Labor Unions Are Supporting Washington State Legal Marijuana Dispensaries that Create "More Workers to Organize"

The United Food and Commercial Workers and other Unions Seek to Strengthen Protections for Cannabis Workers 

What’s going on in the state of Washington and beyond with the movement to legalize marijuana is, only in part, about business, taxes and government oversight — all to be amplified by the billions of dollars annually this new industry promises to throw off.

What the movement also represents is an emerging culture, one that promises to create whole new communities of hemp and cannabis farmers and workers all tied to together by thousands of new workplaces and potentially millions of customers — and patients.

Organized labor sees this landscape unfolding and is putting its chips on the table, betting unions will be on the right side of the change.

With the passage by voters of the state’s Initiative 502 in late 2012, a new legal framework was set up for the sale of recreational marijuana — a process that is still in motion some two years later, with numerous producers, processors and retail storefronts still in the cue awaiting state and local approvals. A 25 percent excise tax is imposed on product sales at each of those three levels, on top of the state’s business-and-occupation tax and local sales taxes.

A major state-government goal for the legalization effort is to put a big dent in black-market marijuana sales by bringing the industry above ground through the creation of a viable regulated market.

The hammer in the background is the federal government, specifically the US Drug Enforcement Administration, which still considers all marijuana sales illegal. For now, DEA is being held back from an all-out assault on the fledging industry due to directives issued by the Obama Administration’s Department of Justice — which seems to want to give this pilot test in weed legalization a chance to get its sea legs.

In Washington, the face of organized labor is the United Food and Commercial Workers International, which through its Cannabis Workers Rising project is ramping up organizing efforts in the state — and in at least a dozen of the other 22 states (plus the District of Colombia) that have embraced medical marijuana or are pursuing legalization. That includes Oregon, where Measure 91 to legalize and tax marijuana will appear on the ballot in November — an initiative that also has drawn support from other labor groups, such as the American Federation of State County and Municipal Employees (AFSCME) and the Northwest Oregon Labor Council.

The stakes are high for the UFCW, given any success it has organizing marijuana-industry employees in Washington and elsewhere could easily be undone overnight by federal law-enforcement intervention. And on that front, the clock is ticking with respect to a peculiar facet of Washington’s marijuana industry that predates I-502 —the estimated 900 medical-marijuana storefront dispensaries doing business statewide.

The Challenge

It’s now nearly two years since I-502 was approved by a popular vote, but the medical-marijuana issue still remains a significant challenge to reconcile for Washington’s emerging cannabis industry — which, if it gets fully on track, is projected to add some $636 million in tax revenue to the state’s coffers via recreational sales alone through mid-2019, state economists project.

The Washington state Legislature in early 2014 attempted, but failed, to resolve how the medical-marijuana outlets will be dealt with in the context of the new rules for recreational sales set up through the 502 initiative. The two paths available to resolve the issue, experts contend, are to roll the dispensaries into the emerging recreational system, or to set up a separate, parallel regulatory structure for them.

The legal framework for medical-marijuana use was put in place in Washington in the late 1990s, and over time the industry has evolved, both through new law and creative interpretations of the law, to become ubiquitous in cities like Seattle. UFCW officials estimate there are now up to 300 storefront dispensaries in operation in the greater Seattle area. (Some claim the precise number of dispensaries in the Seattle area simply isn’t knowable right now because there is no official registry. The mobile-phone app Weedmaps lists some 200 dispensaries in King County, where Seattle is based.)

The existing system in Washington does not legalize medical marijuana — the possession or distribution of which is still considered a crime under federal law. Rather it provides an affirmative defense in court for patients who get proper medical authorizations for cannabis use for certain conditions. The patient is allowed to grow up to 15 cannabis plants for his or her medicinal needs, or select another person (a designated provider) to handle the project.

Subsequent legislation and citizen application spawned the creation of “collective gardens” and retail access points, medical-marijuana dispensaries, that sell to numerous patients. And so far, local and state regulators, even the courts, for the most part, have allowed the system to operate without major challenge.

By contrast, the rules developed for legal recreational sales under I-502 do not allow individuals to possess or grow their own marijuana plants — and require that consumer purchases be made through state-regulated retail outlets.

In the city of Seattle, only four new retail outlets have been approved to date to sell recreational marijuana to consumers via the process set up after passage of I-502. Only three of those stores have opened their doors since the July 1 kickoff for recreational sales established under state rules. Those three shops, state data shows, posted sales through mid-October of about $2.9 million — $715,000 of which is the state’s cut.

Under the state’s apportioning system for retail outlets, Seattle will only be allotted 21 retail stores, which is set against as many as 300 medial-marijuana dispensaries that are already on the scene.

Part of the reason for the slow rollout of the recreational retail outlets is that it simply takes time to navigate the city’s byzantine zoning and approval process, local cannabis-industry experts say. That process is being complicated further, according to union officials, by the fact that the new taxes imposed under the I-502 initiative are directed to state coffers — to fund health-care, drug-abuse prevention, state regulatory efforts and other initiatives. However, nothing is allotted to local communities for the cost of licensing and regulating the startup pot shops, growers and processors.

“Under 502, there’s nothing for the municipalities from the new taxes, so where are they supposed to get the money to regulate it?” asks Patrick MacKay, an organizer in Washington for the UFCW International.

“Peaceful Evolution”

All this detail matters because I-502 is essentially silent on the issue of medical-marijuana dispensaries in Washington, but it is clear the state Legislature, the feds, and even broad elements of the cannabis industry, recognize that until the dispensaries are brought under the rubric of more-defined state regulation, the future of marijuana legalization in Washington will be in jeopardy.

That’s the case because competition from the largely unregulated gray-market dispensaries will continue to undermine sales in the newly legal and heavily taxed market set up under I-502. And as importantly, this gray market is a prime target for DEA investigations and raids. Heavy-handed law-enforcement disruption of the dispensary system, in turn, could drive even more sales into the black market.

The UFCW’s MacKay points out that of the up to 300 dispensaries now in Seattle “84 came online in the last year, and only 48 to 50 are paying B&O [state business and occupation] taxes.” On another front, lawyers representing the dispensary industry rebuked an effort by the state earlier this year to collect more taxes from them, including sales tax, claiming that medical marijuana is a prescribed medicine and not subject to sales taxes in Washington.

That argument may make for some interesting case law in the courts in Washington, but unfortunately, from the DEA’s perspective, the failure of a business to pay taxes, coupled with the sale of what the agency still deems an illegal narcotic (marijuana), creates plenty of pretext for money-laundering and wire-fraud charges — all deemed elements of a criminal conspiracy.

Existing US Department of Justice guidelines, adopted in August 2013, essentially call for federal law-enforcement authorities to look the other way, for now, as Washington’s legalization effort continues to unfold. One of the eight exceptions to that policy, though, is in cases where the sale of marijuana is deemed part of a broader “criminal enterprise.”

And the DEA definitely has its finger on that pulse.

Seattle DEA spokesperson Jodie Underwood explained the agency’s position on medical marijuana, when queried by Narco News, as follows:

Marijuana is and remains illegal under federal law and DEA’s limited resources are focused on the … prioritiesset forth by the Department of Justice. 

Outside of the Department’s enforcement priorities, our directive is to rely on state and local law enforcement agencies to address marijuana activity through enforcement of their own narcotics laws. We do not disclose our enforcement strategies, but if a situation meets one or more of the … priorities, it will be investigated.

And DOJ’s guidelines for marijuana-related prosecutions focus enforcement priorities on, among others, preventing “revenue from the sale of marijuana from going to criminal enterprises” and “preventing state-authorized marijuana activity from being used as a cover or pretext for … other illegal activity.”

So, it would seem any medical-marijuana dispensary that has run afoul of US tax law, or is skirting a few other rules, maybe getting some of its marijuana product from outside the collective garden on the side, say a pallet load or two here and there from California, could well be in DEA’s sights already.

In fact, in the summer of 2013, DEA raided four greater Seattle-area dispensaries. The indictment returned against the alleged operators of the dispensaries accuses them of trafficking marijuana and engaging in wire fraud and money laundering — essentially banking and failing to properly report the proceeds from marijuana sales. One of the defendants also is accused of possessing a firearm “in furtherance of a drug-trafficking crime” — which is another trigger in the DOJ guidelines for pursuit of prosecution. A trial date has not yet been set in the case.

However, there are some major impediments to an all-out DEA assault on the dispensary system in Washington, at this point. Chief among them is the risk of thwarting White House policy as well as the will of Washington’s voters. In addition, the state Legislature is engaged in addressing the legalization mandate, and early next year, in all likelihood, will seek to reconcile the medical-marijuana dispensary system with the recently launched consumer-outlet operations.

“DEA is the stick,” says Dr. Dominic Corva, Ph.D., executive director of the nonprofit Center for the Study of Cannabis and Social Policy. “But a hostile takeover [of the medical-marijuana market by DEA] will only help the black market. What we need is a peaceful evolution.”

Kurt Boehl, a Seattle-based attorney specializing in criminal and civil cases related to medical marijuana, echoes Corva’s analysis, pointing out that the medical-marijuana dispensary “infrastructure has been around at least 10 years.”

“You have to create some kind of path to the legal market for the people who are trying to do things right in that gray market,” Boehl adds. “If you think competition from the gray market [against the recently legalized recreational market] is bad now, it will be even worse if they push all those people into the black market, because they’re not going to simply go away.”

A former DEA agent who spoke with Narco News on background says DEA’s stance on marijuana, medical or otherwise, under current Administrator Michele Leonhard is much more unbending than DOJ’s, but at some point DEA got the message and for now is abiding by the Department of Justice guidelines — which essentially create some space for the I-502 regulatory system to work through the major bugs.

Union Solidarity

The UFCW’s MacKay says the union sees the medical-marijuana dispensary issue as a front-burner problem to tackle in order to move the legalization movement forward.

The labor group has dealt with the issue previously in California, where, after some setbacks, it was ultimately successfully in cities like Los Angeles in navigating the line between DEA crackdowns and the creation of more coherent local regulations. Following a series of DEA raids on marijuana dispensaries in California, Los Angeles last year adopted more stringent rules for the outlets, which pared down the number of shops from some 850 or more to 135.

The UFCW was very active in the effort to advance the reforms, which were ultimately approved by Los Angeles voters. The union also has long been active in organizing dispensary workplaces in L.A and around the country as well as in helping the dispensaries deal with red tape. Consequently, the outlets under the union’s umbrella tend to remain in business, and did so in the case of Los Angeles.

MacKay says the UFCW can bring that same template to the medical-marijuana market in Seattle, along with labor’s political savvy at the negotiating tables as new rules are being written.

And MacKay says the union is coming down on the side of setting up a separate regulatory tract for medical-marijuana dispensaries in Washington that would allow them to co-exist with the recreational market, as opposed to being steamrolled into it. The fight there, should the proposal get legs, will be over the number of outlets allowed.

Initial talks with some elected officials, MacKay adds, indicate a willingness to entertain a smaller number of dispensaries under a separate system, likely only about 100 statewide, and some 10 to 11 in Seattle — a cap deemed too low by the union.

“One of the things the union wants is a merit-based application process with higher numbers on the medical-marijuana dispensary count,” MacKay says. “Certainly, a higher number [is in the union’s interest because it] creates more workers for us to organize.”

He adds that one argument advanced in California to make the case for a higher number of medial-marijuana dispensaries is to “measure the number of pharmacies in a community and use that as a baseline.”

Whether legislation based on the union’s plan will be introduced when bills start getting marked up in December for the upcoming Washington legislative session is not clear at this point.

What seems clear is that cannabis’ future in Washington will be taken up by the Legislature when it convenes in January. Washington state Sen. Jeanne Kohl-Welles, who has played a key role in the advancement of medical -marijuana rights in the state over the past two decades, says she plans to introduce “several cannabis bills” during the upcoming session.

Among her priorities, she told a recent gathering of supporters, is to assure medical marijuana users retain the right to grow their own plants; to assure the medical marijuana provided to patients is tested, safe and pesticide free; and to possibly create a position for a “statewide cannabis coordinator.”

She also sees that the path ahead, despite all the good intentions, is likely to be challenging due to internal rifts among the players.

“There’s a lack of cohesion, even divisiveness, in the cannabis community,” she says.

Based on interviews with individuals active in that community, though, it is apparent that many are struggling to create that cohesion, to better organize their community and communications, so that it isn’t so susceptible to being divided and conquered by those who prefer that the legalization movement collapses under its own weight.

That, according to MacKay, is where the union can help.

He says the UFCW International has the street experience, resources, organizing know-how and political savvy to help assure “the cream rises to the top” in Washington’s budding cannabis industry.

“This is not adversarial,” he says of the union’s organizing approach. “It’s a cooperative effort. We can help build a culture … a future.”

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