track their cannabis as it moves toward the consumer and destroy any “waste product.” Before receiving a license, owners, partners, and investors must pass a financial and/or criminal background check. The same applies to all members of a nonprofit. People convicted of misdemeanors or felonies must wait a certain number of years before they can own any part of an I-502 store, according to a Byzantine formula that assigns a point value to different types of crimes and other variables. Having a bad tax record or a history of administrative violations can also keep you from an I-502 license.

But the first I-502 stores didn’t open until the summer of 2014, more than a year after cannabis was formally legalized. And pretty much anyone could still open a dispensary under the auspices of the 2011 collective garden legislation.

Guess what happened.

In this vacuum of legal cannabis, ostensibly “medical” marijuana dispensaries proliferated like, well, weeds. From the U District to SoDo and beyond, green crosses popped up along storefronts and sidewalks like tribbles filling the USS Enterprise. In his book Weed the People: The Future of Legal Marijuana in America, journalist Bruce Barcott estimates that during the first year of legalization in 2013, Seattle alone housed more than 300 MMJ dispensaries and delivery services, ranging from über-professional to über-sketchy. While the Seattle mayor’s office’s estimate is much lower, it similarly says that the total number of dispensaries in the city doubled after legalization at the end of 2012.

All this didn’t escape the notice of state legislators—nor did the forgone tax revenue lost to gray-market dispensaries. In 2015, the subset of unlicensed MMJ dispensaries that do pay regular business taxes did $109 million in sales, equal to about one-third of the total annual sales at I-502 stores. The state’s MMJ economy is likely bigger than that, even, since many businesses don’t pay taxes so that federal police won’t identify them. In response, the Washington legislature passed CaPPA in 2015, folding the unregulated MMJ market into I-502.

The green gold rush was so dramatic that local authorities in Seattle, Tacoma, and King County all began independently shuttering dispensaries, jumping ahead of state authorities to do so. Last summer, after the state Liquor and Cannabis Board (LCB) announced that it would require all pot shops to have I-502 licenses by July 2016, Seattle Mayor Ed Murray upped the ante by announcing his plan to close about 60 local dispensaries ahead of time. “We’re strengthening the recreational-marijuana market and creating safer, more consistent access for those who rely on medicinal products,” Murray said in a press release.

While the passage of CaPPA was the death knell of medical marijuana as it has existed in Washington since 1998, remnants of the MMJ market will remain. Small collectives are still allowed to operate if they’re at least a mile from an I-502 store, so that patients won’t have to travel too far for their medicine, and patients can get a partial tax break if they voluntarily register with the state. Plus there are the 222 dispensaries that received licenses. But just as legalization jolted the pot economy into a state of frenzied growth, regulation is culling most of the market.

It’s true that there are hundreds of I-502 stores across the state to choose from, and many of them offer some selection of medically oriented cannabis, such as strains high in CBD (which assuages body pain) and low in THC (which gets you high). But it’s also true that the process of reining in the pot market—call it the taming of the Wild Pacific Northwest—has dramatically reduced the number of MMJ sellers on the market. That creates a risk for patients, whose highly specific cannabis needs must now compete with the preferences of more numerous recreational users in a market with an arbitrarily limited supply of I-502 licenses.

Steinborn, our irascible pot advocate, opposed I-502 when it was on the ballot, but looking back he has a balanced assessment of how things shook out. “It’s a tough one,” he says. “Thousands and thousands of people have had their lives not fucked up, because marijuana’s no longer illegal in Washington … A lot of suffering and misery has been saved by this law being passed.”

On the other hand, he continues, “my bitch about it was that [legalization was] a wave rolling in from the ocean. It wasn’t going to be stopped. We didn’t have to make so many compromises to get legalization to pass.”