Forecast of I-502 Sales thru 2017: How lawmakers can make a difference (this session).

I-502 Sales Forecast

I-502 Sales Forecast

By Dr. Jim MacRae, CASP Research Associate

As we approach the 8-month anniversary of Washington’s market for State-legal Cannabis, a clear pattern of linear growth is emerging in the level of observed total daily sales. When one considers that, as of Monday Feb 23, 2015, the State-legal Cannabis market in Washington has generated over $100 million in cumulative sales, this growth suggests strong future revenue potential for the State.

Driven in large part by the steady approval of I-502 licenses and the associated structural growth in the market, the ‚Äúbest-fit‚ÄĚ linear trend is currently predicting a daily increase in the level of sales of almost $2,660 (e.g., next Monday is expected to generate $18,600 more than this Monday did).

We assume that one of the primary determinants of the growth rate seen so far in State-legal Cannabis sales is the rate of licensing of new I-502 businesses (primarily Retailers). Under this assumption, current levels of sales growth are expected to increase until approximately March of 2016 (at which time, we estimate that the WSLCB will have largely completed processing the initial batch of I-502 Retail business applications).

Using the conservative assumption that sales will continue to grow at their current rate until March 27, 2016 and then will go flat, we estimate the following annual sales totals for 2015 and 2016:

In 2015, $392,200,400 in total State-legal Cannabis sales are expected (generating $98 million in excise tax revenue).

In 2016, sales of $645,789,342 are expected, (generating over $161 million in excise tax revenue).

For those currently considering legislation that will impact this industry, these estimates would serve well as a ‚Äúfloor‚ÄĚ or baseline against which future projections could be compared.

If the punitive 25/25/25 tax burden continues, business failures will tend to decrease revenue (and taxation) expectations.

If local governments are allowed to continue the obstructionist position that many are taking, even more businesses will fail or fail to begin operations and these expectations for revenue (and taxation) will decrease.

If, on the other hand, restrictive regulations, inappropriate geographic restrictions, and obstructionist permitting processes are discouraged, this marketplace will develop and grow. With the institution of a taxation structure that allows at least the possibility of competing with unregulated Cannabis markets, this marketplace could well thrive.

Call your Representatives and/or Senator(s) today and let them know that you want to see this market thrive and that a vote supporting the State-legal Cannabis Industry is a vote against the black market and all of the unregulated behavior, nasty up-selling, and targeting of minors that tend to go along with it.

Taxes and Social Policy with Todd Arkley, CPA

Video by Steve Hyde


by Dominic Corva, Executive Director

On Monday, February 16, I sat down with Todd Arkley, CPA, to discuss the state and trajectory of I 502 tax policy as it relates to the big picture; and to do a little ethnographic interview in order to situate Todd’s knowledge in the development of cannabis policy as social policy in Washington State. The interview’s first half addresses the former, and the second half the latter.

The content of this particular interview is extremely timely. In the ecology of social issues that shape state cannabis policy, tax policy is currently dominating how the state makes cannabis policy.

This creates a problem for the optimization of cannabis policy in Washington State. Arguably, I 502 was passed primarily to address the state’s crime policy, informed heretofore mostly by the punitive war on drugs.

Once it was passed, however, it became subject to competing social problems: how do we make good policy for cannabis patients? how do we make good policy for parents with children? how do we make good policy for creating a new market? how do we make good policy for banking? And so forth.

Right now, the only social problem that legislators are interested in is maximizing revenue for our cash-strapped state. They seem to see this in a very simplistic fashion: what is preventing the maximization of tax revenues?

To that end, they have found a well-funded constituency that has purports to have an answer for them. It goes something like this: shut down any potential competition to the I 502 market.

That answer is appealing because it is simple; and because it converges with a singular private interest: vested I 502 business owners, particularly those associated with Martin Tobias’s Washington CannaBusiness Association.

Unfortunately, those business owners do not understand how this way to address the social problem — tax revenues; and the private problem — dysfunctional legal cannabis markets; is unlikely to help either because medical cannabis markets are not the reason the system is dysfunctional.

The system is dysfunctional because the Washington State Liquor Control Board, presumably at the direction of the Governor’s Office, insisted on creating a very tightly regulated market aimed at capturing a very small percentage of Washington State cannabis consumption. There is nothing inherently wrong with that, but this design cannot possibly maximize public and private revenues.

The system is dysfunctional because the slow pace of approval has given reactionary forces time to organize against I 502 proximity in their localities.

The system is dysfunctional because the Association of Washington Cities has organized to block I 502 implementation in order to gain shares of I 502 revenue.

And yes, the system is dysfunctional because the tax structure cripples profit margins in a nascent industry.

Medical cannabis markets will be in competition with I 502 markets when the latter are able to provide geographic accessibility aligned with the reality of Washington State cannabis consumption (and certainly not 25% of it); when the production/processing/retail chain smooths out from the feast or famine pattern of the last eight months; and when that system starts producing the range of goods available in black and gray markets.

Legislators and private Big Money Cannabis groups have apparently not heard that all attempts to eliminate the black market for cannabis for the last 40 years have only served to make it stronger. Prohibition makes profit margins possible, and the retreat from prohibition has already driven down black and gray market margins within range of basic cost of production, at least on the West Coast.

The public needs to know, and policymakers need to understand that their current alignment of tax revenue maximization with I 502 Big Money interests can only be suboptimal policy for everyone, including the legislators and lobbyists who are pushing it.


The Retail Landscape Update 2/12/2015


Map by Steve Hyde

All textual information in this post comes from the 2/3/2015 WSLCB “Frequently Requested” Marijuana Applicant list. The map reflects the 2/10/2015 list.

by Dominic Corva, Executive Director

It’s been a while since we’ve looked at the progression of I 502 Retail Cannabis landscape, pictured above in the map by Steve Hyde. The conjunctural interest is driven by our need to understand how fast I 502 retail stores are currently being approved, now that the availability of supply is no longer a barrier to entry. We expected more retailers to open up once this happened, and in the trendline below we see that around January 1, 2015, the pace of new approvals began to exceed the overall trend since July 6.

image (2)


There are lots of other factors that influence retail decisions to go into business, of course. The availability of affordable retail space for lottery winners, and subsequent lottery replacements for the 25 retail applicants who for one reason or another failed to cash in on their lottery number, is the most significant variable. This of course is also influenced by jurisdictional bans and moratoria that represent a ceiling on how many of the 334 retail slots can possibly open, even given approval.

It’s also important to note that many “approved” applicants are not yet open, because it takes a little while to open retail doors once approved. As of February 3, 2015, 117 retail stores have been approved.¬†Dozens of that number are not yet open, and we anticipate that their arrival in the market will¬†help clear the harvest bounty. It is too early to say how much.

But one thing we can say with some confidence, is that the flip side to the Producer/Processor glut problem is that prices are down and quite possibly, I 502 recreational stores may be picking up consumers for whom I 502 product is a reasonable substitute for medical access point product, if price of flower is the main obstacle to switching over. Of course, there’s a lot more to it than that, but the closer retail prices for comparable product¬†for comparable consumers (ie, not patients), the easier it will be for I 502 producers to clear inventory.

The other factor is of course geographic accessibility. And the I 502 retail landscape, by design, limits that considerably. At some point in the near future we will publish a comparison between the I 502 retail landscape above, and the 462 tax-paying medical cannabis access points registered by the Washington State Department of Revenue.

Below, a table of the 117 approved (not necessarily open) retailers identified in the 2/3/2015 WSLCB list. If you own a retail store that has a web site that is not listed, please contact us and we will fill in that information for you.


Trad-ename License # Street Address City County ZipCode DateCreated DayPhone Web Site
2020 SOLUTIONS 415470 2018 IRON ST STE A BELLINGHAM WHATCOM 982264212 7/6/2014 3603938697
TOP SHELF CANNABIS 414256 3863 HANNEGAN RD BELLINGHAM WHATCOM 982269103 7/6/2014 3602243735
MARGIE’S POT SHOP 413414 405 E STUEBEN BINGEN KLICKITAT 986050000 7/6/2014 5094930441
BUD HUT 413901 1123 E STATE ROUTE 532 CAMANO ISLAND ISLAND 982828833 7/6/2014 4254789928
FREEDOM MARKET 414280 820A WESTSIDE HWY KELSO COWLITZ 986264355 7/6/2014 3603550682
420 CARPENTER 415083 422 CARPENTER RD STE 105 LACEY THURSTON 985037906 7/6/2014 3604026368
4US RETAIL 413700 23251 HWY 20 OKANOGAN OKANOGAN 988400000 7/6/2014 3602240978 None
CANNABIS CITY 413319 2733 4TH AVE S SEATTLE KING 981341912 7/6/2014 2066821332
VERDE VALLEY RETAIL SALES 413596 4007 MAIN ST UNION GAP YAKIMA 989032040 7/6/2014 5094203430
AUSTIN LOTT 413530 29 HORIZON FLATS RD STE 8 WINTHROP OKANOGAN 988628400 7/6/2014 5094295556 None
MILL CREEK NATURAL FOODS 414250 4315 MAIN ST STE A UNION GAP YAKIMA 989032115 7/11/2014 5098400186
HERBAL NATION 413683 19302 BOTHELL EVERETT HWY BOTHELL SNOHOMISH 980127113 7/18/2014 4254852535
HERBAL ACCESS RETAIL 414418 661 NESS’ CORNER RD PORT HADLOCK JEFFERSON 983390000 8/1/2014 3602977996 None
221 414574 18729 FIR ISLAND RD STE C MOUNT VERNON SKAGIT 982738159 8/4/2014 3604454221
MARIJUANA MART 413370 1405 YELM AVE E YELM THURSTON 985979480 8/4/2014 3604801912 None
SAVAGE THC 412066 4428 WILLIAMS VALLEY RD STE A CLAYTON STEVENS 991109745 8/6/2014 5099992989
TOKEN HERB 400209 837 A CRESCENT BEACH RD EASTSOUND SAN JUAN 982451695 8/11/2014 3603766900
HIGH SOCIETY 414430 1824 BROADWAY EVERETT SNOHOMISH 982012349 8/14/2014 2063071651
LOVING FARMS 412370 2615 OLD HIGHWAY 99 S MOUNT VERNON SKAGIT 982730000 8/14/2014 3605405168
CANNARAIL STATION 413366 1448 BASIN ST NW SUITE A EPHRATA GRANT 988239695 8/18/2014 5097541047
THE GREEN SEED 412495 8420 ASPI BLVD STE 3 MOSES LAKE GRANT 988373601 8/22/2014 5098552271 None
LONGVIEW FREEDOM MARKET 413544 971 14TH AVE STE 110 LONGVIEW COWLITZ 986324049 9/4/2014 3606360420
CANNAREX 414060 2714 HENSON RD MOUNT VERNON SKAGIT 982739036 9/5/2014 4254058179
STICKY’S 413836 7831 NE HIGHWAY 99 VANCOUVER CLARK 986658836 9/8/2014 5099521602 None
MR. BILLS OF BUCKLEY 413980 29297 HWY 410 E STE D BUCKLEY PIERCE 983218482 9/12/2014 2533835855
GREENSIDE 414295 23407 PACIFIC HWY S DES MOINES KING 981988738 9/18/2014 2068786470
GREENLIGHT 415112 10309 E TRENT AVE MILLWOOD SPOKANE 992064514 9/18/2014 5093093193
THE 3-M’S OF GRAYS HARBOR 415001 5675 STATE ROUTE 12 STE 1 ELMA GRAYS HARBOR 985410000 9/23/2014 3604709265
OCEAN GREENS 413372 9724 AURORA AVE N SEATTLE KING 981033223 9/26/2014 2062299893
HWY 420 413843 1110 CHARLESTON BEACH RD W BREMERTON KITSAP 983124504 9/30/2014 3609323182
MJ’S POT SHOP 415314 1335 SE BISHOP BLVD PULLMAN WHITMAN 991636408 9/30/2014 5093325203
DIAMOND GREEN 413374 4002 S 12TH ST TACOMA PIERCE 984051509 10/14/2014 2532225697
GOLDEN DISPENSARIES 414292 650 LLAMA LN GOLDENDALE KLICKITAT 986209140 10/17/2014 5097730700 None
THE NOVEL TREE 414983 1817 130TH AVE NE SUITE B BELLEVUE KING 980052225 10/23/2014 3609301700
CINDER 414817 1421 N MULLAN RD STE B SPOKANE VALLEY SPOKANE 992064051 10/23/2014 5092413726 None
THE GREEN DOOR 415410 28120 HWY 410 E UNIT A8 BUCKLEY PIERCE 983218482 10/24/2014 2532248299 None
LOCALAMSTER 414243 1006 CALIFORNIA WAY LONGVIEW COWLITZ 986321615 10/27/2014 2068760140
CANNABIS COUNTRY STORE 414970 1910 W MAIN ST SUITE 101 BATTLE GROUND CLARK 986040000 10/28/2014 3607987194
CINDER 413940 7011 N DIVISION ST STE A SPOKANE SPOKANE 992083968 10/28/2014 5092413091 None
SATORI 414664 9301 N DIVISION ST STE B-C SPOKANE SPOKANE 992181254 10/29/2014 5099947051 None
THE BACK PORCH 415645 907 N WENATCHEE AVENUE STE B WENATCHEE CHELAN 985011572 10/29/2014 5096699160 None
2020 SOLUTIONS ON THE GUIDE 413314 5655 GUIDE MERIDIAN STE A BELLINGHAM WHATCOM 982269722 10/30/2014 3607342020
KUSHMART 414520 6309 EVERGREEN WAY STE C EVERETT SNOHOMISH 982030000 10/30/2014 2067691282
MR. DOOBEES 415206 2870 OCEAN AVE RAYMOND PACIFIC 985774926 10/30/2014 3608758016
HAPPY TIME 414777 1301 N 2ND ST YAKIMA YAKIMA 989011801 10/30/2014 5094802097 None
THE HAPPY CROP SHOPPE 413481 50 ROCK ISLAND RD EAST WENATCHEE DOUGLAS 988025352 11/1/2014 5098881597
W.C.W. ENTERPRISES 415445 3708 MT BAKER HWY EVERSON WHATCOM 982470000 11/3/2014 4253127077 None
THE HIDDEN BUSH 412921 3230 E HWY 101 PORT ANGELES CLALLAM 983629073 11/4/2014 3604606641
GANJA GODDESS 413558 3207 1ST AVE S UNIT A SEATTLE KING 981341819 11/7/2014 2066827220
CANNABIS & GLASS 415243 6620 N MARKET ST SUITE 100 SPOKANE SPOKANE 992177809 11/7/2014 5099991112 None
GREENSIDE 414296 10600 MAIN ST BELLEVUE KING 980045922 11/8/2014 2069103811 None
SPOKANE GREEN LEAF 413347 9107 N COUNTRY HOMES BLVD STEB SPOKANE SPOKANE 992182071 11/11/2014 5099193467
THE STASH BOX 412494 3108 A ST SE STE F AUBURN KING 980028811 11/12/2014 2537970959!visit-us/c24vq
HERBAL E SCENTS 414902 545 C HWY 395 S COLVILLE STEVENS 991140000 11/14/2014 5096756901
LA PUSH KUSH 413695 100 LA PUSH RD STE 602 FORKS CLALLAM 983319406 11/19/2014 5416109508 None
420 SPOT SHOP 414550 1374 SE LUND AVE PORT ORCHARD KITSAP 983665628 11/20/2014 3608765699
GREEN COLLAR 412923 10422 PACIFIC AVE S STE B TACOMA PIERCE 984446052 11/20/2014 2532670675 None
PURPLE HAZE 414680 4218 RUCKER AVE EVERETT SNOHOMISH 982030000 11/24/2014 4252583054 None
GREENWAY MARIJUANA 413541 4851 GEIGER RD SE PORT ORCHARD KITSAP 983669350 11/24/2014 3602041119
GREEN LIFE CANNABIS 414755 3012 GS CENTER RD STE A WENATCHEE CHELAN 988019116 11/27/2014 2817260614
UNCLE IKE’S 414533 2310 EAST UNION ST SEATTLE KING 981222966 12/1/2014
THE SLOW BURN 413773 4101 MAIN STREET UNION GAP YAKIMA 989032042 12/1/2014 5098234793 None
STONEHENGE CANNABIS 415361 8142 HIGHWAY 14 LYLE KLICKITAT 986350000 12/3/2014 5097670039
DOCKSIDE CANNABIS 414569 15001 AURORA AVE N STE 15029 SHORELINE KING 981336134 12/3/2014 2066186094
GREEN STAR CANNABIS 410798 1403 N DIVISION ST STE A SPOKANE SPOKANE 992021810 12/3/2014 5099193398
DAVE’S PLACE 415202 10 MAPLE GROVE RD SUNNYSIDE YAKIMA 989440000 12/8/2014 5098300275 None
RAIN CITY CANNABIS 413803 11537 RAINIER AVE S SEATTLE KING 981783984 12/9/2014 2063210149
CANNABLYSS 415575 2705 HARTFORD DR STE A LAKE STEVENS SNOHOMISH 982589204 12/11/2014 4253277529
ALTITUDE 414225 260 MERLOT DR PROSSER BENTON 993500000 12/11/2014 5097864200
LUCID 414963 4820 YELM HWY SE SUITE D LACEY THURSTON 985033402 12/12/2014 5304010839 None
TREEHOUSE CLUB 413369 14421 E TRENT AVE SPOKANE VALLEY SPOKANE 992161392 12/12/2014 5094132169
MARY’S FINEST MARIJUANA 415325 12230 AURORA AVE N STE B SEATTLE KING 981338033 12/15/2014 7862465027 None
GANJA VITA 415539 23441 NE STATE ROUTE 3 BELFAIR MASON 985280000 12/16/2014 2535143949 None
4:20 FRIENDLY 413586 1515 LEWIS ST SPOKANE SPOKANE 992249785 12/17/2014 5094990999 None
GREEN THEORY 414417 10697 MAIN ST STE B BELLEVUE KING 980040000 12/18/2014 4255027033
MARY JEAN’S GREENS INC. 412048 3204 MERIDIAN AVE E EDGEWOOD PIERCE 983722608 12/18/2014 2537356550 None
GREEN STOP 413801 7466 MT BAKER HWY MAPLE FALLS WHATCOM 982660000 12/18/2014 None
CROCKPOT 415229 1703 SE SEDGWICK RD STE 113 PORT ORCHARD KITSAP 983669599 12/18/2014 2533127280
420 HOLIDAY 415526 2028 10TH AVE LONGVIEW COWLITZ 986324007 12/20/2014 3607033103
THE HAPPY CROP SHOPPE 413600 5736 VALE RD CASHMERE CHELAN 988150000 12/24/2014 5096696835
GLOBODYNE 414982 3223 PINE ST EVERETT SNOHOMISH 982014536 12/24/2014 4258793437 None
MAIN STREET MARIJUANA 414876 2314 MAIN ST VANCOUVER CLARK 986602642 12/24/2014 4259745804
HL SOUTH 415534 1944 1ST AVE S #100 SEATTLE KING 981341406 12/26/2014 2069728500 None
MARY MART 415037 3005 6TH AVE STE B TACOMA PIERCE 984066202 12/29/2014 None
RAINIER ON PINE 414723 3111 S PINE ST TACOMA PIERCE 984094711 12/29/2014
MARIJUANA MERCANTILE 415216 8411 SR 92 STE 6 GRANITE FALLS SNOHOMISH 982520000 12/30/2014 3603227122 None
SPOKANE’S GREEN DEPOT 414101 71 N RALPH ST STE 102 SPOKANE SPOKANE 992024826 12/30/2014 2532417773 None
NEW VANSTERDAM 413732 6515 E MILL PLAIN BLVD VANCOUVER CLARK 986617455 12/30/2014 3605974739
WESTSIDE420 RECREATIONAL 412466 4503 OCEAN BEACH HWY STE 103 LONGVIEW COWLITZ 986325055 12/31/2014 3604235261
SMUGGLER BROTHERS 413762 1912 STATE ROUTE 20 SEDRO WOOLLEY SKAGIT 982840000 12/31/2014 3606473437
CASCADE KROPZ 413819 19129 SMOKEY POINT BLVD STE B ARLINGTON SNOHOMISH 982234258 1/1/2015 3606595422
GREEN LADY 415130 3044 PACIFIC AVE SE STE B OLYMPIA THURSTON 985012043 1/3/2015 5098697574
SEA CHANGE CANNABIS 353260 282332 HIGHWAY 101 STE 2 PORT TOWNSEND JEFFERSON 983688700 1/3/2015 2064228328
CREATIVE RETAIL MANAGEMENT 414889 7046 PACIFIC AVE TACOMA PIERCE 984087219 1/3/2015 2536917293
A BUD & LEAF 413821 421 LILLY RD SE OLYMPIA THURSTON 985012108 1/5/2015 3608706000 None
THE TOP SHELF 414716 1305 S HAYFORD RD SPOKANE SPOKANE 992245276 1/5/2015 5099444350
BUD COMMANDER 413802 849 TROSPER RD SW STE 207 TUMWATER THURSTON 985128145 1/5/2015 3606881709 None
CASCADE HERB COMPANY 415094 1240 E MAPLE ST STE 103 BELLINGHAM WHATCOM 982250000 1/6/2015 3607782357
GREEN LEAF 413886 4220 MERIDIAN ST STE 102 BELLINGHAM WHATCOM 982269153 1/6/2015 3603032860 None
EVERGREEN CANNABIS 415064 922 PEACE PORTAL DR BLAINE WHATCOM 982304409 1/7/2015 3603328922 None
GREEN CITY COLLECTIVE 413737 13601 HIGHWAY 99 STE B EVERETT SNOHOMISH 982045496 1/7/2015 4258693670
SATIVA SISTERS 413739 10525 E TRENT AVE STE 1 SPOKANE SPOKANE 992060000 1/7/2015 2086603909
CLEAR CHOICE CANNABIS 413358 8001 S HOSMER ST TACOMA PIERCE 984081017 1/9/2015 2534445444
HERB’S HOUSE 402039 716 NW 65TH ST SEATTLE KING 981175049 1/14/2015 2065577388
HIGH END MARKET PLACE 413550 1906 BROADWAY VANCOUVER CLARK 986630000 1/14/2015 3606090364
THE LOCAL JOINT 414539 5309 GUIDE MERIDIAN RD SUITE A BELLINGHAM WHATCOM 982260000 1/15/2015 3603063257 None
ISSAQUAH CANNABIS COMPANY 414867 230 NE JUNIPER ST ISSAQUAH KING 980270000 1/16/2015 2069492124
RAINIER DOWNTOWN 415010 112 S 24TH ST TACOMA PIERCE 984022904 1/20/2015 4258020949!the-rainier-family/c1ah4
PRAXA 414785 14343 15TH AVE NE STE A SEATTLE KING 981253162 1/22/2015 2066438576 None
EMERALD LEAVES 413363 2702 6TH AVE TACOMA PIERCE 984067213 1/22/2015 2063991361 None
BELMAR 415253 614 116TH AVE NE BELLEVUE KING 980045206 1/23/2015 4254535749 None
ROCKY MOUNTAIN HIGH 415115 6323 NE BOTHEL WAY KENMORE KING 980280000 1/28/2015 2066604722 None
THE HERBERY 084045 212 NE 164TH AVE STE 11 VANCOUVER CLARK 986840000 1/28/2015 3609490319
HIGH SOCIETY 413534 8630 S MARCH POINT RD ANACORTES SKAGIT 982213412 1/29/2015 3606610168 None




What’s the inventory story? Hard to say, but let’s try anyway.

Retail Volume

Data from WSLCB document released to CASP on January 27, 2015

Harvest volume per month

Data from WSLCB harvest document released to CASP on January 27, 2015

Warning: this post contains calculations from data provided by the WSLCB, without contextual explanation for the December 2014 anomalous sales data; and without a clear definition for retail gram volumes given how difficult that is to include concentrates and edibles. The WSLCB has recently tightened their information provision services and informs me that I should have answers from them in a month or two.

by Dominic Corva, Executive Director

The seasonal glut deriving from fall harvest has a lot of I 502 producer/processors worried about how and when to sell built-up inventory. This post uses WSLCB spreadsheets released to CASP on January 27 to estimate current total market inventory, on the one hand, and retail sales data for projecting inventory clearance on the other. Since national media has decided to throw unsubstantiated, alarming numbers around, I have decided that it is necessary to provide the best educated guess I can based on actual data received from the WSLCB.

The graphs above depict the following information gathered in table form below. Let’s take them one at a time.

Retail Volume per lb Cumulative Total Monthly
July 174.52 174.52
August 517.62 343.10
September 1030.77 513.15
October 1737.89 707.12
November 2584.54 1553.77
December 2845.35 260.81


The retail volume data is clearly problematic. The first five months show healthy, even logarithmic growth in the volume of cannabis sold per month. November’s sales more than double October’s, with 1553.77 lbs sold. December’s data, on the other hand, return us to a volume sold that is less than the second month of I 502 retail volume. What should we make of this? On the one hand, we could guess that the way retail volume is calculated changed in December, casting the first five month’s data in doubt. On the other, we could guess that December’s data is off for some other reason. A third option would be to doubt all of the numbers provided.

If we select Option 1, however, we would be forced to project an totally unrealistic logarithmic jump in retail volume of unknown dimensions. Surely, December could not have been a 3,000 lb month. On the other hand, we could project more realistic growth or even at least volume maintenance, and we could pick a number for December that is anywhere from 1500 to 2000 lbs.

If we select Option 2, we might be able to say with a grain of confidence that at least 250 lbs per month had been sold prior to December and we could expect at least that much for January. If this were so, we would have started seeing major inventory build-up in October, but that doesn’t match what we qualitatively know about the market.

If we select Option 3, we have no leg to stand on and no further analysis is possible.

Realistically, Option 1 seems like the safest bet, with a possible accounting date flexibility that put a lot of December’s sales in November, which actually could be more anomalous than December given its huge jump. Let’s split the difference and suggest that if 1800 lbs were disposed of between the two months, and there is growth rather than stagnation, we could have had about 850 sold in November and 950 in December. At that rate, we expect about 1100 lbs to go in January, bringing cumulative sales to date at about 4000 lbs. That’s probably the best we can do right now, so for this post we’ll go with that number.

How much is that out of everything that has been produced?

Harvest Volume in lbs Cumulative Total Monthly
May 0.19 0.19
June 94.82 94.64
July 446.46 351.63
August 1475.72 1029.26
September 3431.60 1955.88
October 10936.10 7504.50
November 25295.07 14358.97


This data lacks December, which is a big problem especially since it’s uncertain how much of the fall harvest was recorded by November 11, and how much of it will be recorded for December 11. A liberal¬†approach might take September’s harvest as a baseline for indoor production, although my guess would be less given the light dep crops contributed to the September number. This is where we get into almost SWAG (Scientific Wild-Ass Guess) territory, so please feel free to assign different numbers than the ones I pick, which is 2000 lbs for December and 1000 lbs for January. That would give us approximately 28,000 lbs harvested to date — about 4000 of which have been sold.

The Bottom Line

If the above calculations are in the ballpark, that leaves 24,000 lbs of inventory. ¬†That’s a lot! But, it’s important to understand that at least half of all the cannabis harvested should have been trim and shake, and thus don’t really count the same in terms of inventory. Half that — 12,000 lbs —¬†should count as flower and thus reflect farmgate flower prices. The other half should count as raw material for processing. That includes pre-rolled joints, which are usually not derived from bud. The rest of it is processed into concentrates which are then either further processed into edibles, or sold as concentrates. Right now, it appears that edibles and pre-rolled joints are where most of it is going.

One problem that this poses is, what is the comparison between pre-rolled joints and flowers, in terms of wholesale price per weight? It is entirely possible that pre-rolled joints are being sold at a price per gram that is a little too close to the price per gram of bud flowers, even taking into account the value added by rolling and packaging. It is also entirely possible that this is pure conjecture with so little available information.

But let’s think about that 12,000 lb number. If inventory is around 12,000 lbs, and the retail volume trajectory has us at around 1100 lbs per month right now, with expected growth at about 300 lbs per month, that’s still a serious problem that won’t necessarily clear up this summer as I have previously suggested — especially given the possibility that 1100 lbs per month is about our indoor production volume.

The bottom line is this: we need more processors and retailers to come on line, and fast. I hope the WSLCB understands this, because if we don’t achieve solid growth in those areas of the market then we will not get the summer farmgate price rise that we have been projecting and a whole lot of people will be put out of business. I also hope the legislature understands this, because something needs to be done pronto about bans and moratoria that represent firm ceilings on how many retail stores can open, on the one hand, and how punitive tax structures render the I 502 system unable to capture “recreational” consumers.

It is a bad sign, however, that the WSLCB cannot provide up to date information. This data should be at their fingertips so they can optimize their decision-making capacity. I am afraid that perhaps it is not.



462 Medical Cannabis Businesses are Registered with DOR and Pay Taxes



Data from, accessed on 2/8/2015.

by Dominic Corva, Executive Director

Tax revenues derived from cannabis sales in Washington State are a major public policy question at this moment for at least two major reasons. First, the state legislature is currently trying to figure out how to reconfigure the I 502 tax structure in order to maximize revenue; and second because policymakers seem certain that one route to doing so would be to capture an increasing share of revenue for the I 502 market from medical cannabis markets. I would argue that there is a third significance that is at odds with the first two, which is what kind of social costs would be potentially incurred by such revenue-maximizing strategies. For this post, however, I will address the first two issues because without understanding existing realities policymakers are likely to create suboptimal strategies for what they are trying to do, and this would bad for everyone.

In order to begin to represent existing relationships between cannabis markets and revenue, we have to have some idea of the relationship between revenue and taxes on medical cannabis retail markets. What is the current reality?

The Washington State Department of Revenue provides us the most authoritative data available regarding medical cannabis markets and state and local tax revenues¬†absent a special vice tax such as the I 502 three-tiered one. Thus, it provides a model for estimating tax revenues in a market that isn’t distorted by rates so big as to require reinvention in the current legislative session. It also provides us with a number of taxed, registered¬†medical cannabis access¬†points that corrects public perceptions of an untaxed, unregulated industry. There are limits to the data, of course, but the DOR accounts for sales and tax information from 462 medical access points from the beginning of FY2014 though the first five months of FY2015.

From the linked document:

*462 registered medical retailers owed the State of Washington a total of $10,696,252 in FY 2014; and $5,054,345 through four months of FY2015 (July-November 2014). 

*Registered medical retailers owed $2,147,653  in local retail sales tax for FY 2014 and 1,101,346 for FY 2015.

*The above numbers were on $69,369,667 of revenues in FY2014 and $35,645,866 of revenues for FY2015.

This chart gives us a baseline from which to estimate potential WA State cannabis revenues based on¬†no vice tax. More analysis along these lines is forthcoming, but the chart provides one surprise of note. Every quarter, the State gets a revenue bump (September, December, March, June). But September 2014’s peak is barely above its previous two months, and is followed by declining revue rather than flat revenue in previous quarters. The DOR document thus ends on a cliffhanger: have we reached a peak of registered medical cannabis revenues in Washington State, already? And why might that be?

Stay tuned.



Medical Cannabis Commodity Pie compared with I 502 Cannabis Commodity Pie

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by Dominic Corva, Executive Director

This post compares what authorized medical cannabis patients have access to in medical cannabis access points, with what I 502 consumers have access to in legal retail stores. The purpose is to highlight what we talk about when we talk about “safe and reliable access” to cannabis products¬†in the state. There are other aspects to this key policy question, especially price and location, but the former needs to be broken down by available cannabis products in order to make more sense than a simple flower price comparison. It’s also important to get a sense of where the I 502 market is going and what’s needed right now to get there.

The charts derive from sales data provided confidentially to CASP, and reflect a small sample size of both medical and legal retail cohorts (the latter is a MUCH bigger sample, comparatively, even though it’s from less information). The medical information comes from access points that pay sales taxes, as does the legal retail information of course. Both data sets include January 2015 data.

The first thing to note about the pies is their ingredients are not the same. Cannabis juice and shake/trim are not currently available in retail stores, although an argument could be made that shake/trim shows up in the “pre-rolls” category for both medical and retail. I also removed clone revenue from the medical pie because I am pretty sure there is no legal way for I 502 retail stores to carry clones. Juice and shake/trim, on the other hand, represent possible 502 commodities.

Let’s break down some other differences.

The legal revenue pie derives 17% more income from flowers than the medical revenue pie, 73% to 56%.

The legal revenue pie derives more than 10% from pre-rolls, whereas pre-rolls are a relatively insignificant source of revenue for medical. This probably, as noted above, reflects the arrival of shake/trim to market in the form of pre-rolls; and also the lack of processing capacity in the I 502 system to turn shake/trim into concentrates.

The medical revenue pie derives over 30% of its revenue from edibles and concentrates; where the retail revenue pie actually derives more income (11.2% to 8.3%) from edibles than the medical pie.

Legal concentrate share is running at about a fifth of the revenue share compared with medical.

“Other” is a weird but significant category for medical, and while I have not dug deep into the data it seems apparent that vape pens are the biggest “other” category.” It is therefore how I categorized legal vape pen sales, and that tiny red slice includes vape pens and pre-packed pipes.

The major take-away from this pie is that medical access points derive a much greater share of their income from a variety of commodities, especially higher value-added categories, than legal retail outlets. In order to draw consumption away from medical into legal markets, the processing capacity of I 502 has to develop substantially. There are many barriers to this, but it would appear as though edible processing is much further towards this than other value-added cannabis commodities.

One final note: the basket of goods sold in medical access points has been diversifying considerably in recent years, but two particular kinds of cannabis commodities should be considered “immature” for both medical and retail: juice and topicals. There is no reason to believe that these non-psychoactive health and wellness commodities, both of which can be made from hemp, will not constitute a huge growth opportunity for cannabis markets in general.

Oh, right, the reason I am even looking at this right now is the tax question. How can we project tax revenues for a legal market that not only has a long way to go to get to its presumed perfect substitute, the medical market, but also will be producing “nontraditional” cannabis commodities that are only now making a difference in more evolved markets? This comparison gets us somewhere to calculate per-gram potential tax revenue, which is a lot higher for value-added commodities than it is for flower.




On the Tribal Cannabis Question


by Dominic Corva, Executive Director

*A day after publishing this, Indian Country Today Media Network announced a February 27 conference about this issue, sponsored in part by Harris Moure PLLC and Odawi Law PLLC. Click the link for details.

By now most people should be aware that in December, the U.S. Department of Justice released a memo dated October 28, 2014, that effectively extends Federal toleration of legal cannabis regulation to all Native American lands. The three page document clarifies that the August 2013 Cole memo¬†doesn’t just apply to states, but to tribal territories. ¬†Within days of the LA Times article that brought the memo to national attention, a Mendocino County tribe announced that they had closed a deal with investors to begin production using locally existing medical cannabis regulatory frameworks. This post addresses what I have learned about what’s going on in the last month.

The first thing to note is that although all state legal regulatory frameworks are expected to comply with the Cole Memo’s eight area’s of concern, each state is free to experiment with different ways to do so. In Washington State, policymakers have chosen an extremely conservative approach that limits the flexibility and viability of the state system. This approach satisfies political requirements that strangle the viability of the legal system and therefore limits tax revenues considerably.

By contrast, Native American interests are likely to be much more focused on the maximization of public and private revenue. This means, among other things, lower taxes and a more liberal approach to locating production, processing and revenue. As a result, tribal cannabis prices are likely to undercut State I 502 prices considerably, once production begins. Once tribal production matures, it poses an existential threat to public and private revenues under I 502.

Given that state authorities will have little leverage in the matter, it is highly likely that I 502 will have to change to level the playing field and maintain a state tax revenue flow. How much it will have to change will depend upon what regulatory model tribes adopt.

I was recently contacted by the representative of a large national investment group that had become stuck on this question, and wanted our assistance in communicating options to tribal authorities. The appointed time came for my input, but no one called and the matter was left unresolved. I was left wondering to what extent the investors were overreaching, given their stated intent to monopolize national tribal cannabis production.

Over the last several weeks, since the initial contact, information has been coming and going about other investment groups and different iterations of nationally and locally coordinated tribal interests. Not much is clear, but at this point I can say a few general things about the direction this may be going.

First, tribes are going to have to pick a regulatory model that addresses the Cole memo, and they may be coordinating this process through national tribal casino interests in combination with possibly competing venture capital interests of enormous magnitude. they don’t have to: local tribes could strike out on their own, but it seems that given the availability of massive investment capital it is likely that this process will be coordinated with Big Money interests.

Second, “tribal interests” are likely to mean tribal¬†casino interests. This may pose some issues for other tribal interests that may get steamrolled by outside money. This, folks, is best characterized by the term “colonialism,” whereby tribes are exploited by a combination of outside forces collaborating with inside elites. The potential for exploitation is simply enormous, given that this particular memo seems to have been dropped in their laps. Endogenous indigenous cannabis experts are few and far between, and it’s going to be fairly easy for folks who understand cannabis markets to set the tone for and content of emergent Native American cannabis industries.¬†That said, there’s also lots of room for folks to build genuinely productive relationships with Native American tribes to develop healthy and viable cannabis markets.

Third, and I can’t emphasize this enough, enormous investment groups are likely to want to monopolize indigenous cannabis industries and may be competing with each other to do so. This may manifest itself in the centralization of production and processing, which will concentrate market share and value in a few hands. This would destroy existing efforts to preserve space for a democratic cannabis economy.

Fourth, this will take a while — but not that long. Within the year we could see the first wave of tribal production, and by year two it could be significant enough to cause lawmakers to revisit and repair legal regulatory frameworks that are, right now, being revisited and repaired in legislative session. Policymakers who are thinking in terms of state experiments have to revise their thinking — we are now moving from what is formally one scalar relationship (state and federal) to three (tribal-federal, state-federal, and state-tribal-federal). Informally, of course, in Washington State we realize that “state” isn’t a homogeneous territorial field but one that is constituted of multiple local-state relationships: county-state, city-state, city-county, ad infinitum.

And maybe this is the only certain thing that can be said right now: absent Federal descheduling, the landscape of legalization has been marching towards a confusing and irrational patchwork of economic and political interests that make it very difficult indeed to evaluate for public and private interests alike.


CASP conversation with Twicebaked in Washington


Video by Steve Hyde

by Dominic Corva, Executive Director

We are incredibly grateful to Pam Dyer, Twicebaked in Washington,¬†for visiting our office on Tuesday, January 27 for a long form ethnographic conversation/interview. Pam has been a friend of ours since last year’s Cannabis Freedom March, where we first began to learn about her as a “cannabis stakeholder,” as the legislators put it. Here at CASP, we like to unpack such categorical boxes so we can understand how cannabis is social policy, embedded in wider contexts, since what’s at stake for cannabis is what’s at stake for¬†society. To do that we have to know a lot more about the human beings whose lives and livelihoods are constructed in complex relationship with the plant, rather than simple categorical boxes like “recreationist” or even “patient.” People like Pam who have been around the plant their whole lives — including childhood, gasp — have something important to tell us about how to make peace with a plant.

The difference between an ethnographic interview and other ways of interviewing people is that the interviewer is looking for ways in which individual’s¬†stories shed partial light on¬†collective ones. Life stories tell us something about how individuals make choices, but not under conditions of their own choosing. Instead, they face landscapes of choice that are shared with different others making similar and/or different choices under similar cultural, economic and political conditions. The Twicebaked story intersects with shared social particularities around, among other things: chronic lifelong pain related to scoliosis; lifework associated with personal fitness and nutrition training; suburban British Columbia childhood; women’s spaces; and most recently, working¬†in the newly out-of-the-closet cannabis landscapes which include but are not limited to legal ones. Twicebaked’s choices in these conditions for choosing are her own, but they provide us with a grounded peek into how others with similar conditions have developed their identities as cannabis stakeholders, or not.

What can you learn from a conversation with Twicebaked, then? You can learn about the content of her choices as well as the conditions others in similar positions face. Right now, the most timely combination of the two might be her account of challenges to others interested in following her along the path of raw cannabis preparation and consumption as part of a holistic diet. As the discussion about how to regulate cannabis markets develops, the question of access to and distribution of fresh, organic whole plants to juice has yet to take its place at the legislative table. Yet this may be the most healthy¬†direction for cannabis markets to develop. “Health and wellness” cannabis preparation defies existing regulatory¬†definitions like “recreational” and “medical,” and have the greatest potential for creating new kinds of markets for cannabis¬†consumption¬†and its associated potential tax revenues.

With that said, many thanks to Pam Dyer for her participation and engagement. She is an important part of the CASP solidarity network, and we have much common ground. Special thanks also go out to Steve Hyde, our tireless and creative videographer.



How many I 502 producers just went dormant for the next 8 months?


Map by Steve Hyde

by Dominic Corva, Executive Director

In the process of developing a forecasting methodology, I’ve noticed that “canopy” — maximum or effective — seems to be a very blunt tool for calculating harvest potential. However, it can give us comparative ratios that are much more credible than nominal numbers. Today’s post uses canopy to highlight a very significant factor for thinking about I 502 production in the coming year: the dormancy of most outdoor grows.

The 1/13/2015 WSLCB update counts 339 approved producer licensees. 78 are Tier 1, 153 are Tier 2, and 108 are Tier 3 producers. We applied our sample ratios provided by the WSLCB a few months ago to project how many of those are indoor, outdoor, and both.

Tier 1:     Est. Licensees Max Canopy Effective Canopy % of canopy
In 65 91,000 27,300 1.33%
Out 8 10,920 9,828 0.48%
Both 5 7,280 4,732 0.23%
Tier 2:
In 91 634,145 190,243 9.27%
Out 24 169,105 152,195 7.42%
Both 38 267,750 174,038 8.48%
Tier 3:
In 26 546,000 163,800 7.98%
Out 40 840,000 756,000 36.85%
Both 42 882,000 573,300 27.95%
Total 339 3,448,200 2,051,436 100.00%


Simple math tells us that approximately 44.75% of currently approved production is classified as strictly outdoor, and therefore will not be harvesting for the next nine months. This number is the absolute low end of the percentage of approved producers that won’t be delivering product to market till Fall 2015: some unknown percentage of the 36.7% categorized as “both” indoor and outdoor are primarily outdoor.

If half that number are primarily outdoor — about 18% — then we would estimate that 63% of all currently approved I 502 canopy will not be yielding product for market until Fall 2015.

Of course, we don’t have good data on whether half that number is a good rule of thumb. I suspect it is too low. As we move towards a quarterly forecast, the takeaway point is that a LOT higher percentage of max canopy will be harvested in the fourth quarter, while about a third of max canopy could be harvested in the first three quarters. The third quarter will include Outdoor Light Dep crops, of course, and so we predict a steep production drop in the first quarter of 2015 followed by steady increase fortified by more producers coming on line.

That is really the difficult trend to anticipate. We don’t know how much of the current applicant pool is viable, on the one hand, and how many of those businesses will be sold to investors who can make them viable, on the other. As of now, the WSLCB seems content to let the market figure out how to distribute the limited number of licenses applied for in its first and only window.

An alternative would be to open up the process to merit-based applications, rather than let the production landscape go to the highest bidder. It is also possible the WSLCB will restore the 30% of max canopy it took away a year ago. We are at about 3.5 million out of 8.5 million square feet of max canopy the WSLCB has most recently estimated as the production ceiling.

In that case, though, investment groups may snatch up enough of the currently unviable applications to surge way past WSLCB intentions to cap production.

Astute readers will note that given the existing approved canopy numbers, Fall 2015 is likely to blow production up so much that many licensees will go out of business, on the one hand, and that I 502 retail will be extremely competitive with current medical access points. When I 502 producers start going out of business because wholesale prices can’t meet cost of production, indoor production will decline precipitously.

That goes for indoor gray and black market indoor producers, too — but does not apply to imported “indoor” from California, which is mostly outdoor. ¬†That price floor is probably about $1000/lb wholesale — and the legal system once up and running can beat it, if anti-competitive measures such as the tax structure are fixed.

The working hypothesis, then, is that those concerned with commercial medical production could easily wait it out — it won’t be long before market forces displace most of them. This hypothesis assumes that the 2015 legislature will (a) switch from excise to sales tax and only at point of retail; (b) resolve the local jurisdiction rebellion against I 502 participation; and (c) open up a LOT more retail stores.