Shawn Vestal: Feds injection of uncertainty into state pot industry stunts business growth

When Attorney General Jeff Sessions rescinded the feds’ take-it-easy policy on pot prosecutions, he threw a ton of uncertainty into Washington’s marijuana industry.

Retailers quickly found reason for anxiety in the possibility that they would be prosecuted under federal law, not long after setting sail with new businesses approved by state law. Already-wary financial institutions were spooked, making an already cash-dependent industry even more so. And the vague nature of the change further heightened the worry – an announcement that didn’t unleash a flood of specific prosecutions, but changed discretionary guidelines indicating that prosecutors could, but would not necessarily, pursue marijuana convictions.

One casualty of this new murk is a planned cannabis-themed truck stop along I-90 near Ritzville. The longtime home of Templin’s Country Corner – recently marked by a change in its large sign from RESTAURANT to CANNABIS – was set to be sold to Kennewick pot entrepreneurs Steve and Jessica Lee.

Those plans were the subject of a Jan. 7 column. Right before that, however, Sessions rescinded the Cole Memo, an Obama administration order which had basically directed federal prosecutors to lay off pot cases. And not long after, the Lees changed their minds.

For many, the Cole Memo was fundamental for the creation creating voter-approved legal marijuana markets like Washington and Colorado. The result of the reversal is that cannabis businesspeople suddenly are wary about the future. Most seem to be simply soldiering on; many have expressed confidence that the state’s legal market will be OK and that federal prosecutors will essentially decide they have bigger fish to fry.

Joseph Harrington, the U.S. attorney for Eastern Washington, issued a statement in January emphasizing that prosecutors will continue to use the same set of guidelines to determine which cases to pursue, including: “the nature and seriousness of an offense, the potential deterrence effect of prosecution, a putative defendant’s culpability in connection with an offense, a putative defendant’s criminal history and other circumstances, and the limited federal resources.”

Harrington’s statement noted that his office was focused on crimes that posed the greatest safety risk to the community, “by disrupting criminal organizations, tackling the growing drug crisis, thwarting violent crime, and corralling white-collar fraudsters in this District.”

So, reading those tea leaves, it doesn’t sound like pot shop prosecutions have shot to the top of the priority list, and we haven’t seen retail pot prosecutions here so far.

But from the Lees perspective, there’s a difference between staying the course and hoping for the best, and undertaking a major expansion. That’s what the Lees decided they couldn’t do now. The $1 million purchase of the Country Corner was going to be financed by the Templins themselves and not a bank, the Lees and their attorneys decided it was too risky and stepped away.

Steve Lee said all it would take for him to go bust – and leave the Templins holding the bag – would be for a federal prosecutor to go looking for retailers to prosecute and settle on a prominent one like his Green2Go stores.

“If they do a freeze and seize (of assets), my company goes out of business in three days,” Lee said.

The planned transition at the truck stop – 45 miles west of Spokane – would have corresponded with the retirement of Gary and Vernette Templin, who have owned the gas station, store and restaurant for more than three decades. The Country Corner is a familiar sight for travelers on I-90 between Spokane and Ritzville – a stop for food or gas on a long drive.

Vernette Templin said Monday that they would have been comfortable moving forward with the sale, and that Lee’s decision to withdraw has spoiled their planned retirement.

“We are extremely disappointed they backed out, whatever the reason is,” she said.

Lee, who was elected to the Kennewick City Council, runs two Green2Go retail stores. He and his wife started in the medical marijuana business, and expanded to recreational sales after voters approved it in 2012. They opened the retail store in an outbuilding they leased at the Templin’s truck stop in November 2016. As it true of many parts of the new marijuana economy, the Lees business has grown very rapidly, and they were hopeful about expansion.

Now Steve Lee says he’s wondering if he should tamp down the sales – particularly at his busy Kennewick location – in order to avoid unwanted attention.

All in all, it’s another new wrinkle in the longtime national nonsense over marijuana.

Lee said he’s planning to continue operating the store at the Templin’s site for now; the large CANNABIS sign will likely be recovered. In a January interview, Gary Templin said he considered financing the purchase a way to help a young couple build their business.

“We had help,” he said. “I felt it was maybe time for me to help somebody get their start.”

Lee had a grand vision for the Country Corner, which also has RV and camping spots. He said he envisioned creating a “cannabis Leavenworth,” a tourist destination with the possibility of hosting festivals and other events.

He said that though Templins aren’t happy with his decision, he didn’t feel comfortable allowing them to shoulder all of the risk – even if he had been willing to take on that much debt himself.

“That would put their entire retirement at risk,” he said.