Vancouver’s marijuana industry growing like a weed

Then, the winds shifted in their favor.

In October, the state began allowing the transfer of licenses from jurisdictions that don’t allow retail pot sales to those that do. On Dec. 16, the state Liquor and Cannabis Board recommended boosting the number of retail pot shops statewide from 334 stores to 556 stores to accommodate the state’s alignment of the medical marijuana market with the existing recreational market. The expectation is that medical pot users will turn to retail pot shops for their marijuana supply and that dispensaries will shut down by July 1.

The Liquor and Cannabis Board followed up in January by increasing Vancouver’s allocation from six to 12 retail licenses. The increase was based on a formula in which the state’s 10 most densely populated cities would receive double the number of retail pot licenses distributed in the 2014 lottery. Smaller cities received a 75 percent boost in licenses.

However, the Vancouver City Council, saying 12 licenses was too drastic a jump, split the difference Feb. 1 and set a limit of nine. The expansion presented an opening for Britt and Crenshaw, who transferred their state license to Vancouver, then applied to the city to open one of the three stores.

Now the couple are preparing to open High-5 Cannabis on March 12 at 6511 N.E. 137th Ave. in Orchards, which is about 5 miles from any other pot store.

“It’s such an exciting new business,” said Britt, 44, who will oversee a staff of nine. “It’s being on the forefront of something huge.”

Washington has been in the forefront of that huge new business since November 2012, when state voters approved Initiative 502 legalizing recreational marijuana. The state Liquor Control Board started taking license applications in December 2013 and began the approval process in early 2014. It allowed unlimited applications for growers and processors in the state, but limited the number of retail stores, of which 15 were allotted for Clark County.

Recreational sales to the public began July 8, 2014 — and buyers can’t seem to get enough. During the first fiscal year, which ran July 1, 2014, through June 30, 2015, recreational marijuana sales of $260 million netted the state $65 million in marijuana excise taxes. So far for fiscal year 2016, the state has collected $111 million in marijuana excise taxes from the $580 million in sales, according to the state Liquor and Cannabis Board.

Although Clark County borders Oregon, which in October legalized the sale of recreational pot from medical dispensaries, its retail pot sales of $27 million so far this fiscal year are third highest in Washington. King County ranks No. 1, with $59 million in pot sales, followed by Spokane County at $37 million.

Vancouver is expected to receive $795,500 in marijuana excise tax this fiscal year, the largest amount any city in the state has received.

‘Post-Prohibition’

Amy and Marc Elkins of Washougal found themselves in a situation similar to that of Britt and Crenshaw after winning an initial retail marijuana license for Camas in the state lottery. Although Camas imposed a moratorium on retail pot shops, the couple outfitted a store anyway, thinking the city council would lift the ban when the moratorium expired Nov. 30.

But the council didn’t.

So the Elkinses turned to Vancouver and obtained one of the three available slots. Mary Jane’s House of Glass agreed to lease them its building at 8312 E. Mill Plain Blvd. The Elkinses’ store, Aardvark Reeferology, which will open in mid-March, will sell functional glass pieces produced by Mary Jane’s.

It’s the first joint venture for Amy, 39, who has a retail and marketing background, and her husband, Marc, 42, a mechanical engineer.

“I thought it was a crazy idea at first, but it makes good business sense,” Amy said. “It’s a post-Prohibition landscape. It’s being a pioneer.”

Industry veteran Ramsey Hamide, co-owner of Main Street Marijuana in Vancouver, obtained the city’s sole remaining slot Monday. In early April or so, Hamide, 37, plans to open another store just off 164th Avenue at 16219 S.E. 12th St.

“Our goal is to have a little bit of a more regional presence,” said Hamide, who also is opening a store in Longview. “We had explosive growth at the original location.”

Main Street Marijuana, the highest-earning marijuana store in Washington, draws 1,500 to 1,700 customers daily and claims 50 percent of the revenue of the city’s six stores, he said. With another location, the business could nab perhaps 75 percent of the market share, Hamide said.

The new store in east Vancouver will have 30 available parking spaces, as opposed to Main Street Marijuana in Uptown Village, which has five.

Hamide and the owners of High-5 Cannabis and Aardvark Reeferology say they believe there’s ample demand to support nine stores in Vancouver.

Britt, Crenshaw and the Elkinses said their strategy will be to offer “mom and pop” and boutique marijuana strains and manufacturers people can’t find elsewhere in Vancouver, in addition to strains from well-known companies.

The fact that the only cities in Clark County to allow the sale of marijuana are Vancouver and Battle Ground — which has one store — means there’s a need to be filled, they said.

“I think those communities need to be served, and I think that allows for plenty of market,” Amy said.

“Because we have so much foot traffic, we get cheaper pricing. We pass that onto the customers in full,” Hamide said of Main Street Marijuana. “It has fed upon itself. Lower prices lead to more customers; more customers lead to lower prices.”

One of Vancouver’s six existing pot shops, New Vansterdam, said it welcomes the competition because more access will make it easier for users to buy marijuana legally rather than on the black market, spokesman Shon-Lueiss Harris said early last month.

However, owners of The Herbery, which has two Vancouver locations, had urged the city to wait before allowing additional stores, arguing that the market was too volatile since Oregon legalized recreational pot and that the Herbery’s sales had declined sharply. But city council members said it wasn’t the government’s job to protect a private business’s profits.

Hamide said that when Oregon legalized pot, he told his customers to check out the Oregon stores.

“A significant percentage of the customers came right back over, and our foot traffic is higher than it’s ever been,” he said.

The state isn’t going to remove its cap on the number of stores entirely and let the free market decide who succeeds or fails, said Brian Smith, spokesman for the Liquor and Cannabis Board.

“It’s illegal federally, and the federal government cares a lot about what we’re doing in Washington,” Smith said. “It’s a controlled market. … We’re fulfilling what our directive is.”

The federal government is concerned about youth access, keeping the criminal element out and preventing the spread of marijuana out of state (called “diversion”). Therefore, the state is trying to create a marketplace that will satisfy the demand without overproduction, he said.

Oregon won’t solidify its recreational marijuana regulations until later this year, and it remains to be seen what that state will do, Smith said. The Oregon Liquor Control Commission is expected to allow retail recreational pot stores to open in the fourth quarter of this year. It’s not been determined yet what the quota of stores will be, although there’s currently no limit on the number of licenses being issued.