Sunday, October 5, 2014

Bigger Harvest Could Lower Washington Legal Marijuana Prices

Slowly and in beat with the rhythms of agriculture, licensed producers are growing enough pot that retailers hope to eventually lower prices enough to diminish the black market, one of the major justifications for Initiative 502, passed by state voters nearly two years ago.

So far, legal marijuana store owners admit legalizing and licensing marijuana has done little to combat street sales, where unscrupulous dealers don't test their products, pay taxes or check the age of their customers.

Statistics for 2014 are not out yet, but there's an increase this year in illegal grows on tribal lands, public lands and in backyards, said Jodie Underwood, a spokeswoman the federal Drug Enforcement Administration's regional office in Seattle.

Just last Monday, authorities seized 20 pounds of processed marijuana and 43 plants in Zillah. The same day, police arrested two men they accuse of stealing medical marijuana from a home in Selah.

Currently, Yakima Valley retailers pay wholesale producers from $8 to $15 per gram, about the same range as the street value of the untaxed, illicit version that runs anywhere from $10 to $20 per gram depending on quality. Medical marijuana, often sold illegally, runs between $10 to $12 per gram, retailers say.

Store owners then charge between $25 to $40 to cover their operating expenses and taxes. The state charges a 25 percent excise tax on all retail sales, while the federal government, which still considers marijuana against the law, charges store owners income tax but allows no deductions.

The math often works out to a net gain of less than 5 percent from which retailers must pay rent, utilities, wages and their monthly bills for their startup loans.

However, things have improved and will keep improving, some retailers promise. At least stores can keep their doors open now.

Up until this fall, most of the state's marijuana has come from more indoor growers, who have much higher electric bills than Eastern Washington's sunlight farmers.

Marijuana business owners predict the extra supply from the sun-grown harvests will allow them to cut their prices in half sometime this fall.

Adam Markus, owner of Station 420 in Union Gap, also predicts prices will drop by half but doesn't suspect they will stay that way for long.

Just this week, Markus drove twice to Spokane and once to Seattle to meet with growers in search of enough product to keep his shelves full.

Last week, he spent a day and a half with no marijuana in small packages, in spite of an entire day of desperate phone calls.

Markus suspects prices will drop only for a few months but go back up again once retailers sell out of their outdoor-grown supplies. Changes to federal tax laws in his favor aren't coming anytime soon either, he said.

As of Tuesday, the state had issued licenses to 235 marijuana producers, though not all have necessarily started growing. Klickitat County had 12, Kittitas County five, Benton County six and Grant County two. Yakima County had one.

Yakima County has banned all marijuana businesses in the unincorporated areas, while the city of Moxee allows only producers and processors, not retail stores. Most growers prefer locating outside city limits, where they have more space between themselves and neighbors and cheaper water.

Growing pot is more technical than it looks, producers say, another trait it shares with most of the region's crops.

Crews must watch out for pests and mold, manage canopy density and regulate water. Most of the Kittitas growers haul water in by truck because of the Department of Ecology's moratorium on new wells.

At least two of the Kittitas County growers, including Life Gardens, aren't completely outdoors.

They plant in grow tubes with plastic tarps stretched over a pipe skeleton similar to those used by a handful of Yakima Valley vegetable farmers. The tubes let in fresh air and sunlight but allow the gardeners to regulate heat and humidity. In the future, they may be able to harvest three times in one year, instead of just once, or at least stagger their seasons to keep the supply more steady.

At Life Gardens, bamboo stakes support the weight of budding branches, much the way notched lumber once did for ripe apples.

Mark Ziegler spots a stick with too much ripening foliage crammed against it, causing him to worry about mold. On another stake, wire chokes a ripening bud.

"I'll have to find out whose row this is," he said.

Ziegler, 37, moved to the Ellensburg area in late June from Santa Rosa, Calif., where he worked for many years tending medical cannabis crops.

Already, his crews may have learned some lessons. Their plants, some more than 7 feet tall, have grown so big and wide that workers have to crawl on their hands and knees to reach the ones in the back. They might spread things out a little next year.

"A lot of people underestimate it and they learn the hard way," Ziegler said.

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