Spokane County pot dispensary owner says new rules unfair

James Errol Dixon is fed up with marijuana regulations in the state of Washington.

Dixon owns Herb Nerds, a medical marijuana dispensary on East Indiana Avenue in Spokane Valley, and Herb N Pipe on North Division Street in Spokane.

Like all medical dispensaries, he had to apply for a new license in order to comply with state regulations approved by the Legislature in 2015.

In December, he got a letter from the Washington Liquor and Cannabis Board informing him that his application received the lowest possible priority although he’s had the dispensaries since 2014.

Dixon said the regulations aren’t fair and are designed to run the little guy out of business.

Brian Smith, spokesperson for the Washington State Liquor and Cannabis Board, said that’s a complaint the board hears a lot these days.

One issue, said Smith, is that dispensaries will become a thing of the past when the new regulations take effect on July 1.

“No one knows how many dispensaries there are today because they are completely illegal and unregulated,” Smith said, adding that the new license structure is an attempt to get all retail into the state system. “Products in the state stores will be tested and regulated and the staff will be educated.”

Smith said that when medical marijuana became legal in 1998, dispensaries proliferated and their numbers have especially grown in the past three or four years.

The new state regulations, Smith said, makes it impossible to operate just a medical dispensary.

“We are licensing and creating new retail marijuana stores and those stores may receive an endorsement so they can accommodate medical marijuana users,” Smith said.

There’s tough competition for the limited number of state licenses. First priority is given to stores that applied for a retail license before July 1, 2014, and operated collective gardens before 2013. Second priority goes to those who applied for a license later, but still had a collective garden before 2013 – and third priority is given to everybody else, including Dixon, whose businesses don’t meet any of the other criteria.

Smith said the state allowed 14 stores in unincorporated Spokane County and 16 in the city of Spokane. The number in Spokane Valley has yet to be determined as there’s a moratorium on new marijuana businesses there.

If Dixon doesn’t receive a license before July 1 he’ll have to close his stores.

“The law was supposed to be set up so medical stores can merge into the state system,” Dixon said. “This doesn’t feel like a merger to me. This feels like I’m being run out of business.”

Dixon said he is also worried about his patients.

Medical marijuana users will have to pay more for the same products in the new stores because they will be charged a 37 percent excise tax.

Smith said qualified medical patients are exempt from the retail sales tax, which is the only tax they currently pay at a dispensary.

One of Dixon’s customers, Mike Dunlap, just moved back to Spokane from Georgia where he’d moved to get surgery for a debilitating back condition.

Dunlap has difficulty walking and uses marijuana to deal with pain from degenerative disc disorder and residual pain from the back surgery.

“I can function when I use marijuana. I can get up and do things in the house, do things with my wife,” Dunlap said. “If I’m on painkillers like morphine, I’m just a zombie.”

Dunlap was surprised to hear Herb Nerds may be closing and he didn’t know state rules had changed.

“I’ve been coming here for some time, it’s nice and cheap,” Dunlap said. “The state should just leave it alone.”

Several other dispensaries in the Spokane area are in the same situation as Dixon, but Smith didn’t know how many.

In December, the Liquor and Cannabis Board recommended the state increase the number of licenses from 334 to 556 stores, to meet the demand for medical marijuana or what Smith calls “the gray market.”

“The medical patients need a place to go,” Smith said.

That opened an extra 222 slots.

For those who don’t receive a license, there may not be a way to appeal the state’s decision.

“I’d say you could probably appeal the process,” Smith said, “but I’m not sure how that would work.”