Alison Holcomb on the City of Seattle’s proposal to regulate City Medical Marijuana Access Points

Active_Pending_Medical Seattle Map 07162014
Active_Pending_Medical Seattle Map 07162014
Map by Steve Hyde. The map is from July and is not up to date
[The following email is reprinted with permission from the author, Alison Holcomb. She is responding to an invitation from the Mayor’s office to a medical marijuana stakeholder meeting on December 2 about the City of Seattle’s proposal for regulating access points in the City — ed]

Dear [City of Seattle Mayor’s Office],

Thank you for the invitation to participate in this meeting.  Unfortunately, I will be in New York next Tuesday.

I am very concerned about the Mayor’s proposal to create a special, Seattle-specific ordinance purporting to regulate medical marijuana businesses.

The Washington State Court of Appeals recently determined that medical marijuana businesses are not legal.  Cannabis Action Coalition v. City of Kent.  The state Supreme Court accepted review of the decision last month.  At a minimum, it is premature to contemplate licensing businesses deemed unlawful under state law.  Absent action by the legislature in the upcoming session (which action I believe will be taken), it is the Supreme Court, not Seattle, that should first “[c]larify laws regarding medical marijuana for all involved including patients, dispensaries, processors, and law enforcement.”

Moreover, it is redundant to expend city time and resources considering regulations for collective gardens engaged in commercial activity (producers), dispensaries (retailers), and edible and concentrate product manufacturers (processors).  Regulations for these entities already exist under state law.  If those regulations are thought inadequate or inappropriate, amendment should be sought at the state level to avoid the possibility of litigation over conflicting state and local laws.

Thank you again for the invitation.  I’m sorry I won’t be able to participate in the discussion.  Hopefully, you’ll find these remarks somewhat helpful.

 

Best regards,

Alison

 

Alison Holcomb

National Director, ACLU Campaign to End Mass Incarceration

Emerging Trends in I-502 Sales – The first 4 months

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by Dr. Jim MacRae, CASP Research Associate & Dr. Dominic Corva, Executive Director

With the first four months of the I-502 legal cannabis market now behind us, this article presents a summary of the daily sales data provided by the LCB that reveals patterns and trends becoming apparent in those data.  We then provide preliminary estimates regarding what sales levels might be over the next 20 months of Washington State’s first Legal Cannabis Biennium (ironically – LCB), and the resulting excise tax revenue to the State.

We begin by making a chart of daily I 502 sales available from the Nov. 18 WSLCB update. This allows us a “jagged” look at the four-month trend, and we are able to identify intra-week patterns and daily variation in the data. We focus next on daily variation, which allows us to see common weekly patterns in the revenue stream. This level of detail reveals recurring tendencies in weekly cycles and date-specific outliers associated with retail spikes and dips. Next, we filter these intra-week spikes out of the data in order to analyze weekly changes and trends over time.  This allows us to make some preliminary projections about the development of Washington’s legal cannabis revenues for businesses and the state. It is important to note that as we refine our methods and take into account seasonal variation, these projections will change. However, the following charts allow us a starting point for talking about the evolution of markets and the effectiveness of I 502 as a State revenue policy.

Daily Sales Observation and Analysis

Chart 1 details daily overall levels of I-502 sales (from Producers, Processors & Retailers) spanning the first  19 weeks  of the WA recreational cannabis market, as reported by the LCB.  These data have been customized to include internal LCB adjustments for sales reported late by I-502 businesses.

Total Daily 502 Sales

Chart 1

While this chart displays an overall trend upward, its dominant feature is one of regular, high – frequency spiking “noise”. Three of the four days  in which sales exceeded $750,000 occurred in the first half of November, or the last three weeks.  The other spike was during Hempfest/CannaCon in mid-August, and we can predict with some confidence that this will be an annual spike.

The cyclical noise dominating this trend appears to be driven primarily by the “day-of-week” sales pattern detailed in Chart 2 Sales peak through the weekend before dropping off during the weekday.  This suggests that I-502 consumers are indeed consuming “recreationally” in a pattern consistent with the work week, on the one hand, and the presence of tourists closer to the weekend on the other. It would be interesting to compare this weekly variation with alcohol sales, or revenue from other “recreational” consumables.

Intraweek

Chart 2

This weekend-preparatory pattern of I-502 Sales led to our decision to display and analyze the daily overall Sales data as a 7-day (trailing) moving average to better understand this market’s week-to-week growth pattern, smoothed out from its jagged daily course. The trend of this moving-average sales metric, along with a few highlighted annotations, follows in Chart 3.

 

 movingaverage

Chart 3

Note: It is expected that the last point or two will always be artificially low because of delays in reporting to the LCB.  We think that it’s better-than-even odds that we are seeing the beginning of a trend break upwards.  We’ll know in the next few weeks.

With the intra-week noise removed, the relatively consistent growth in sales over the past 3 months is apparent, as is the tendency for small spikes in sales to occur around the beginning of each calendar month, followed by a sharp (and brief) decline.  The decline seen following the monthly peaks at the beginning of August, September, and October did not occur in November.  It is likely that these peaks correspond to a month-end (or beginning) pay period, which is common to people paid weekly, semi-monthly, and monthly — as well as many people receiving Federal benefits.

The lack of a sharp decline immediately following the initial peak seen November 1 is consistent with a bolus of product entering the pipeline, as expected given the outdoor harvest that occurred last month. In this scenario, increased revenues from production and processing make up for retail sales that usually drive total revenues (since prices are highest at the retail point, with near-zero inventory).

Given the presence of a reasonably consistent monthly cycle revealed after filtering out the intra-week spikes, we felt that it would be useful to look at average daily sales per month and the growth seen in this number from month-to-month.  Chart 4 summarizes this information, and allows us to focus directly on how the growth in this market is changing from month-to-month.

 

averagedaily

 Chart 4

This chart reveals a relatively consistent pattern over the past three months, with month-on-month percentage growth averaging in the low 30s.  We are using “average daily sales” as the metric and November is only three weeks in, so it will be interesting to see if the autumn harvest pushes this month’s daily average sales upwards over the next week.

We now explore this growth trend using a simple linear forecast that largely ignores the recent upward inflection, and presents preliminary (admittedly weak) estimates of annual sales and excise tax levels over the next 20 months.  We also will compare these with tax estimates released this week by the Washington State Economic & Revenue Forecast Council.

The Linear Trend

The simple “best-fit” linear trend is displayed on Chart 3 as a thin grey ascending line.  The formula describing this best-fitting straight-line prediction of sales is:

Sales = $92,517 * ($3,077 * day)

This basically says that on day “zero”, Sales started at $92,517 (the intercept) and $3,077 additional dollars are added on each subsequent day (the slope of the line).

This line has an R-squared of .83, meaning that it’s not a bad fit for the smoothed moving average data. If this linear growth were to continue through July 7, 2015 (defining the first full “year” of the I-502 market), we would see sales of $240 million of I-502 sales in this first full year (generating $60 million in excise tax revenue).  $65 million of these sales, and $16 million of excise tax are expected in calendar year 2014.

Going forward, and as a very conservative assumption, we opted to run the terminal daily sales level of this forecast (just over $1,200,000 of projected sales on July 7, 2015) and assume that this level of sales “flat-lines” as a constant for each of the next 365 days.  This produces, for the second half of Washington’s first cannabis biennium, $444 million in sales and $111 million in excise tax revenue.

 

2yeartrend

Chart 5

Estimates published this week by the Washington State Economic & Forecasting Council place the total taxes to be collected relating to I-502 at $43 million in the period ending June, 2015.  This estimate includes excise tax revenue, sales tax revenue, and B&O tax revenue.  In contrast, our simple estimate above suggests that $60 million in excise tax revenue alone will be collected during this time period.  This discrepancy may well be the result of the simple linear forecast that we used.  Such a model does not take into account annual seasonality in any way, particularly as it is based on such a limited set of actual data (only 4 months’ worth).

Extending this flat-line out an additional year would suggest a total excise tax revenue of $222 million in the biennium ending June, 2017.  This, again, seems higher than the official estimate released this week that suggest a total tax revenue during the 2015-2017 biennium of $237 million (with excise, sales, and B&O taxes included).  We eagerly await additional data that will allow us more confidence in our estimates.

Implications: What we see, and what we don’t see

Our analysis provides evidence of discernible patterns developing within the evolution of the Washington State Legal Cannabis market, and allows us to demonstrate that even by conservative metrics, business and tax revenues from I-502 show no signs of faltering in the coming year.

There is no indication in this particular analysis that the initial surge of growth seen over the first 4 months of our legal cannabis market is going to slow down any time soon. However, we have yet to introduce our first evolutionary market challenge: what is known in cannabis black markets as the “dry season,” when outdoor cannabis agriculture goes dormant for the winter.  In a forthcoming post, we will look into how we think this will play out in our much more limited legal production market. For now, however, we are sure that at least a third of approved Tier 3s just had their last harvest till July 2015. How that affects the market depends on how much those businesses decide to keep as inventory and dole out over time, to get the best wholesale prices, and how many of those businesses simply pushed all of their product into the system.

We also note, with caveats, that fewer than 25% of the allocated retail stores are licensed let alone open for business, and fewer than 15% of production and/or processing licenses have been granted. This would seem to suggest that this level of growth will continue for at least the next year or two, as those approval rates fill in. However, we understand that many of the pending applications for production and processing are not viable, and that we are probably much further along the production possibility curve than these numbers suggest.

 

 

 

 

[VIDEO] Filmmaker Mikal Jakubal discusses his film ONE GOOD YEAR with Seattle audience at CASP fundraiser

Thanks to everyone for joining CASP at New Freeway Hall last night – especially filmmaker Mikal Jakubal who shared with us the story of family farming Humboldt style. ONE GOOD YEAR is a film about people who plant marijuana and grow a community. We have prepared a video of the Q&A with Mikal held after the screening.

If you would like to make a contribution to CASP – please use the donate button in the column menu to the left. Thank you.

See you in Southern Oregon tomorrow!

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by Dominic Corva, Executive Director

Special thanks to Steve Hyde, Joy Beckerman, Naz Victoria, Rachel Kurtz, Don Wirtschafter, Michelle Sexton, New Freedom Hall, and of course documentary filmmaker Mikal Jakubal for putting together our screening of One Good Year last night!  Next up: Dr. Corva goes to Southern Oregon to meet the Oregon SunGrown Grower’s Guild, organized by the fabulous Kaitrin Arnold!

 

 

 

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Update on Spokane County Organizing

WANORML

by Crystal Oliver, Washington NORML

After a Spokane County Planning Commission Hearing held last Thursday the county is now considering more restrictive zoning on Marijuana producers as well as prohibiting outdoor production.

Public comment is being accepted for the next 3 days at jpederson@spokanecounty.org
in the subject line please write “comment for the record on amendment 14-ZTA-03″.

Ask that this amendment be adopted as it is currently written and explain why you support marijuana businesses and farms being allowed to open and operate with minimal restrictions in Spokane County.

Please share and take action if you’re in Spokane county and support legal marijuana!

County Voting on Advisory Vote #8

MacRae1

Map Source: http://results.vote.wa.gov/results/current/Advisory-Votes-Advisory-Vote-No-8-Senate-Bill-6505-Concerns-marijuana-excise-tax_ByCounty.html

 

By Dr. Jim MacRae, CASP Research Associate

Counties that chose, on Advisory Vote #8, the option to MAINTAIN the restrictions imposed by SB-6505 on common benefits and tax exemptions available to the remainder of Washington’s agricultural businesses tend to cluster in the Northwest portion of the State and are joined by Clark and Whitman Counties.

The negative correlation apparent in the following graph demonstrates that Counties voting for the legalization of recreational cannabis in 2012 have now expressed a preference to maintain the exclusion of common agricultural benefits and tax exemptions delineated in SB-6505.

MacRae3

MAINTAINING SB-6505 increases the production costs (and, in many cases, processor costs) of recreational cannabis. Given this, one might have reasonably expected to see less desire to maintain SB-6505 in areas that are on record as supporting the legalization of recreational cannabis. This is clearly not the case.

 

Perhaps this reflects enduring support for one of the original selling points behind I-502: the supply of new tax revenues to our State. Those favoring SB-6505 as one that eliminates tax exemptions to I-502 businesses may not wish to see the promised tax revenues they voted for in 2012 be compromised.

Conversely, those wishing to repeal SB-6505 as something that dramatically increases the cost of production of recreational cannabis (in a manner further compounded by the the multiple levels of subsequent excise tax) may well have realized that maintaining SB-6505 will increase both the cost of recreational cannabis to the consumer, and the difficulty of running a profitable I-502 business.

Cultural Geography of WA State Cannabis Consumption (based on BOTEC study)

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Map by Steve Hyde

Research by Dr. Jim MacRae

by Dominic Corva

This map, created from data produced by BOTEC for the Washington State Liquor Control Board, shows how the WSLCB understood the cultural geography of cannabis consumption by county level in Washington State as they embarked upon their rule-making process.  This information was used to calculate canopy limits and allocate retail stores to jurisdictions a year ago.

The purpose of creating this map is two fold: first, to help the public and policymakers understand how cultural geography shapes bureaucratic rulemaking; and second, to help the public and policy makers understand better how cannabis market consumption (not just legal consumption) is unevenly distributed throughout the state.

This “one-map story” is the first in an ongoing series aimed at helping people understand the geography of cannabis policy landscapes, one digestible bit at a time.  More complex analyses depend upon understanding how all the stories fit together, but the following paragraphs provide starting points for such analyses.

First, there is a clear East/West relationship may map, to some extent, onto existing state political geographies: conservative/liberal; rural/urban; and to the I-5 corridor which extends south of the border but also north of the border.  We could look further at the first two by finding existing county-level maps, but the third requires a little more thought.

While I-90 is a major East-West corridor, it does not lead through major urban consumption areas. The North-South corridor leads to and through Vancouver, Seattle, Tacoma, Portland, and Eugene; from Eugene to the south is the cannabis agricultural breadbaskets of Southern Oregon and Northern California. It’s also the major historical corridor for hippie migration from the Bay Area at the end of the 1960s.

We can also say with weak confidence (given data limitations and methodological challenges) that there appear to be five anomalous counties:  Three of them (Whatcom, Skagit, and Clallam) are in the Northwest of the state, where lots of intentional communities sprang up in the 1970s.  We also note that southwest British Colombia may have stronger cultural geographies of consumption that Washington state. Grey’s Harbor is on the Peninsula not far from where Ed Rosenthal outed the first commercial indoor grow he’d ever seen in a 1987 Whole Earth Catalog article; and Ferry county in the northeast may share some combination of the Northwest cannabis consumption geographies as well as being a historical corridor for BC cannabis entering the U.S. (this all-but ended after 2001).

One map stories root our geographical investigations by showing us spatial relationships that must be further explained.  Look forward to more on a regular basis!

 

 

[Photo Essay] State-Legal Sun-grown Production in Washington State

WSLCB licensed Tier 2 and 3 cannabis farms clustered together in North Central Washington State

WSLCB licensed Tier 2 and 3 cannabis farms clustered together in North Central Washington State

North Central Washington State-legal Sungrown Cannabis

North Central Washington State-legal Sungrown Cannabis

Cannabis understory.  State-Legal Washington, Autumn 2014

Cannabis understory. State-Legal Washington, Autumn 2014

Cannabis understory.  State-Legal Washington, Autumn 2014

Cannabis understory. State-Legal Washington, Autumn 2014

Local workers tending to state-legal cannabis, Washington, Autumn 2014

Local workers tending to state-legal cannabis, Washington, Autumn 2014

State-Legal Cannabis, Washington, Autumn 2014

State-Legal Cannabis, Washington, Autumn 2014

State-legal cannabis Washington.  Autumn 2014

State-legal cannabis Washington. Autumn 2014

State-Legal Cannabis, Washington, Sutumn 2014

State-Legal Cannabis, Washington, Sutumn 2014

Cannabis processing at a sun-grown tier 3 production farm in North Central Washington, Autumn 2014

Cannabis processing at a sun-grown tier 3 production farm in North Central Washington, Autumn 2014

Cannabis processing at a sun-grown tier 3 production farm in North Central Washington, Autumn 2014

Cannabis processing at a sun-grown tier 3 production farm in North Central Washington, Autumn 2014

Autumn colors at the first state-legal sungrown season, Washington  2014

Autumn colors at the first state-legal sungrown season, Washington 2014

Autumn colors at the first state-legal sungrown season, Washington  2014

Autumn colors at the first state-legal sungrown season, Washington 2014