Pot is perched at the edge of the economy, and ready to roll. Now the only question is whether the economy will roll right along with it.
Local business advisors and owners in the South Sound seem to think so.
“Absolutely, it’s going to take off,” said Joe Freet, a small business advisor for the South Sound SCORE office at Bates Technical College. “We’ve seen a lot of interest in start-up companies related to pot.”
Freet, who has mentored more than 1,200 clients in his dozen years there, said that legalization here and in Colorado late last year is a chance to not only sink more dollars into the region’s economy, but also an opportunity to grow an entire new industry, as well as niches for residual products and services.
In fact, within Freet’s group, the Tacoma SCORE office has been processing weekly eight to 10 clients interested in opening a pot-type of business. He expects that rate to only pick up as rule finalizations will be made in November, and the 30-day license application window begins November 18.
Given all the industry niches and the relatively tight licensing schedule, Freet said many people are confused about how to get started. First, you must choose between medical or recreational usage, and whether you want to be a grower, producer, retail outlet, or combination of these. Another sticky point is federal bank regulations, which bar prospective pot businesses from obtaining SBA loan funding.
For Pierce County, the Washington State Liquor Control Board approved establishment of up to 31 privately run retail stores selling marijuana. That includes up to eight stores in Tacoma, two each in Puyallup and Lakewood, one each in University Place and Bonney Lake, and 17 elsewhere in smaller cities or unincorporated areas. Statewide, the Board gave the nod to 334 total stores, seven in South King County and 11 in Thurston. Stores will only be able to sell pot or marijuana-infused products, with no more than three stores in the same area, and owners will only be able to corner 33 percent of the local market.
However, that’s hardly the limit for pot-industry businesses in the region. Alex Cooley, owner of Solstice Corporation, a marijuana grower and seller in South King County, said that there’s endless potential for capitalizing on pot legalization.
“Anything that has to do with mechanization and streamlining the growing and processing of marijuana will be a growth industry,” he said. “That includes equipment and services related to the drip system, harvesting, foliar feeding, waste product disposal, and soil reuse.”
Other types of new businesses and industries that could be sparked when the retail store networks go into business include private security firms, and waste and recycling services, Cooley said. And, like brewery tours and wine trails, cannabis tourism could also be a boon for Washington state.
Loaded Soda owner Dave Kois both grows pot and makes a line of pot-infused products in Thurston County. In fact, his company is the state’s largest producer of infused products for the medical marijuana.
“Lots of industries will see growth due to legalization, particularly packaging and container manufacturers, grow equipment suppliers, the security industry, and industry- and culture-specific publications,” he said.
In the service sector, the biggest business opportunity is in the banking industry. Federal regulations make it difficult for pot-related businesses to obtain loans, or to make credit card transactions.
“Access to banking is currently the number-one need in the industry,” said Kois. “Due to implied threats by the federal government, banks currently decline to do business with us.”
Sean Green is the owner of Pacific NW Medical, a business that grows marijuana, makes pre-rolled joints with concentrate and operates dispensaries in both Eastern and Western Washington. He’s definitely seen a spike in business since pot was legalized, and he expects that it will only get better.
“After the law passed, oh boy – we couldn’t even answer because it was a full-time job,” he said. “It went from just me to 21 employees in just two years.”
And now he’s looking to hire 20 more in the next couple of months, as well as considering other products. Already his dispensaries sell cannabis candy, and for Thanksgiving last year he made prime rib with a marijuana rub.
“It’s definitely having a huge economic impact, not just because of marijuana sales, but because of the ripple effect we have purchasing things for our sites, and our employees spending locally,” said Green. “We’re a tax-paying business, so that’s more than $20,000 per month going out between sales tax, employment security and social security. And 80 percent of the people had no jobs when we hired them, so there’s an employment impact as well.”
As for customers, Green said the market already exists for both medical and recreational use. However, the former corners only 15 percent of the total market; the latter is expected to garner just 10 percent. That means 75 percent will still be bought on the black market at roughly 1,000 statewide illegal retail access points.
“That’s why the future of cannabis will be national distribution, not just in Washington state and Colorado,” he said. “A single signature could make that real.”