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Signs advertising particular types of marijuana for sale at 2020 Solutions, a store that was opening on July 10 at 4:20 p.m. after complications prevented it from opening on July 8, the first day marijuana could legally be sold in the state. (Iain Marlow)
Signs advertising particular types of marijuana for sale at 2020 Solutions, a store that was opening on July 10 at 4:20 p.m. after complications prevented it from opening on July 8, the first day marijuana could legally be sold in the state. (Iain Marlow)

Entrepreneurs abuzz over Washington’s legalized marijuana Add to ...

When he decided to open a marijuana store, the first challenge Tom Beckley faced was getting kicked out of the house by his girlfriend.

“I’ve been sleeping in my truck,” he says.

But Mr. Beckley, whose Top Shelf Cannabis in Bellingham, Wash., became one of the first retail stores to open last week after Washington legalized the sale of marijuana, doesn’t seem perturbed. In fact, he looks relaxed and is optimistic. After all, his store had a lineup around the corner on Tuesday when it opened to sell greenery, bagged with names such as Cheese Quake and Catatonic, which sell for about $75 (U.S.) for a 3.5 gram bag.

Globe and Mail Update Jul. 14 2014, 9:21 AM EDT

Video: Growing pains for Washington's first marijuana entrepreneurs

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In Washington, as with Colorado, the seeds of a new industry have been planted by citizens who voted to end the prohibition on weed. Beyond the jubilation of activists and smokers, though, are risk-takers such as Mr. Beckley who face unpredictability, complicated regulations, rigourous background checks and suppliers who are struggling to get licensed and grow their product. It must be meticulously barcoded, tested in a third-party lab for THC levels and quarantined before it is sold to the public with tobacco-like warnings.

These entrepreneurs see themselves as the vanguard of a new, billion-dollar industry. “It’s going to be bigger than anyone’s imagined,” says Mr. Beckley, who used to work as an electrical inspector for the city of Bellingham.

That hope has nurtured business owners through the wild ride of the industry’s early days. Store owners only found out they got one of the state’s 334 retail licences through a lottery, and were then given roughly a month to get their stores built and their product – from pounds of loose marijuana to pre-rolled joints and pipes – sourced, paid for and delivered. There are no restrictions on the number of suppliers. But there has still been a scramble for growers to secure licences, get inspected and begin raising plants painstakingly tracked by the state from seedling to their journey across the state in, for example, the trunk of a silver Honda Civic.

Which is the type of car Aaron Nelson is waiting for when he opens the front door of Bellingham’s 2020 Solutions on a sunny Thursday afternoon. “Is it here yet?” he asks, looking both ways down the quiet street.

He’s waiting for weed that didn’t arrive in time for a planned opening a couple of days earlier. A misclassification in the state’s tracking system – a supplier was labled as a retailer – meant the shipment was never sent. Because of the industry’s infancy, as well as the sheer number of regulations, no one is risking their licence, or the sector’s reputation, just to sell weed a day or two earlier than possible. And so 2020 Solutions staff spent Thursday afternoon barcoding glass pipes – including a 12-inch monster called “The Gandalf” – as they waited for their scheduled opening time: 4:20 p.m. At one point, a man driving a large Coca-Cola delivery truck slowed down to ask: “Any free samples?”

Eventually, a car drives up and two middle-aged men open the trunk. “Smells good, doesn’t it?” one says, as a strong aroma wafts out. He begins unloading boxes containing 859 small tins that each hold three separate, pre-rolled joints. There is a brief bit of celebration as the weed is moved into the back room, and then the store’s owner, Troy Lozano, who also operates two contracting businesses in Bellingham, shuts the door.

Pot store owners are understandably cagey. Despite its newfound legality in Washington state, banks don’t want to touch the weed business until there is nationwide legislation. Running a marijuana store, consequently, means dealing entirely in cash; Mr. Lozano’s store even has an in-store ATM. But mostly the owners and operators are bewildered by the endless number of regulations, which govern everything from the size of signage and how far their stores can be from elementary schools, to what sort of warnings must be on the label and what products they can offer (the state is still licensing companies to produce marijuana-infused “edibles,” such as brownies and candies, but such producers need their kitchens inspected and approved).

But the state’s stringent regulations, and the resultant compliance measures, can be a business opportunity on their own. Ben Curren, a Silicon Valley entrepreneur who sold his previous company to GoDaddy for an undisclosed sum, has launched a new business with software tailored to help marijuana store owners comply with the law. It may be a niche market for now, but Mr. Curren suggests a number of U.S. states, such as California, are “broke and desperate for tax revenue,” and that the industry is destined to grow exponentially, particularly when pharmaceutical companies see the potential profits.

“Marijuana is just the next batch of small businesses that are ready to explode.”

Werner Antweiler, a professor with the University of British Columbia’s Sauder School of Business, compared the situation now to the era after prohibition: A lot of smaller players, with inevitable consolidation ahead. Currently, he said, the criminalization of marijuana use is not good economics: Police crackdowns temporarily limit the supply but leave demand unchanged, thus increasing the pay-off for those who want to supply and distribute the drug illegally.

“Once you bring it out in the open you can regulate it, control it, tax it and you can intervene and modify the demand, as we have with tobacco,” Prof. Antweiler says. “That’s the economic argument. It’s very compelling.”

Follow on Twitter: @iainmarlow

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