Pubdate: Thu, 18 Sep 2014
Source: Seattle Times (WA)
Copyright: 2014 The Seattle Times Company
Contact:  http://seattletimes.nwsource.com/
Details: http://www.mapinc.org/media/409
Author: Evan Bush
Page: A1

A ROCKY START FOR STATE'S POT STORES

Seattle Stores Have Been Delayed by Limited Locations, Short Supply, 
City Code Issues and Unprepared Applicants.

More than two months after the first state-licensed marijuana stores 
opened in Washington, only one is selling pot in Seattle, and it 
might be weeks before another opens.

Meanwhile in Bellingham - a city of about 82,000 people - four stores 
have opened.

What's the problem here?

Chalk it up to unprepared applicants, difficulties for some 
entrepreneurs in finding legal locations for their stores and issues 
with city permitting, among the myriad problems.

Even the city's first store hasn't yet been able to bypass the red 
tape. Cannabis City is lacking permits to legally operate, according 
to the city's Department of Planning and Development (DPD).

Plus, without much marijuana available to sell, potential store 
owners say there's little incentive to move quickly.

Many of the delays stem from the state's retail marijuana lottery. In 
April, the Liquor Control Board (LCB) held a drawing to determine who 
could operate Washington's 334 potential pot shops. The LCB chose 21 
applicants at random for Seattle, of the 191 who applied.

The lottery was not merit-based. To qualify, applicants had to show 
they had the right to property suitable for selling pot under state 
law, but they did not have to prove their financial means or business 
capabilities.

In some cases, lottery winners either weren't interested or capable 
of opening a store, Liquor Board spokesman Mikhail Carpenter said.

"They're not doing anything with (their application)," Carpenter said.

Killy Nichelin, whose company Iconic Cannabis received the 53rd spot 
in the lottery, said some winners looked to profit from their license 
alone, which they viewed as "golden tickets" to barter with.

Before the lottery, Iconic Cannabis leased and began to remodel a 
property in Ballard.

When Nichelin's company was not drawn, he sent an email out to all 
the lottery winners seeking partnership. Seven winners contacted him. 
They wanted his company's location, knowledge and business plan. Some 
asked for money.

"These people are insane," he said. "They got a lottery ticket, they 
didn't prepare at all, and they thought they ruled the world."

Nichelin said some of the people who wanted to partner didn't appear 
to have the financial means to operate nor did they have access to a 
good location. He wasn't willing to give up prime, legal real estate 
to people he felt shouldn't have been in the lottery in the first place.

"If we were to give up the building ... we just handed someone a 
turnkey property," he said. To afford rent on their location, 
Nichelin and his business partners opened a low-volume medical 
dispensary. They still hope to get a state license.

So far, the LCB has disqualified five Seattle lottery winners and 
begun to review some ranked higher than 21. The LCB this week also is 
sending letters to dozens of lottery winners, giving them 60 days to 
make significant progress toward their license or have their 
applications withdrawn, said Randy Simmons, the state's marijuana 
project director.

Although he received the 25th lottery position, applicant Bob Ramstad 
said his company, Paradoxical, received a letter from the LCB in 
August. His application was being reviewed.

It was a surprise. Ramstad had secured property before the lottery 
but relinquished it when he wasn't selected. He had to start his search anew.

Finding real estate has proved difficult. Ramstad said he pored over 
800 lease listings in Seattle and found just 20 that would be legal 
and suitable for a retail business. About half of those would require 
him to change the property's allowable use to retail, which can take weeks.

Ramstad said once he signs a lease, he'll be two months away from 
opening up but said some landlords haven't been willing to work with 
him for fear of a federal crackdown on pot businesses.

Valid locations

The city's more than 400 parks, 97 public schools and about 200 
child-care centers presented challenges for applicants, who are not 
allowed to be within 1,000 feet of them.

Trichome & Calyx's Mehran Rafizadeh, for example, drew Seattle's top 
lottery number, but his application is on hold as he and the LCB 
determine whether he chose a valid location.

Rafizadeh says a child-care facility opened within 1,000 feet of his 
location after his application was submitted.

Until a judge rules on his case, Rafizadeh doesn't know if he can 
proceed where he is, be allowed to move or have his application 
denied altogether. He has a hearing scheduled for next month.

Two Seattle stores are scheduled for final inspections by the LCB.

One of those applicants, Oltion Hyseni, said the LCB will visit his 
1960s-themed shop this week. If Ocean Greens passes, Hyseni said, 
that puts him on track to get his license and open the store by the 
end of the month.

For lottery winners who did lock down a legal location, complying 
with Seattle's building and land-use code has been another hurdle.

Seth Sligar won the 12th lottery spot with his company, Bud Bouquets. 
Sligar said the LCB has approved his application pending a final 
inspection, but he's still waiting to build out his storefront.

"I can't swing a hammer until DPD tells me I can," said Sligar, 
referring to the city's Department of Planning and Development.

"There's tons of building going on in Seattle right now," Sligar 
said. "They'll get to us when they get to us."

Acquiring a permit to renovate a space or change its use can take 
anywhere from about six weeks to five months, said Bryan Stevens, a 
spokesman for DPD. Stevens said older buildings often require safety 
additions or seismic upgrades.

If the process takes so much time, how was Cannabis City ready to 
open July 8, more than two months before any other Seattle shop? They 
simply didn't wait on DPD, and instead filed for a change of use after opening.

That approach comes with risks. In June, the city sued its first pot 
producer for operating outside its building code.

If Cannabis City were not addressing its permit problems, Seattle 
could choose to take similar action.

"The space is technically not legal," Stevens said. "However, we will 
allow a business to be used or remain open if they show progress to 
obtain a permit."

Cannabis City owner James Lathrop said he didn't know he needed a 
permit. "I took the space the way it was, and I opened it," he said. 
"It's just paperwork to move it from office to retail. It's all in process."

Stevens said as long as Lathrop continues on his path to compliance, 
he won't be fined, but it could still be costly.

"When you're asking for forgiveness rather than permission there's a 
huge risk there," Stevens said. "You may have to make physical 
changes to the space, safety changes. That can add some cost to the project."

Limited supplies

If any potential store owners are waiting on supply to stabilize, 
that could happen soon, said LCB spokesman Carpenter. Many of the 
state's outdoor grows will harvest their first crop later this month 
or early next.

Lathrop said if Cannabis City weren't already operating, he would be 
in no rush to open his store's doors. "There's no supply," he said.

Store manager Amber McGowan said pot producers are charging high 
prices, which has strained the retail business.

"It's not yet really profitable," she said. "We're able to pay our 
bills and pay our staff. We have just enough money to turn around and 
buy product."

Michael Perkins, who owns one prospective state-licensed marijuana 
store and is financing another, said he'll wait to open as long as 
the state allows him.

"I'm not sprinting to get open because the marketplace isn't ready 
yet," he said.

Perkins said his storefronts are operating as medical dispensaries 
right now, so he can pay his leases.

"What comes first? The food or the grocery store? I think the food 
has to come first."
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MAP posted-by: Jay Bergstrom