Reefer Madness

Unusual business or business as usual?

Wednesday, April 30, 2014

Initiative 502 legalized recreational marijuana in Washington. Or did it?

Imagine you own ten acres in rural Whatcom County. Your family has operated a commercial plant nursery on this property for three generations. But, like many rural businesses, you are still suffering from the economic downturn. Plant sales are down and those businesses that you used to supply locally have recently shut down.

With the passage of I502, a new business opportunity exists. Growing and processing marijuana could enable you to keep operating on your land. Also, you voted for I502 thinking that our war on drugs has been a losing battle and marijuana should be taxed and regulated.

In November of 2013, you check with Whatcom County to make sure marijuana production and processing is allowed in the rural zone and you are told that it is. You file your application with the State of Washington for a producer/processor license in December of 2013. You and your spouse go through the required criminal background checks and verify the source of funds for the business. You then invest tens of thousands of dollars in business startup expenses knowing that you will have to meet the state’s requirements for security, camera surveillance, electronic tracking, handling, measuring, waste disposal, etc.

Having made it through the initial state licensing steps, in March of 2014, you seek to apply to Whatcom County for the appropriate building permits. You are now told that you cannot operate a marijuana business on your property because you are within 1,000 feet of the Church of the Divine Center of Spiritual Yearning. Sorry, but the local zoning rules have changed since you submitted your application to the State of Washington. The new rules prohibit any marijuana businesses within 1,000 feet of a church or other “community center.”

You know the folks at the church and you know they probably don’t mind a grow-op within 1,000 feet. The Church High Priestess confirms this and lets the county know that all herb is sacred and they don’t object to the operation. The only problem is that a group of rural residents do object and they threaten to appeal any building permit approvals based upon the church being within 1,000 feet of the operation. They claim that there is no ability for the church to waive the 1,000-foot rule. The county agrees and denies the building permit application.

You can appeal this decision and hope that tens of thousands of dollars later in legal bills you will prevail. But you also know that the rural residents are well-funded and can keep you tied up in court for years. You can try to move your operation, but the state has said that they will put on hold any application where a licensee seeks to change locations. So what is an otherwise qualified marijuana licensee to do other than to pray for local legislative changes?

When Washington State voters passed I502 and legalized the production, processing and sale of recreational marijuana, potential marijuana business owners assumed that the biggest hurdle they would face would be the state’s licensing system. What they likely did not anticipate was the myriad local regulations that would heavily restrict, and in some cases outright prohibit, recreational marijuana businesses.

In our far corner of Cascadia, which is considered the bluest area in one of the bluest states, each local jurisdiction has created its own set of rules and restrictions that could hamper the growth of a legal marijuana industry. I502 passed with a 57 percent vote in Whatcom County. Yet, the County Council recently enacted a set of regulations that among other things, restricts marijuana and growing operations in rural areas such that they cannot be located within 300 feet of a residence, unless the marijuana licensee obtains a waiver from every property owner within 300 feet.

Given the amount of residential development in the county’s rural areas, it is likely that any marijuana operation is going to be located within 300 feet of at least one residence. The idea of obtaining a waiver, while it may appear to be a compromise solution on paper, presents all sorts of practical difficulties and transfers potential control to a neighbor. What if the property is bank-owned due to a foreclosure? What if the owners are out of state (tenants cannot sign the waiver)? What if the property owner demands money in return for the waiver?

In addition to the 300-foot setback, the county also decided to ban marijuana facilities within 1,000 feet of a “community center, which includes grange halls, senior centers, field houses as well as churches. This is on top of the State’s prohibition from marijuana business being located within 1,000 feet of a school, child care center, playground, library, or anywhere else where minors gather.

The question is, what are these buffers actually protecting?

Claims that setbacks are needed for safety and security make no sense, and in fact conflict with this goal. The large setback requirements will require that marijuana operations be located far away from any existing development and therefore harder for the Sheriff and other emergency personnel to reach. The more isolated a business, the more susceptible it is to crime.

Are we protecting “rural character” with these setbacks? It seems we are merely protecting residential development in the county.

Marijuana growing and processing operations, from the outside, are like any other greenhouse operation and would therefore seem to be more consistent with rural character than a housing development.

The state’s 1,000-foot buffer from schools, playgrounds and other public areas was specifically enacted to prevent access to marijuana by minors. If a church has a child care center it would already be covered under the state’s 1,000-foot setback. Do we really need to prevent marijuana business from being anywhere near grange halls?

Leaving unincorporated Whatcom County, only Bellingham outright allows marijuana businesses. But even Bellingham has restricted marijuana operations to specific areas of the city. Production and processing are limited to the industrial areas and retailing limited to commercial and industrial areas.

The next largest city, Ferndale, initially allowed marijuana operations in certain zones but recently enacted a moratorium prohibiting new marijuana businesses from locating in the city.

Both Lynden and Everson have enacted moratoria banning all marijuana businesses.

Our northwest corner of the state is not alone in having a mix of moratoria and differing zoning schemes regulating marijuana businesses. According to the Center for the Study of Cannabis and Social Policy, 46 percent of Washington cities have either placed a moratorium on or banned recreational marijuana businesses; and 36 percent of the counties have enacted moratoria or bans. In all other jurisdictions, licensees are subject to that area’s unique set of zoning and/or business licensing regulations.

As an attorney who has practiced land use and real estate law for the past 17 years, I understand the need for zoning regulations to reflect local conditions. This makes sense when we talk about density restrictions, environmental controls and properly managing growth.

The problem is that with regard to marijuana, zoning controls are being used to limit a specific industry in contravention of a voter-passed initiative.

The purpose of I502 was to tax and regulate marijuana in order to get rid of the illegal market. If local jurisdictions ban or otherwise restrict the ability of legal recreational marijuana businesses to operate, the legal market will never be able to compete with the black market. Nor will the state collect the tax revenue to be used for substance abuse treatment.

The state is set to issue retail licenses in July. To date, however, approximately one dozen producer licenses have been issued. Given the quagmire of local regulations, it is unclear whether there will be a sufficient legal marijuana supply for the licensed retailers.

Certainly the state Legislature could and should provide incentives to local governments to implement I502 by sharing tax revenue. But in the interim, local jurisdictions should not be able to thwart the goals of the initiative.
Heather Wolf is a partner with the law firm Brownlie Evans Wolf & Lee, LLP. She has practiced land use, real estate and business law in Whatcom County for the past 17 years. She represents recreational marijuana producers, processors, and retailers throughout Whatcom and Skagit counties.

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