John Davis On The Birth Pangs Of Washington's Cannabis Industry

The Washington State Liquor Control Board holds a public hearing tonight at Seattle’s City Hall on how to implement the state’s new marijuana law. The first one drew a standing room only crowd eager to weigh in on how Washington state should set up its system to license marijuana growers, processors and sellers.

John Davis is the owner and CEO of Northwest Patient Resource Center and chairman of the board of directors of Seattle Hempfest. He’s also chair of the Coalition for Cannabis Standards and Ethics, the state’s largest state cannabis industry association. And he’s a board member of the National Cannabis Industry Association. He’s been working on drug policy in Washington state for more than 20 years.

Interview edited for clarity.

What do you think of Liquor Control Board hearings?

They're great. They're engaging the community and giving everyone a fair shot at getting out these licenses.They're also getting out information - not just for people who are interested in getting licenses, but for people who are just interested in what's going on. And it is interesting. This has never happened before.

Do you think anything is missing from these hearings?

There are still a lot of unanswered questions out there. First and foremost, where is the supply of legalized marijuana going to come from? This has been a clandestine industry for so many years. And a few of us have been working to bring out the legitimacy of the market, but we haven't exactly been helped along the way. The upshot of that is, most producers out there aren't really operating in any licensable way. So as a result, the supply of cannabis is, from a legal and permitted standpoint, is very very rare. So there's a lot of infrastructure that needs to be put in place if this is going to be a successful program. As retail outlets spring up, they are going to need something to sell. And that's going to be really challenging, frankly.

At this point, Washington state has legal outlets for medical marijuana. Will people who are currently growing legal medical marijuana be able to help set up that infrastructure for legal marijuana?

Yes. And luckily there are some of us who have expertise, but that expertise is still rare in our state. We've been working to get people into properly zoned and even permitted facilities. But permitting a cannabis grow in Washington state has not exactly been easy. So the number of facilities out there that can be considered legally permitted is less than a dozen at this point.

You've previously said that many grow operations are in houses. And you think they need to be in commercial areas.

Exactly. From my conversations with the Liquor Control Board, I don't believe a license for a producer will be hard to get. The Liquor Control Board realizes there needs to be a supply. But getting the license is only step one. It's an easy step. Getting a permit is step two. And there are very few locales in Washington state where you can do the simple change-of-use to get a building permit to grow cannabis. So even if you have your license, will you be able to get a permit for a grow operation in residence to produce a legal supply of cannabis? Those home-grow operations are not zoned properly. They're improperly placed. They're likely to be problematic because they're in communities where people have their lives, their houses, their kids. Being a cannabis producer is still a semi-black market thing, and cannabis can be as good as cash. That can open up security issues. Will these places get robbed? So having these operations in residential areas is a really bad idea. And most people out there are not operating in a legal fashion.

The Feds and other states have expressed concerns about legal Washington state marijuana crossing state borders. You've been working on these issues a long time. What do you think about that?

There was a meeting with Attorney General Holder, Governor Inslee and Washington Attorney General Ferguson, and the issue of diversion came up. And that’s appropriate for the federal government to worry about. But is diversion going to happen? I don’t think that’s our big problem here. Licensed producers are going to have to show how much they grew and where the product went.

What is the link between what the Liquor Control Board has done with liquor and what it could do to regulate the sale of marijuana?

The Liquor Control Board is clearly good at implementing rules and enforcing those rules. That’s their strong suit. But what they don’t know is cannabis and the cannabis industry. And it’s an industry that has to be born fairly quickly.

Has the Liquor Control Board talked to you, or someone like you -- an expert in the business of marijuana?>

Yes. They call me. We’ve done several presentations for them to show them how all this works. The Liquor Control Board is interested in processing how that takes place, what’s used, how does it stay safe.

What about environmental issues? Better control over what gets sprayed on plants and what ends up in sewer systems?

That’s a concern. The real bugaboo we’re seeing is the people who are operating now aren’t doing so in an environmentally safe manner. They’re not doing simple things like following energy code. So as we see these grow facilities spring up, we’re going to have environmental concerns. And that’s appropriate. But those places have to be built. They don’t really exist right now.

The first step is hammering out the permitting for grow facilities. And there are obstacles - like banks. Banks won’t work with people who run grow facilities. But these places have to run legally, as businesses, with bank accounts to pay their taxes. Also, most localities don’t have a use that supports indoor cultivation of anything. Seattle’s been more progressive and created use and zoning regulations where you can come in and say, I’m going to build a facility to grow cannabis, and here’s how I’m going to do it. So then building inspectors can say, OK, here’s what we need you to do so you’re compliant with energy code and zoning. It all goes back to permitting.

Learn more about the Washington State Liquor Control Board’s implementation of I-502.

Listen to audio from this interview.