Secretiveness and Rule-Stretching as Pot Applications Flood In

Since the state opened its application process for marijuana business licenses on Monday, the forms have been streaming in. On the very first day, nearly 300 businesses applied by the mid-afternoon. By 8 a.m. this morning, 585 applications had come in.

The Department of Revenue, which is receiving the applications and will forward to the Liquor Control Board for processing and approval, is not yet revealing the names of applicants. But if you want an idea of the kind of people involved, take a look at last week’s cover story, which profiles four marijuana entrepreneurs.

I checked back in with them this week. Two, Alex Cooley and Shy Sadis, got applications in on Day 1.

“We’re really excited to get going,” says Cooley. The 28-year-old runs Solstice, the only grow operation already permitted by the city of Seattle. Solstice currently caters to the medical marijuana market, but it has big expansion plans now that the recreational industry is coming online.

When I talked with him earlier this month, Cooley was planning to apply for six producer and processor licenses, the maximum number possible. (Three is the limit in each category.) In the event, though, he says Solstice only applied for five. The thinking is that the company will likely centralize all its processing at one location in Seattle, somewhere “a little south of SoDo,” he says. That will put the facility near Solstice’s current base of operations in SoDo, which he says will continue to supply the medical market as long as one exists. (See proposed regulations that mean it may not.)

As for growing, he says Solstice is in the process of buying a 10-acre farm on which is will cultivate pot in “every way possible” –outdoors, indoors and in a green house. All three licenses would be for that one location. There is a maximum square footage of marijuana cultivation allowed for each license—30,000 square feet—and Solstice wants to grow three times that amount.

And where is this farm? Cooley, despite having put the address down on his application, won’t say beyond revealing that it is “east of the mountains.” Competition is fierce in the nascent marijuana industry, and Cooley contends that lots of rivals have been trying to capitalize on the work Solstice has done to figure out the best place in the state to grow pot. So while the 30-day application period is still open, he’s keeping mum.

Sadis, owner of medical marijuana dispensaries called The Joint, says he filed applications for two retail locations, in Bellingham and Tacoma. He plans to apply for a third, but is still choosing between locations in Seattle and Bellevue.

Readers of last week’s cover story may remember that he and his partner Derek Anderson scoped out a Kirkland property whose owners didn’t seem to have a problem with marijuana, but did have a problem with potential seizure of their assets by the feds. That property is still up in the air, Sadis says.

Another entrepreneur with big ambitions, Sadis chafes at the three-license limit. His strategy is to apply for three under his name, have Anderson apply for another three under his and have other “friends and family” apply for licenses under theirs.

A seeming wrinkle in that plan is LCB rules that require business to reveal “true parties of interest,” with the three-license limit applying to each. “On paperwork, no, I’m not supposed to get anything out of [the businesses run by his friends and family].”

But he says there’s nothing to stop him from licensing the The Joint name “for a small fee.” Or, he says, “I could be a consultant.” Or, he continues, he could buy a property with, say, a $5,000-a-month mortgage and rent it to Anderson for $10,000 a month.

“There’s lots of ways around it,” he says of the LCB limit, revealing once again that capitalism is alive and well in Washington’s newest industry.

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