As a veteran long-form journalist and the deputy editor of Leafly, a marijuana-focused news organization, Bruce Barcott closely tracks the states and municipalities legalizing cannabis and the various issues that come along with it. Barcott will be the guest speaker at an event in Grand Rapids on Friday, April 20 hosted by marijuana consulting firm Canna Communications LLC. Prior to his talk, Barcott spoke with MiBiz about several of the industry trends he’s watching, as well as what states should be doing when it comes to regulating recreational marijuana, an initiative that’s likely to appear on Michigan’s November ballot.
As states increasingly deal with legalizing and regulating recreational marijuana, what should they avoid?
When (Washington state) passed adult-use legalization back in November of 2012, we wanted to do a couple of things: One of them was to make sure that criminal money, or cartels, stayed out of the business. We wanted to do that, and we wanted to make it fair for everybody in terms of who had access to the licenses.
How did Washington accomplish that?
We set up a lottery system for our licenses — our grow licenses, our processing licenses, and our retail licenses. Essentially, if you applied and you could jump over a certain bar in terms of your bonafides, your name was thrown into the hopper. We drew applications at random for licenses.
How did that work out?
The problem there was that it had the ring of fairness to it, but it ended up giving licenses to people who had no business getting a license. In other words, they had either zero understanding or experience with cannabis, or no experience in business at all — no understanding that opening up a retail store required a lot of capital. They had no access to capital. One of the reasons they had no access to capital, or very little access to capital, was that we set up very strict rules around who could invest in these businesses.
Have other states avoided those issues?
The states that legalized after Washington looked at what we did, and realized pretty quickly, ‘OK, look, we have to have some sort of merit system, some sort of scoring system.’ For the best of the states that have done this — as California and others have done — they essentially rewarded the good players in the space.
Michigan is finishing its licensing of businesses in the medical marijuana space. Will having that licensing completed be helpful to the state should voters choose to legalize recreational marijuana later this year?
That’s a big advantage. That’s where Washington was at a disadvantage. We had no records of which dispensaries were licensed and playing by the rules. Having those dispensaries (and other marijuana businesses) licensed is a huge leg up. It’s critically important.
It seems that although many voters have welcomed legalized marijuana, many still harbor concerns about allowing dispensaries and marijuana retailers in their communities.
We’ve seen that play out in just about every state that’s passed adult-use legalization. This challenge with a statewide embrace of legalization is there’s sort of a NIMBYism when it comes to your own county, your own city, your own neighborhood. I live on an island of 25,000 people here (in Washington), right across the water from Seattle. We voted in favor of legalization by something like 70 percent, one of the highest totals in the state. When it came time to zone and allow a single, licensed retail store on the island, the whole island was sort of up in arms over where it would be, whether it was appropriate for the island.
The Grand Rapids Area Chamber of Commerce recently came out in opposition to a Michigan ballot initiative to legalize recreational marijuana, citing concerns related to workforce development. How are you seeing establishment business groups around the country dealing with the legalization trend?
I understand the fear, because I felt some of the same fear myself. I live here in western Washington state. I go to work in Seattle. One of my fears was that there would be a lot more stoned people around. When I look out in the streets all time, I don’t think that has really happened. I mean this is a very competitive, high-tech city. Since (legalization took effect), that boom has only accelerated. You see the same thing in Denver, which is a city that’s one of the fastest growing cities in the nation.
Do you see a direct correlation between legalization and the growth of cities like Denver and Seattle?
I don’t attribute that entirely to legalization, but it does send a signal about the progressive values of a city, the tolerance, the acceptance. Those cities tend to become more of a magnet for young, ambitious people in their 20s and 30s who are much more accepting of cannabis consumption.
You’ve mentioned that states are grappling with issues of fairness in granting licenses and that entrepreneurs have struggled to raise capital for marijuana businesses. Is there still a fair amount of racial inequity in the sector as legalization becomes more prevalent?
Absolutely, that’s true. The people who bore the greatest burden during the war on drugs are not reaping the greatest benefit. That’s been a problem in the legal cannabis industry kind of from day one. The states that are now coming online are doing progressively better jobs at addressing that. There was just an AP story today where the Maryland legislature added more medical marijuana licenses to its system specifically to address the disparities in diversity.