Washington: Legal Pot Shortage Turns Into Legal Pot Glut

WorriedGuy

By Steve Elliott
Hemp News

Washington has a weed headache. Implementation of the state's weak, badly written marijuana legalization measure, Initiative 502, continues to be plagued with problems. When legal recreational cannabis shops opened last summer, there was a shortage of weed, and high prices. Now, six months later, there's a glut of weed, as growers are left sitting on hundreds of pounds of product -- but prices are still absurdly high at the 502 stores.

A big autumn harvest of outdoor cannabis from the eastern part of the state flooded the market, reports the Associated Press. That would normally mean plummeting prices at pot shops, but even as growers are worried about going belly up, pot shops continue to charge $23 to $25 a gram -- more than twice the going price either on the street or in medical marijuana dispensaries.

"It's an economic nightmare," said Andrew Seitz, general manager at Dutch Brothers Farms in Seattle.

Licensed growers had harvested 31,000 pounds of marijuana as of Thursday, according to state data, but Washington's few licensed pot shops had sold less than 20 percent of that. Many marijuana users in Washington, faced with ridiculously out-of-synch prices in state marijuana stores, have opted to stick with the less expensive pot they buy on the black market, or at medical marijuana dispensaries.

"Every grower I know has got surplus inventory and they're concerned about it," said Scott Masengill, who has sold only half of the 280 pounds he harvested from his cannabis farm in central Washington. "I don't know anybody getting rich."

Washington has about 270 licensed pot growers, but there are only 85 operational pot shops to which they can sell. A glacially slow, nightmarishly difficult licensing process is at least partly to blame. Other culprits are applicants for retail pot shops who won a license then failed to open, and pot bans in many cities and counties.

Randy Simmons, the Liquor Control Board's marijuana manager, claimed that about 100 more pot shops will open in the coming months, providing additional outlets for the weed glut. Simmons suggested that the state will likely always have a glut of cannabis every autumn when the outdoor harvest comes in.

That brings us back to the still-too-expensive weed at the state stores. Who wants to pay $23 to $25 a gram when you can buy it all day long for $8 to $10 at medical marijuana dispensaries and farmers' markets? Even black market weed is cheaper at $10 to $15 a gram.

Because of the high taxes on legal Washington pot, Seitz said 502 stores can never compete with the black market. He said it was a mistake for the state to license so much marijuana production while lagging in the licensing of retail stores that sell the stuff -- and other growers agree.

"If it's a natural bump from the outdoor harvest, that's one thing," said Jeremy Moberg, as he sat on 1,500 pounds of unsold weed at his CannaSol Farms in north-central Washington. "If it's institutionally creating oversupply ... that's a problem."

Many retailers are marking up the wholesale price three-fold or more. "I got retailers beating me down to sell for black market prices," said Fitz Couhig, who owns Pioneer Production and Processing in Arlington.

But even at those prices, two of the biggest pot stores in Seattle, Uncle Ike's and Cannabis City, claim that because of their high taxes -- along with the low demand for their expensive-ass weed -- they're not making any money either, despite each having sales exceeding $600,000 per month.