“There will be a ton of froth in the water during the first three months. Folks will be squeezing each other and not making many friends.”

Yes, Washington marijuana growers will have product ready for sale in the first week of July in time for the first wave of 20-30 stores receiving state licenses.

Exactly which day those first stores will open, how much you’ll be able to buy and how much it will cost the consumer is still mostly an open question, but there will be legal weed on store shelves.

But expect it to sell out fast.

“There’s just no way it’s not going to sell out,” said Attila Soos, the owner of Verdavanti, one of the largest growers licensed so far. He will have product to offer stores for that first week, he said.

“We’ll have product for retailers as long as they are licensed. We expect things to start rolling out July 1st, but it is safe to assume that not all retailers will receive their license July 1st, so you’ll likely see our products being rolled out in weekly phases across the state.”

And there’s a tough, fast-paced, free-market battle going on right now as you read this story. Soos added:

“We’re at a point where one gentleman wrote to every single producer and processor that he wanted to buy product, and he kept everyone in the contact list. The next retailer simply hit the reply-all button and said ‘I’ll match whatever you guys offer to him and on top of it I’ll add 15 percent.’

“There’s no real feasible way to meet the demand at this point.”

And, according to many conversations we’ve had with growers and hopeful retailers, prices per gram will range from $15 to $25 (with some higher spikes and brief lows, possibly at $12 a gram) during those first few days and weeks, but then level out at … about the same range.

While we’ve heard of some growers trying to lock in very high prices (we heard of one pitch to sell a pound at $6,500 to the retailer, who then has to tack on his/her costs and taxes), those are aberrations. By and large, from what we’ve heard, growers and retailers are looking long-term and don’t want to anger each other or the consumer.

“We’re pioneers in the industry,” said John Evich, a retail hopeful. “We want to be among the first to open. We want to benefit the future of the industry, because my research tells me that if we charge everyone $25 a gram, people are going to be pissed off at the industry and say that retail is a joke.”

Evich is part of retail hopeful Top Shelf Cannabis in Bellingham, owned by Thomas Beckely. He believes the store will be among the first licensed in the state.

“We want to offer a wide variety of prices and quality that’s affordable,” Evich said. “I’ve had a lot of people tell me, ‘We’re just going to keep buying from the black market or from medical.’ And that’s what we don’t want to see. I want to see this come out, and the retail be looked at, and (Initiative) 502 be looked at, as a good thing and a fair thing.”

Quick note on buying pot: All dried marijuana will be sold to consumers at one-ounce or less sizes, so “a 1/4” is … well … 7.08 grams. “An 1/8th” is 3.54 grams and so on. Some retailers will sell an 1/8th or a 1/4 for less than if you bought each gram separately. And, of course, a wide variety of edibles and other infused products will also, eventually, be available.

“Our market research shows a low- to mid-level out-the-door pricing structure of $12-15 dollars a gram, with some higher-level product going as high as $25,” said Sam Calvert, a retail hopeful in Spokane. “However, the higher price is a limited-target market, and will not support a retail going concern. Our informed (grower/processors) know our business model and are looking for sustainability in the marketplace.”

Calvert said his retail operation, Green Star Cannabis, will be among the first wave of licensees in July. We chatted with him via email.

“We do not have an opening date but an opening window of dates. We’re in negotiations with several local Producer/Processors (P&Ps) for usable marijuana with varied product availability schedules ranging from July 9th through August 15th. … Our primary concern is long-term relationships with model-efficient pricing P&Ps who understand our market place and demographic target.”

No ‘first’ store

According to Liquor Control Board spokesman Mikhail Carpenter, five retail applicants were ready for final inspection as of Wednesday. Meaning, all of their paperwork checks out and all that’s left is the walkthrough inspection to make sure their store actually has all the security and other equipment they’re supposed to have.

“I’ve had my final review and passed and now I just need to finish my (store) front, get fingerprinted, and pass my inspection, which is supposed to happen in about a week,” said Austin Lott of the Fresh Greens retail hopeful in Winthrop.

“I’ll be opening, probably, on the third of July … (if all goes well). I don’t have much info on prices — it’s all just speculation at this point. But I expect them to be higher than black market, certainly. They’ll come way down next year come November/December when the big outdoor crops come in.”

The liquor board still plans to release the first licenses in a batch in early July (no day set), Carpenter said. Thus, despite some news reports that this or that store will be the “first,” no one store will be the first licensed, though perhaps a store could be the first to open doors after getting a license.

Another retailer who expects to be opening in July in Millwood — “Sativa Sisters,” run by Cathy Smith et al — reports:

“I have only one producer who has been brave enough to throw out a number. One gram for $6.30. Not a bad price but until testing who knows. Another producer/processor is telling me between $150 and $200 per oz (to the retailer). $150 works great but $200 means the black market might win. I am tying up any production I can, but so few have anything to sell. I currently hope to have 40 pounds to open. The quality is yet to be determined. Gram bags might be in the $20 range (for customers), ounce for top shelf could be about $600 … Most will be $350+.”

What the growers are saying

It’s one thing to hear from retailers, who clearly have an interest in seeing the lowest prices they can get coming in the door, but what are the growers saying?

“There will be a ton of froth in the water during the first three months,” said Brian Stroh, grower/owner at CannaMan Farms. “Folks will be squeezing each other and not making many friends. I’ve been contacted by producers, processors and retailers, all with their own game on squeezing the market.

“I’ve done my math and will produce 1/8th bags only at a price of $4,000/lb to the retailer. At this price point both the retailer and I make roughly (retailer slightly more) the same dollar amount on the transactional cost of $75 per eighth to the customer after sales tax.”

That’s roughly $21 a gram to the consumer.

Stroh said he’ll have around 10 pounds for sale to retailers the first week of July “and we intend to sprinkle it around the state for the opener. We will be in full production swing by late July with another 40 pounds.”

Another grower said he’ll have 20 pounds of of indoor product available every two weeks starting July 28. “We will have outdoor product available in October. Depends on Mother Nature but a good guess is 750 lbs. Our price out the door is 7.50 a gram.”

That’s around $3,400 a pound to retailers.

“I have been approached with the idea of contracts at a pre-set price of $7 per gram, when the retailer plans to be at $20 per gram,” another grower told us. “I am hoping that nobody is fool enough to sign these contracts, and we all let the market speak.”

This grower said he expects prices to range from $3,000 to $4,000 per pound to the retailer with prices “leveling off” in the $18 to $22 per gram range to consumers.

But some think the prices will be higher.

“In terms of pricing for the first wave,” said Soos of Verdavanti, a grower, “I would say $25 to $35 a gram on the retail side … I definitely think it’s feasible. They might say, ‘Oh we’ll sell it for less,’ but they’re going to be in a position to sell it. Even if they were going to say $50 a gram, somebody will buy it.”

Ring in the outdoor grows

The general expectation is that once September rolls around, outdoor-grown marijuana will start to hit the market and prices will stabilize.

One outdoor grower we talked with hopes to have 600 pounds ready by Thanksgiving. This grower also wished to remain anonymous since there’s so much wheeling and dealing going on and no one wants to get locked into anything just yet.

“Unlike medical,” the outdoor grower said, “the retailer cannot package for the purchaser. Purchasers cannot buy more than a ounce. If a retailer only wants 1 gram packages (454 grams per pound) the price per pound could triple vs. providing oz. size packages. At ounce packages, the wholesale price will be $1,600 to $2,000 per lb.”

With outdoor at those prices (outdoor tends to be less expensive than indoor, just based on the production costs), buds should in a year average between $2,200 to $2,800 a pound to the retailers, who then have expenses and taxes to tack on.

So in a year or so, according to general consensus, bud to retailers should pencil out to about $15 to $20 a gram to consumers with “premier” or “connoisseur” grade cannabis hitting $25 a gram and higher. Average for medical marijuana is currently between $10 a gram and $15 for premium. Colorado’s recreational prices are running around $15 to $25 a gram.

Jake Ellison can be reached at 206-448-8334 or jakeellison@seattlepi.com. Follow Jake on Twitter at twitter.com/Jake_News. Also, swing by and *LIKE* his page on Facebook.

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