Originally published on Forbes.com Dec 20th, 2012
A whole new field of legal business is opening up in the State of Washington. It will be heavily regulated and taxed. The Liquor Control Board will be in charge and they have started rolling out the guidance. They have provided the answers to some frequently asked questions. Personally, I don’t think that they framed the questions all that well so I am going to give you the highlights with questions that are worded a little differently than they worded them, but I will give you their answers in italics.
Hoorah It’s Legal – Totally Legal Man – Don’t Have to Worry About the Feds ??
I-502 does not preempt federal law. Presently Washington State residents involved in marijuana production /retailing could still be subject to prosecution if the federal government chooses to do so.
Confiscation of assets is one of the enforcement tactics available to federal authorities.
What a bummer, man. Here is something else you may have to worry about if you go into the business. Since it is illegal under federal law, most of your expenses may not be deductible.
Never Mind Business I Just Want To Grow My Own ?
Home grown marijuana for recreational use, as well as sale, is illegal. Recreational use marijuana must be purchased from a state-licensed retailer.
I’m Thinking Of Having A Seed To Joint Totally Integrated Operation – You Have a Problem With That ?
I-502 creates three separate tiers: marijuana producer, marijuana processor, and marijuana retailer. Currently the WSLCB is working to define what the qualifications and requirements for each license will be. The best way to keep up to date on the process is to register for email notifications on the WSLCB website www.liq.wa.gov
Having all three licenses is not permitted under I-502. A licensee may hold both a producer and a processor license simultaneously. The initiative does not allow a producer to also be a retailer or a processor to also be a retailer.
I’m Not Much Of A Businessman And I Am Not A Pothead – Why Should I Care ?
The task of regulating an entirely new system is a big one and the agency will have to expand to meet those challenges. We are estimating about 35 hires, mostly in licensing and enforcement.
If You Hire Me Are You Cool About Me Sampling On The Job ?
The WSLB does not drug test administrative staff at the time of hiring. However, we do test potential enforcement staff for drugs, including marijuana. The WSLCB is a drug-free workplace. All employees are expected to not be impaired at work. Should a reasonable suspicion arise that an employee is impaired, that person may be tested
What Is It Going To Cost ?
OFM’s fiscal impact statement places a price estimate of a $3 per gram producer price, a $6 per gram processor price and a pre-tax $12 per gram average retail purchase price.
The initiative applies a 25% excise tax on each level of the system: producer to a processor, processor to a retailer, and retailer to the customer. In addition, B&O taxes on the production and local retail sales taxes apply.
It is not clear to me how that is going to work out. Simplistically it could mean $5.25 in excise tax, but maybe they mean that the tax will compound.
What Will A Pot Store Look Like ?
You cannot set up a store within 1000 feet of any elementary or secondary school, playground, recreation center or facility, child care center, public park, public transit center, library, or game arcade that allows minors to enter. Local authorities will also be notified and have an opportunity to object.
The initiative is clear that retail outlets may only sell marijuana, marijuana infused products and marijuana paraphernalia.
On-premise consumption is not allowed under Initiative 502.
Retailers are limited to one 1,600 square inch sign bearing their business/trade name. They cannot put products on display to the general public such as through window fronts. No licensee can advertise marijuana/infused product in any form or through any medium whatsoever within 1,000 ft. of school grounds, playgrounds, child care, public parks, libraries, or game arcades that allows minors to enter. Also, you can’t advertise on public transit vehicles/shelters or on any publically owned or operated property.
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