A month of retail weed: high prices and low supply

Don Murphy, security guard at Top Shelf Cannabis, sees putting people at ease as part of his job. Some are nervous about entering the retail marijuana store at 3857 Hannegan Rd., in Bellingham.

“You can’t come in here, you have more hair than me.” Murphy told a customer while checking his ID – buyers must be 21. “I’ll give you a pass because you’re younger than me. I haven’t seen my hairline since I was 23.”

Murphy keeps a list of all 50 states, and he crosses them off when he sees an ID from that state. So far, the only states not crossed off are Rhode Island, Connecticut, and West Virginia.

As he checks IDs, a family of three filter into the store, followed by a father and daughter, a gray-haired woman, and a man in a cowboy hat. Murphy only lets five groups of people at a time into the store. While he’s not checking ID, he watches for suspicious cars in the parking lot.

A car with Canadian plates pulls up. About 40 percent of Top Shelf’s customers are Canadian, Murphy said.

Pot shops in Washington finally opened on July 8, about 1.5 years after voters passed initiative 502. Apparently, the green buds had an eager market, and Bellingham’s two retailers could hardly keep product on the shelves. Like other shops in the state, both Top Shelf Cannabis and 2020 Solutions, at 2018 Iron Street, closed periodically throughout the month.

Near the end of the July, Top Shelf Cannabis opened for the first time in four days and sold out of its 1.5 pound supply before closing time. If Top Shelf could get enough marijuana to allow each customer to buy the state limit of 1 ounce, Zack Henifin, a store manager, said they could sell about 5 pounds a day.

To keep their doors open as long possible, Top Shelf rationed the amount each customer could buy. At times, they sold just 1 gram per customer – the smallest amount available. But more marijuana was on the way.

“We have the shipments scheduled out,” Henifin said. “It’s just a matter of hoping the producers make it on time.”

There aren’t enough licensed growers to supply the state’s 10 stores. Blewett Pass Farms, which supplies 2020 Solutions, said five stores want their weed for every one they can supply. In mid-July, they were distributing 10 or 15 pounds of marijuana a week.

“Our phones are constantly hammered,” said Colin Smith, a grower at the Peshastin, Wash., farm. “There’s just no way we can meet the demand that’s out there.”

Top Shelf Cannabis didn’t raise their prices because of the limited supply, Henifin said.

“We could be making way more money but we want people to know that we’re reliable,” he said. “We want people to know they can come here and not have to unload their pockets just to smoke a little dope.”

At Top Shelf Cannabis on July 24, 1 gram sold for $22. That’s about twice the street price.

Prices at both Top Shelf Cannabis and 2020 Solutions varied throughout the month, but usually they were at least twice the street price.

The state Liquor Control Board, which regulates marijuana, has approved more then 40 producer and processor licenses since July 8. In that time, the board has approved five retailer applications, according to its website.

Despite the cost, Lauren Christensen said she prefers buying legally. The Bellingham mother of three said buying on the black market makes her feel anxious.

“That’s why I’m here buying it today,” Christensen said outside of Top Shelf Cannabis. “I respect what these folks have done and I respect the law. They’ve provided us with a safe, legal market even though the prices are a little high.”

Christensen was also impressed with the information available about Top Shelf’s products. The back of each package details when the plant was harvested and tested, where it grew, the percentage of THC and CBD, and the moisture content.

“On the street, I don’t know what it’s laced with,” Christensen said. “I know that this stuff is pure.”

For Richy Prason a Bellingham resident who is already a regular at Top Shelf Cannabis, not having to look over his shoulder while buying is one benefit to retail marijuana, he said. But more importantly for him, retail shops provide a choice of strains. One day when he visited Top Shelf, he had a choice between 11 strains, including Strawberry Sour Diesel, Grape Ape, and Platinum Girl Scout Cookies.

At 2020 Solutions, customers also said they preferred buying legally.

“We definitely feel more comfortable coming into the store and having everything be legal,” Maria Grenwood said.

James Atwell browsed 2020 Solutions for a minute before leaving empty-handed. He told an employee that the store’s marijuana was out of his price range.

“I’d definitely rather buy it legally, but it’s just a little pricey,” he said.

The fee for a marijuana retailer, producer, or processor license is $250, and they cost $1,000 to renew.

Each transaction during the production process – producer to processor, processor to retailer, and retailer to customer – is taxed 25 percent by the state.

As of July 24, the Washington State was slated to collect $403,008 from I-502, according to Mikhail Carpenter, spokesperson for the state Liquor Control Board.

That money goes into a dedicated fund. Every three months, $1,250,000 will go to the state Liquor Control Board for administrative costs. The rest will go to a variety of state agencies, including the University of Washington Alcohol and Drug Abuse Institute, the state Department of Social and Health Services, and the state Department of Health.

At the end of July, the state Liquor Control Board was reviewing the first legal edibles, said Brian Smith, agency spokesperson. The state board released rules July 18 that allow retailers to sell marijuana in cookies, brownies and other approved baked goods, but not in candy or items that might appeal to children.

Top Shelf Cannabis began stocking edible marijuana on Aug. 6.

Illegal dealer says business is still strong

One unregulated pot dealer who wanted to remain anonymous said retail stores haven’t cut into his business.

“I’m still selling faster than I can dry it,” he said. “Right now the reason people come over to my place is because it’s less expensive.”

He said he has more experience growing and selling the plant than most in the legal industry.

“I find it interesting that there are people in the business who have never smoked a bowl,” he said. “They have no business selling it.”

Brian Smith, spokesperson for the state Liquor Control Board, said he expects regulated marijuana sales to supplant most of the black market eventually.

“The street market has been in place for 100 years,” he said. “We can’t expect it to disappear in three weeks.”

What Smith calls the gray market – medical patients selling legally obtained marijuana to people who aren’t medical patients – might be more challenging to eliminate.

Gray market growers and dealers have little of the risk that black market producers do, and they don’t pay taxes on their product.

“The gray market is certainly an issue the legislature is going to address,” Smith said.

 

Oliver Lazenby, staff reporter for The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or olazenby@bbjtoday.com

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