Will legalised marijuana lead to an economic boom?

Legal marijuana: Confusion in Colorado over taxing cannabis

Marijuana is now legal in Washington state in the north-west of America. Will the sales kick-start an economic boom?

Kimberly Bliss and her wife, Kim Ridgway, have been looking for ways to get back on their feet.

The women lost their jobs when their mutual employers sold a struggling wholesale meat business during the recession. Two and a half years later, Ridgway has been unable to find stable work, while Bliss only works part-time.

"We're both over 50, and we're women," Bliss says. "We're some of the hardest people to employ in this economy. We have nothing to look forward to in our future."

But the legalisation of marijuana has changed that.

Women hold up paperwork Kimberly Bliss, left, and Kim Ridgway, right, of Olympia, Washington will apply for a retail license once the state makes them available.

Now Bliss and Ridgway are drawing up plans to open a quaint cannabis shop in downtown Olympia, Washington, funded by about $20,000 (£13,000) in savings.

They are among many Washington residents looking to cash in on the newly legal and potentially lucrative marijuana market, which they hope will give them a new start, create jobs, and boost Washington's slumping economy.

"I'm going to work for my American dream, and that's opening a retail marijuana store," Ridgway says. "It will be such a financial relief. And we have friends who are struggling, so this will also be putting them to work."

Washington's economic plan

Since voters legalised marijuana in November, the Washington State Liquor Control Board (WSLCB) has worked to formulate a system to regulate marijuana growers, processors and retailers:

  • Washington's regulation will be a first in the world - while the Netherlands tolerates the sale of cannabis, the country has no laws in place regulating its production
  • Growers, processors and retailers will be taxed
  • Marijuana licenses will be issued in December
  • The WSLCB has until then to have the new system in place, but officials are unsure whether it will be functioning at that point

Source: Washington State Liquor Control Board

A diverse bunch, prospective marijuana entrepreneurs range from cannabis novices like Bliss and Ridgway to experienced sellers crawling out of the black market.

State officials are unsure how much revenue marijuana will bring because the market has never been regulated. But experts predict the industry could fetch up to $2bn over a five-year period.

And that does not include the secondary markets that legal cannabis might fuel - tourism, agriculture and the food industry.

Sales begin next year, after the Washington State Liquor Control Board (WSLCB) issues rules and regulations for growers, processors and sellers, a task never before undertaken in the world.

Of course, many businesses in Washington are already on the ground floor - most visible are the medical dispensaries that have been selling cannabis for years.

Jar of canabis “Budtenders” at The Joint in Seattle weigh, package and sell cannabis like any other commodity

"Part of the reason legalisation passed is that this has been going on for a long time," says WSLCB spokesman Brian Smith. "It's about time we regulated this thing to get revenue for the state from this product."

Medical dispensaries have flourished in western Washington for years, although it is unknown how much revenue they earn because until December, marijuana use was illegal in the state and remains illegal under federal law. Dispensaries cannot open bank accounts and probably pay no taxes.

Despite that, at least 60 storefront medical marijuana shops have opened in Seattle alone.

At The Joint in Seattle, community service plaques line the wall near the receptionist's counter, a scene more akin to a small-town dentist's office than a drug dealer's den.

"Right now we sponsor a little football league," says Shy Sadis, manager of The Joint. "We give back to the Seattle Police Department, to the Mariners [baseball team], to the Seattle Fire Department. We even run a local toy drive ever year."

With its clean waiting room and professional staff, the company is poised to expand to recreational sales once Sadis can apply for a business license. Many other dispensaries are readying themselves to do the same.

Colorado's new normal

Marijuana for medicinal purposes has been legal in the state of Colorado for more than a decade.

In November, voters there approved recreational use of the drug as well.

Adults over 21 can now possess up to an ounce of cannabis or grow up to six plants at home.

The law will allow licensed shops to sell the drug starting in 2014.

It remains illegal under state law to consume it in public.

Supporters promise the change will bring in much-needed revenue through a 15% excise tax and a sales tax initially set at 10%.

"Seattle is going to be a Mecca for cannabis," Sadis says. "And I'm happy and proud to be a part of it. We want to pay our taxes. We want to do the right thing."

Many local marijuana businesspeople fear large companies will take over small operations before they have had a chance to develop.

Yet no big corporations have directly invested in the market and are unlikely to do so until the federal government decides whether to take action against Washington for contravening federal law.

In March, Attorney General Eric Holder said the Obama administration was still considering the federal response to new state marijuana laws.

That response is the ultimate source of concern for people looking to enter the marijuana market. Their investment and efforts could be lost if the federal government overturns legal marijuana use in the state.

"There are risks and challenges for everyone starting a new business," Bliss says. "This is a bit of a higher risk… I'm sure federal prison isn't fun. But if we do it correctly, maybe we can open some eyes."

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