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Will rules create a marijuana monopoly?

Post by Jordan Schrader / The News Tribune on June 19, 2013 at 7:53 pm |
June 19, 2013 7:56 pm

One of the regulators guiding the development of a legal marijuana industry in Washington voiced concerns today that the industry might end up dominated by a wealthy few.

Chris Marr
Chris Marr

Liquor Control Board member Chris Marr noted the rules being drawn up for the board’s approval don’t limit the number of licenses that any one business can have. What would keep one company from snapping up a slew of licenses and setting up a monopoly, he asked?

“How do you prevent a Microsoft millionaire from getting this idea and deciding that — playing by the rules — they’re going to dominate the market?” Marr said at a board meeting.

While Marr said he wasn’t thinking of anyone in particular, a former Microsoft manager, Jamen Shively, has reportedly announced plans to build dozens of stores in Washington and Colorado where voters legalized marijuana last November.

Marr said a cap of, say, three licenses per license holder might be appropriate.

But board chairwoman Sharon Foster said she thought the market would likely sort itself out without size limitations.

And one state lawmaker sees the opposite problem in the rules: too much allowance for small companies. Rep. Chris Hurst wants the board to require businesses to be well-capitalized and to post a bond to apply for a license.

Otherwise, he sees an invitation for former sellers in the black market to enter the new system.

“I think that the more you invest in it, the less likely you are to break the law,” said Hurst, an Enumclaw Democrat who leads the House committee overseeing marijuana.

The board’s proposed requirements already encourage large operations. The draft rules call for tight security including surveillance cameras and alarms. Businesses must have liability insurance. And under the initiative, the government will take a 25 percent cut at each level of sale.

“There are going to be handful of large players that are probably going to dominate the marketplace,” Hurst said. “I don’t think anyone can get into this business for under a quarter million dollars.”

There is no ceiling on the size of business operations or marijuana volume. But there is no minimum size, either, as there is for liquor stores.

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