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Invisibleluvdemshrooms
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Wash. state faces prospect of too many pot growers
    #19386912 - 01/08/14 08:37 AM (10 years, 23 days ago)

Wash. state faces prospect of too many pot growers
Posted: Tuesday, January 7, 2014 6:59 PM EST Updated: Tuesday, January 7, 2014 7:00 PM EST


By GENE JOHNSON
Associated Press

SEATTLE (AP) - Washington state could be facing a curious economics problem: too many pot growers.

According to updated figures released Tuesday, more than 2,600 applications have been submitted to produce the marijuana that will be sold at state-licensed stores when Washington's legal marijuana industry opens for business around the middle of this year.

That's a problem because officials are, at least initially, capping total pot production at 2 million square feet, or about 46 acres. It remains to be seen how many applications are approved, but if it's even close to the number submitted, that could leave growers with less than 1,000 square feet apiece on average - not enough space for most to run an economically viable operation.

"It's going to be a challenge, no question about it," said Alison Holcomb, the Seattle attorney who drafted the legal pot law. "There are 10 times as many applications as we need."

The prospect of having too many growers isn't the only difficulty prompted by the overwhelming interest in the industry. Some 2,035 applications have been processed so far for retail licenses, but the state is capping the number of pot shops statewide at 334. That means there are likely to be lotteries for those licenses in many areas.

In Seattle, where the state Liquor Control Board has allotted 21 pot shops, there have been 408 retail license applications. In Spokane, which will have eight marijuana stores, there have been 84 applications.

Board spokesman Mikhail Carpenter said it's premature to worry about the number of applications, because while the state is not capping the number of growers, no one yet knows how many will meet criteria. The board must screen each application to make sure the proposed locations aren't within 1,000 feet of schools, parks, daycares or other locations where children frequent. Officials must also conduct background checks on applicants and their financial backers.

"They haven't gone through the licensing process," he said. "We don't know how many are viable."

The board is issuing growing licenses of three tiers: less than 2,000 square feet; 2,000 to 10,000 square feet; and 10,000 to 30,000 square feet. Under its rules, if the total amount of licensed growing canopy exceeds 2 million square feet, it may reduce by an equal percentage the space allotted to each grower, or apply those reductions to the growers in one or two of the tiers.

Holcomb called the glut of pot-growing applications "a real problem for the people that want to go into production."

"If you apply for a 30,000-square-foot grow and incur all the expenses for the lease and buildout, you don't want to suddenly learn that you can only grow 2,000 square feet," she said.

Holcomb suggested the board should be prepared to raise the production cap of 2 million square feet, to ensure enough pot is produced to meet demand. It remains unclear how good the licensed growers will prove to be, and how much usable marijuana they'll actually produce from the 2 million square feet of canopy.

She noted that soon after recreational marijuana stores opened in Colorado Jan. 1, some had to close early due to limited supply. Some stores jacked up prices due to the first-day demand.

Some hopeful growers have applied for the maximum of three top-tier licenses, meaning they might have been planning to grow as much as 90,000 square feet of cannabis.

"Our biggest clients are sweating it," said Seattle marijuana business attorney Hilary Bricken. "People are paranoid and they have every right to be paranoid, because no one knows what's going to happen. As a business strategy, can you rely on everyone else's failure so that you can have the size grow you want? I would say, no, not if you want to sleep at night."

But Paul Schrag, of Commencement Bay Production and Processing in Tacoma, said he's not panicking. His company has applied for two growing licenses, with plans to start with an initial grow of about 3,000 square feet and expand from there.

"Knowing what I know of the gantlet people have to go through to receive a license, I have a feeling a good percentage of those applications will be eliminated," he said. "There's a lot of due diligence left that's going to thin out those numbers."


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You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for that my dear friend is the beginning of the end of any nation. You cannot multiply wealth by dividing it. ~ Adrian Rogers


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OfflineCliftonGK1
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Re: Wash. state faces prospect of too many pot growers [Re: luvdemshrooms]
    #19386956 - 01/08/14 08:54 AM (10 years, 23 days ago)

Why cap the production?  Obviously they've learned nothing from the situation in Colorado:  If you grow it, they will come.
Washington has got a crapton of financial issues to contend with.  Take for example the 520 bridge replacement.  So they started tolling, and everyone switched to using the I90 bridge instead, and now they're going to toll that, too.  Ugh, what an utter disaster. 
If they just capitalize on the market potential for marijuana sales, both locals and tourism dollars, they could pay for a new 520 bridge with leftover pocket change.  (OK, that's an exaggeration, but the money could be put to great use on infrastructure projects like the bridge and the new tunnel they're building.)

What I'd like to see there, and in Colorado, is a Bed & Breakfast pot tourism industry.  That's apparently the big issue in Colorado, is that people drive in from out of state and have nowhere to smoke.  Can't smoke in the shops.  Can't smoke in public.  Hotels that allow cigarette smoking have specifically banned pot smoking.  Can't drive it across state lines back home.  What's a tourist to do?  Pot-friendly B&Bs could make a killing in either state.


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Invisible36fuckin5
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Re: Wash. state faces prospect of too many pot growers [Re: CliftonGK1]
    #19387096 - 01/08/14 09:42 AM (10 years, 23 days ago)

Quote:

CliftonGK1 said:
What I'd like to see there, and in Colorado, is a Bed & Breakfast pot tourism industry.  That's apparently the big issue in Colorado, is that people drive in from out of state and have nowhere to smoke.  Can't smoke in the shops.  Can't smoke in public.  Hotels that allow cigarette smoking have specifically banned pot smoking.  Can't drive it across state lines back home.  What's a tourist to do?  Pot-friendly B&Bs could make a killing in either state.




Hotels aren't really gonna bother you. I went to CO back in the Summer, while it was legal but not yet implemented and the lady at the front desk of my hotel helped us find pot.


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Redd Foxx said:
If you're offended I don't give a shit and don't come see me no more.

Pat The Bunny said:
A punk rock song won't ever change the world, but I can tell you about a couple that changed me.

bodhisatta said:
i recommend common sense and figuring it out.

These are the TEKs I use. They're all as cheap and easy as possible, just like your mom.


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OfflineCan-i-bus
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Re: Wash. state faces prospect of too many pot growers [Re: 36fuckin5]
    #19387205 - 01/08/14 10:13 AM (10 years, 23 days ago)

I just hope I-502 crashes and burns. It's a terrible fucking law....


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Invisibleluvdemshrooms
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Re: Wash. state faces prospect of too many pot growers [Re: Can-i-bus] * 1
    #19387325 - 01/08/14 10:37 AM (10 years, 23 days ago)

Right, because what they had before was superior.

What's the matter? Profits down?

http://www.priceofweed.com/prices/United-States/Washington.html


--------------------
You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for that my dear friend is the beginning of the end of any nation. You cannot multiply wealth by dividing it. ~ Adrian Rogers


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Offlineoverstand
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Re: Wash. state faces prospect of too many pot growers [Re: Can-i-bus]
    #19387346 - 01/08/14 10:42 AM (10 years, 23 days ago)

There is a saturation point for the cannabis market in Washington state. Residents and tourists can only smoke so much in a given time period. If supply out paces demand prices will drop and so will state tax revenue. This is the states attempt at price gauging so that they can increase their tax revenue. If they are not careful the black market will thrive.


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“Disobedience is the true foundation of liberty. The obedient must be slaves.” - Henry David Thoreau


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OfflineCliftonGK1
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Re: Wash. state faces prospect of too many pot growers [Re: overstand]
    #19387470 - 01/08/14 11:06 AM (10 years, 22 days ago)

Quote:

overstand said:
There is a saturation point for the cannabis market in Washington state. Residents and tourists can only smoke so much in a given time period. If supply out paces demand prices will drop and so will state tax revenue. This is the states attempt at price gauging so that they can increase their tax revenue. If they are not careful the black market will thrive.




It's Washington.  You just know they'll fuck it up the same way they did with the privatization of liquor stores.
Oh look, this bottle is $6.00 less than it used to be at the State Store... Until you factor in the $8.00 of taxes thrown on it.  I just about shit myself when I saw how cheap the liquor prices are here in Atlanta.


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OfflineLord_McLovin
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Re: Wash. state faces prospect of too many pot growers [Re: CliftonGK1]
    #19387806 - 01/08/14 11:53 AM (10 years, 22 days ago)

I wonder what happens if the demand is way higher than production... oh, wait, I know.

The people who will have grown the weed illegally will make a lot of money... But I do wonder what the governments response to that will be and how the people respond to that. :strokebeard:


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InvisibleDebuteMachine

Registered: 09/29/06
Posts: 6,457
Re: Wash. state faces prospect of too many pot growers [Re: Lord_McLovin]
    #19388347 - 01/08/14 02:04 PM (10 years, 22 days ago)

Shit article, I have nothing more to add. Mindless speculation.


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OfflineJesus Christ
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Re: Wash. state faces prospect of too many pot growers [Re: DebuteMachine]
    #19388375 - 01/08/14 02:12 PM (10 years, 22 days ago)

i opened this thinking it was gonna be a good thing that there's too many pot growers.


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Offlinesunshine
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Re: Wash. state faces prospect of too many pot growers [Re: Jesus Christ]
    #19388498 - 01/08/14 02:45 PM (10 years, 22 days ago)

I vot4ed against it.  Everyone will still buy their pot on the black market and it opens up the door for law enforcement to test and bust drivers like mad.  I've already been hearing about the "don't drive buzzed" campaign on the radio.


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One Love True Indeed.  Have Good Trips.  Mike/sunshine's mom.


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Invisibletaterdb
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Re: Wash. state faces prospect of too many pot growers [Re: DebuteMachine]
    #19391953 - 01/09/14 03:21 AM (10 years, 22 days ago)

Quote:

CliftonGK1 said:
Why cap the production?  Obviously they've learned nothing from the situation in Colorado:  If you grow it, they will come.




This is actually my area of expertise, in a very competitive of a market, which pot is strictly because of the nature of the product and its ease of production, price is forced down to equal cost: if supply goes up, prices drop, if prices drop too much the amount a grower can make from a pound lets say, will be equal to or less than the cost of growing that pound. This might seem good from a consumer's perspective for a while, but then the supply side of the market crashes and that's bad for everybody. Without some sort of limiting factor on the supply such as a tax or license fee people will continue to become growers and this level of supply will be reached, people will only stop entering the market when this price equals cost point is reached. Therefore for the industry to be healthy and profitable they have to limit supply. They also likely have a target demand in mind to try to limit consumption a certain amount, that's a whole other discussion. Bottom line however is that proper taxation, license fees and production caps will keep the industry healthy and profitable.

Quote:

Lord_McLovin said:
I wonder what happens if the demand is way higher than production... oh, wait, I know.

The people who will have grown the weed illegally will make a lot of money... But I do wonder what the governments response to that will be and how the people respond to that. :strokebeard:




This is a temporary problem in Colorado and will not last, supply will quickly catch up if there is money to be made. And illegal growers still face the same market problems as their legal counterparts, their one advantage will be that they have slightly lower costs by not paying for licenses and other such stuff, how much of an advantage this may create is hard to say.


Quote:

overstand said:
There is a saturation point for the cannabis market in Washington state. Residents and tourists can only smoke so much in a given time period. If supply out paces demand prices will drop and so will state tax revenue. This is the states attempt at price gauging so that they can increase their tax revenue. If they are not careful the black market will thrive.




I think you'd be surprised, if it were cheap enough I bet people could go though an almost limitless quantity, but you are exactly right in that price will drop, and that more sales equals more tax revenue for the state. However we want the industry to do well, if the industry does well so does the community (and the state for that matter, but that's besides the point). That money the producers make goes back into the economy and is a betterment for all, even if weed isn't quite as cheap as we might like.

Quote:

DebuteMachine said:
Shit article, I have nothing more to add. Mindless speculation.




The article is just fine and is not speculation, the economic principles here have been long tried and trued and there are numerous mathematical proofs to back it up. Given good enough data any third year econ major could run the industry like a well oiled machine, the problem is this data does not exist, at least yet.


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InvisibleDebuteMachine

Registered: 09/29/06
Posts: 6,457
Re: Wash. state faces prospect of too many pot growers [Re: taterdb]
    #19391964 - 01/09/14 03:30 AM (10 years, 22 days ago)

Some businesses will sink, some businesses will float. Did I miss anything? To me that just seems like common sense.


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OfflineLord_McLovin
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Re: Wash. state faces prospect of too many pot growers [Re: taterdb]
    #19391980 - 01/09/14 03:34 AM (10 years, 22 days ago)

Quote:

This is actually my area of expertise, in a very competitive of a market, which pot is strictly because of the nature of the product and its ease of production, price is forced down to equal cost: if supply goes up, prices drop, if prices drop too much the amount a grower can make from a pound lets say, will be equal to or less than the cost of growing that pound. This might seem good from a consumer's perspective for a while, but then the supply side of the market crashes and that's bad for everybody.




Why should the latter happen? Pot is just another good to be traded and we do not have the pricing policy you suggested for other goods so I do not see any reason to introduce it from an economic perspective.
Unless of course you take the perspective of the state, they want to keep prices and thus their tax revenue high... Oh Lord, I hate the government.

Quote:

This is a temporary problem in Colorado and will not last, supply will quickly catch up if there is money to be made. And illegal growers still face the same market problems as their legal counterparts, their one advantage will be that they have slightly lower costs by not paying for licenses and other such stuff, how much of an advantage this may create is hard to say.




I wasn't talking about Colorado, but let's do that. In the criminal market people want to get paid for the risk they take, so, assuming production supersedes demand, I do not see why the industry should not be able to compete price-wise - unless of course, people get greedy and keep the prices high artificially...


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InvisibleLe_Canard
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Re: Wash. state faces prospect of too many pot growers [Re: luvdemshrooms]
    #19392874 - 01/09/14 09:50 AM (10 years, 22 days ago)

Let them grow all they want and send anything in excess over here back east. We'll figure out something to do with it. :grin:


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OfflineAbsent Minded
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Re: Wash. state faces prospect of too many pot growers [Re: Le_Canard]
    #19393590 - 01/09/14 12:44 PM (10 years, 21 days ago)

Quote:

ToiletDuk said:
Let them grow all they want and send anything in excess over here back east. We'll figure out something to do with it. :grin:



I second this.
Keep it comin', boyz
:trippinbawelz:


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