Many medical marijuana supporters in Washington were skeptical about the legalization of recreational weed when the campaign took off in 2012. It seemed odd, but medical marijuana users saw what voters didn’t. Legalization could make the medical marijuana system much worse — or even kill it.

Their worst fears may already be coming true.

Initiative 502, a 2012 voter initiative to legalize recreational marijuana, came into effect on Jan. 1. While the law was purposely written in a way that steered clear of the medical marijuana system, it placed the State Liquor Control Board in charge of creating a tightly regulated, tax-generating system for recreational marijuana.

And this past year's budget asked the board to make recommendations for medical marijuana, too. These recommendations could be disastrous for the medical marijuana industry, threatening to limit possession amounts, restrict home growing, and shut down the hundreds of dispensaries currently operating. Ultimately, these limits could force the system's more than 100,000 patients over to the heavily taxed, more expensive recreational system.

Senator Jeanne Kohl-Welles (D-Seattle) is an outspoken advocate of medical marijuana in Washington. Courtesy of Senator Jeanne Kohl-Welles (D-Seattle)

This potential disaster has led Washington State Senator Jeanne Kohl-Welles (D-Seattle), a longtime medical marijuana advocate, to prepare a bill aimed at salvaging medical marijuana and fixing many of the Liquor Control Board's recommendations for the upcoming session of the legislature, slated to begin next week.

Kohl-Welles has been a key player in any medical marijuana discussion in Washington since she was elected in 1995. After witnessing the drug’s effect on a cancer-ridden friend in the mid-'90s, the senator became an outspoken advocate for the medical marijuana community.

The Making Of The Marijuana "Wild West"

Marijuana in Washington has a complicated history, far more so than in Colorado, which also legalized recreational smoking in 2012. In 1998, Washington passed a voter initiative with a nearly 60% majority to legalize medical marijuana for patients with terminal or debilitating illnesses.

The initiative left a lot of open questions. Unlike in Colorado and California, medical marijuana in Washington was mostly unregulated. Patients were allowed to have a 60-day supply of marijuana, 15 plants, or up to 24 ounces of usable marijuana, yet the law never specified where the product would come from. No regulatory agency was placed in charge of the nascent medical marijuana industry, which led to what Senator Kohl-Welles calls “a grey market.”

Despite pushing for the 1998 medical marijuana initiative, Kohl-Welles knew the law was flawed. Since its passage, she has tried, with varying degrees of success, to rein in the medical marijuana wild west she helped create. After nearly 10 years of back and forth, Kohl-Welles got small amendments to the law passed in 2007, 2008, and 2010.

Then-Washington Governor Chris Gregoire talks to reporters about her plans to veto key parts of the medical marijuana reform bill in 2011. AP Photo/Ted S. Warren In 2011, Kohl-Welles finally got a comprehensive reform bill through the state legislature to then-Governor Christine Gregoire. The bill established a complete system for licensing and regulating the medical marijuana dispensary business. In fact, it did for medical marijuana much of what I-502 is poised to do with recreational weed.

When Gregoire received the bill, Mike Ormsby and Jenny Durkan, the U.S. attorneys in Washington, told Gregoire that if she signed the bill into law as is, they would go after her administration and any officials who followed her directive. Those U.S. attorneys worked for the federal government, which was cracking down on medical marijuana at the time.

Under competing pressure from the federal government and medical marijuana activists, Gregoire signed the bill, but not before vetoing its most important parts. The messy medical marijuana business got even messier.

“I was furious with the Governor,” Kohl-Welles told Business Insider. “It was one of the greatest disappointments of my legislative career.”

The senator attempted to immediately introduce a new law to fix the gutted law, but the legislature was exhausted of the issue. By 2012, it became apparent that marijuana reform might be more doable through another voter initiative.

Legalization As Washington's Best Shot At Reform

Public opinion about pot changed drastically over the years, in no small part due to the acceptance of medical marijuana. By 2012, 56% of Americans favored marijuana legalization and regulation. California’s Prop-19, a voter initiative for marijuana legalization, may have failed during the 2010 election, but it opened the eyes of marijuana advocates to the possibility of legalization. Recreational legalization was suddenly more plausible than significant medical marijuana reform.

Alison Holcomb, an attorney for Washington’s ACLU and the primary author of Initiative 502, concluded that given the mess that medical marijuana had become, legalization was marijuana reform’s best bet.

“I don't know if I-502 was the simplest solution, but it was definitely the most pragmatic,” Holcomb told Business Insider.

Holcomb thinks that part of the support for I-502, at least from Washington voters, may have been a result of the messy situation of medical marijuana.



Loopholes In Washington's Medical Marijuana Law

Among the few provisions left in by Gregoire’s partial veto was a clause that allowed for “collective gardens.” It stipulates that up to 10 patients may participate in a “collective garden,” in which patients can pool up to 45 plants for the purpose of producing, processing, and delivering cannabis. Dispensary owners used the clause to justify or open businesses, taking the 10 patients limit to mean 10 customers in the store at a time. It was a wonky interpretation of a gutted law, but it has since held up in court.

Many politicians, analysts, and reporters have long felt that the dispensaries' interpretation of the "collective gardens" provision was a legal stretch, if not outright deceptive. Even Kohl-Welles — who wants medical-only marijuana stores in the state — has said the clause needs to go.

UCLA public policy professor Mark Kleiman goes so far as to call the dispensaries' "collective gardens" interpretation "legal bullshit." Kleiman is the head of BOTEC, a drug policy consultancy Washington state hired to help design legalization. He has some opinions about how loosely medical marijuana was prescribed in Washington.

“It’s either a trivial issue or a cover for complete legalization … Anybody who behaves with oxycodone the way physicians do with cannabis would lose his or her license if they were lucky,” Kleiman told Business Insider.

Kleiman's assessment may be harsh, but it has some merit. In 2010, Washington amended its medical pot law to ensure doctors couldn't be punished for recommending medical marijuana. Since then, the number of dispensaries in Washington exploded. The lid blew off the industry and the profit margins for dispensaries began to soar. In Seattle alone, there are currently more than more than 150 dispensaries.

Green Ambrosia used to be the largest dispensary in Seattle, before closing several months ago. Co-founder Dante Jones, who has since moved to get in the legal producer/processor system, says that Washington won't accept an unregulated industry anymore. Harrison Jacobs/Business Insider The state has made policing these dispensaries a low priority; both dispensaries we talked to claimed to never have any police issues. Basically, anybody can go in and out of these stores as long as he has a medical marijuana card, which is currently very easy to obtain.

Rick Garza, the agency director of the Liquor Control Board, claims that up to 90% of medical authorizations are fraudulent. In 2011, Seattle Times reporter Jonathan Martin demonstrated the ease of being authorized when, for a story, he obtained a card at Hempfest for $200, without providing medical records.

Medical marijuana's lack of oversight was a prime reason so many voters with no stake in the marijuana debate voted to legalize recreational weed. Under I-502, the Washington Liquor Control Board authorizes licenses for businesses, enforces regulations and collects 25% excise taxes at three separate points: when the producer sells to the processor, when the processor sells to the retailer, and when the retailer sells to the customer.

Tack on state sales taxes and you are looking at nearly a 40% tax rate for recreational marijuana. A regulated, heavily taxed system had voters, politicians, and even potential marijuana investors with dollar signs in their eyes. Medical marijuana, on the other hand, is subject to only the state's regular sales tax rate, which is just 6.5%.

It's now clear that it doesn't make sense to maintain Washington's loosely medical marijuana business alongside the new, highly taxed recreational system. If people can obtain legal high-quality marijuana at a far cheaper price, users will likely attempt to go to the medical marijuana stores. That could be a lot of lost revenue for Washington state and provide ammunition for legalization’s opponents to call the experiment a bust.

The Ones Who Stand To Lose

Harlequin (pictured) is a highly medicinal marijuana strain high in cannabidol. Strains like this are rare, hard to grow, and tend to have a low yield, making them not ideal for the commercial market. Harrison Jacobs/Business Insider What’s gotten lost in the battle between earnest efforts at reform and political gamesmanship is not those who abuse the system, but the patients who need the system to be healthier.

Former Marine Ryan Day never thought about using marijuana, according to a story in The Seattle Times. Then he found out that his son Haiden had a rare form of epilepsy known as Dravet's Syndrome, which makes him have more than 100 seizures a day. They are so bad that, at 5 years old, Haiden's cognitive development remains stunted at 2. Pharmaceuticals either don’t help or, if they do, come with disturbing side effects.

When Day heard that medical marijuana might be an effective alternative to pharmaceuticals, he was skeptical. With the condition so bad, Day decided to give it a try, feeding his son marijuana-infused applesauce with pot he grows himself. According to Bob Young at The Seattle Times, the treatment has been miraculous. Provided that Haiden uses cannabis daily, his seizures are down to only a few a day.

Haiden requires a marijuana strain high in cannabidol (a chemical with analgesic, anti-inflammatory, and anti-anxiety properties) and low in THC (the psychoactive ingredient in pot). The strain is expensive, rare, and difficult to cultivate. If Day purchased it in a dispensary, it would end up costing him about $15,000 a year to treat his son. That number could rise exponentially in the coming year.

Stephan Oxman, a patient with multiple sclerosis, was blunt about the problem with only having recreational stores. He thinks, with a profit-driven market, retailers will go after mass-producing plants that have high yields and appeal to recreational users.

"What quality will they put into their stores? Great, you got a place that can grow 10,000 plants, but if the 10,000 plants are garbage you are not helping the medical community," Oxman told Business Insider. "There are patients in far worse shape than I am."

The Liquor Control Board's End-Game

In October, The Liquor Control Board and other agencies released initial recommendations about medical marijuana. Several of these recommendations infuriated the medical marijuana community. Most noxious among the recommendations were a reevaluation of what ailments could be treated, the folding in of medical marijuana into the I-502 system, and the elimination of home-grows and “collective gardens." The elimination of collective gardens in particular could eliminate many dispensaries, which rely on that definition to operate.



The only real benefit patients would see was the ability to purchase cannabis without a sales tax, which admittedly is a plus. However, patients would still have to pay the new, larger 25% excise taxes.

Oxman is a frequent customer at Life's RX, a dispensary in Renton, WA. If the Board's recommendations are accepted, Life's RX will have to close. Harrison Jacobs/Business Insider Those changes could make marijuana not only prohibitively expensive for patients, especially those like Haiden, but also difficult to obtain. Many patients use nearly an ounce a day; the recommendations stipulated that patients may carry a max of three ounces at any one time. For patients like Oxman, that’s problematic. Some days he can barely get out of bed, let alone make the long trip to a dispensary. The ability to obtain large quantities at one time ensures that he’s never without medicine.

In response to the recommendations, medical marijuana advocates went on the offensive. A single hearing was held in the state capital in November so that citizens’ voices could be heard. Advocates came in force to criticize the regulations. According to Kohl-Welles, the hearing got so rowdy, it never approached being helpful.

In response to the criticism, the Liquor Control Board revised the recommendations in December. The final recommendations, which the Legislature will use to reform the system, fix some but not all of the issues that drew ire. The state will still redefine and restrict the medical conditions that can get you a cannabis prescription — a mistake according to Kleiman, who says it is akin to “the state playing doctor.” In addition, “collective gardens” will still be eliminated, possession remains at three ounces, and the tax structure is unchanged. The only real concession to the criticism is allowing patients to home-grow six plants which could, to be fair, help former marine Ryan Day grow medical pot for his son. The state legislature has the option of adopting these recommendations or, potentially, disregarding them.

The Plan To Save The Industry

The revisions were a step in the right direction for medical marijuana, but they still do far too little to help patients, according to Kohl-Welles. When the legislature opens its session next week, the senator will introduce a medical marijuana bill that she feels “aligns the industry with I-502,” while fixing some of the problems in the recommendations.

Kohl-Welles’ bill is still undergoing final adjustments, but the key difference is that patients with authorization cards would be able to purchase cannabis without the retailer excise and sales taxes. It attempts to increase possession amounts and the number of plants allotted to patients. Kohl-Welles would also like to find a way to allow additional I-502 stores that are strictly medical.

Under I-502, the total number of store licenses is capped somewhere around 300, with 21 allotted for Seattle. With more than 150 dispensaries currently in Seattle alone, Kohl-Welles believes that the number established by the state will be insufficient to fill demand, especially among patients like Haiden who need rare strains that are difficult to cultivate and not particularly commercial.

With a limited number of stores and a strong recreational customer base, I-502 stores might be incentivized to only carry commercial strains that appeal to those looking to get high.

Whether Kohl-Welles bill will pass is anyone’s guess. The senator places the bill’s chances of success at “fair.” She admits that, when the session opens, there will be a “wide array” of bills proposed, some aiming to repeal medical marijuana completely. Until the session opens, no one knows which way the legislature will go.

And what happens if the Liquor Control Board’s recommendations are adopted, effectively eliminating the hundreds of dispensaries currently in business? Kohl-Welles thinks that it will push both medical and recreational users to the black market.

“People will go to whatever is out there so they can get marijuana at a lower cost,” says Kohl-Welles.