Growers Struggle With Excess Of Legal Pot In Washington

January 20, 2015 Nemes Legal

Washingtons legal marijuana market opened last summer to a dearth of weed. Some stores occasionally closed due to the fact that they didnt have pot to offer. Costs were through the roof.

Six months later on, the equation has turned, bringing major growing discomforts to the new industry.

A huge harvest of sun-grown cannabis from Eastern Washington last fall flooded the market. Rates are beginning to come down in the states licensed pot stores, however due to the glut, growers are remarkably struggling to sell their cannabis.

Some are concerned about going belly-up, finding it tougher than expected to earn a living in legal weed.

Its an economic nightmare, states Andrew Seitz, basic manager at Dutch Brothers Farms in Seattle.

State data reveal that licensed growers had collected 31,000 pounds of bud as of Thursday, but Washingtons reasonably few legal pot stores have actually sold less than one-fifth of that. Numerous of the states marijuana users have actually stuck to the untaxed or much-lesser-taxed pot they get from black-market dealers or unregulated medical dispensaries restricting how rapidly product moves off the shelves of legal stores.

Every grower I understand has actually got surplus inventory, and theyre worried about it, said Scott Masengill, who has actually offered half of the 280 pounds he gathered from his pot farm in Central Washington. I do not know anybody getting rich.

Officials at the state Alcohol Control Board, which regulates cannabis, aren’t extremely worried.

Up until now, there are about 270 certified growers in Washington but only about 85 open shops for them to sell to. Thats partially due to a slow, challenging licensing procedure; retail candidates who have not been all setprepared to open; and pot-business bans in lots of cities and counties.

The boards legal-pot project supervisor, Randy Simmons, states he hopes about 100 more stores will open in the next couple of months, providing added outlets for the weed thats been collected. Washington is most likely to constantly have an excess of marijuana after the outdoor crop is available in each fall, he recommended, because outdoor growers normally collect one huge crop, which they continue to offer throughout the year.

Weed is still costly at the states pot shops often in the $23- to $25-per-gram range. Thats about twice the cost at clinical dispensaries, however more affordable than it was a few months ago.

Simmons said he anticipates pot rates to keep fluctuating for the next year and a half: Its the volatility of a new marketplace.

Colorado, the just other state with legal marijuana sales, has a differently structured market. Regulatory authorities have kept a cover on production, though the restrictions were loosened last fall as part of a planned growth of the market.

Colorado growers still have to prove legal need for their product, a regulatory curb intended at avoiding excess weed from spilling to other states. The result has actually been more need than supply.

In Washington, lots of growers have impractical expectations about how rapidly they need to be able to recover their preliminary investments, Simmons said. And some of the growers grumbling about the low rates theyre getting now had actually gouged the new stores amid lacks last summer.

Those include Seitz, who offered his very first crop 22 pounds for just under $21 per gram: nearly $230,000 prior to his substantial $57,000 tax bill. Hes ready to gather his second crop, butnow he anticipates to obtain simply $4 per gram, and at a time when he has big costs to pay.

Were running out of cash, he said. We requirehave to make sales this month to stay operational, and were going to be offering at losses.

Because of the high taxes on Washingtons legal pot, Seitz states shops can never compete with the black market while paying growers sustainable costs.

He and other growers say its been an error for the state to license a lot manufacturing while the rollout of legal stores has lagged.

If its a natural bump from the outdoor harvest, thats one thing, said Jeremy Moberg, who is sitting on 1,500 pounds of unsold cannabis at his CannaSol Farms in North Central Washington. If its institutionally developing excess … thats a problem.

Some retailers have actually been marking up the wholesale price threefold or more a practice that has some growers wondering if particular stores aren’t tidying up as they struggle.

I got sellers beating me down to offercost black-market prices, said Fitz Couhig, owner of Pioneer Production and Processing in Arlington.

But two of the top-selling shops in Seattle Uncle Ikes and Cannabis City insist that due to the fact that of their tax obligations and low need for pricey pot, theyre not making any cash either, regardless of each having sales of more than $600,000 per month.

Aaron Varney, a director at Dockside Marijuana, a retail store in the Seattle suburb of Shoreline, stated shops that exploit growers now could get bitten in the long run.

Right now, the numbers will say that were in the motorists seat, he said.

However that can change. Were looking to develop excellent relationships with the growers were dealing with.

Kristen Wyatt added to this story from Denver.

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