Recreational marijuana laws: CO vs. WA

Marijuana, Rights

Colorado and Washington are leading the nation in the legalization of recreational marijuana. However, as with any U.S. law, each state has its own rules and enforcement protocols. The result is that honest, law-abiding citizens are left confused by the interplay between these two states’ laws, as well as the effect of marijuana legalization on their rights and responsibilities in other jurisdictions.

Below, we explore the main differences in these two states’ legal pot statutes and what they mean for consumers and retailers.

Why the differences?

The differences stem largely from infrastructure variations. Colorado began its medicinal marijuana initiative years ago, allowing it a more seamless transition to its recreational use statute, while Washington was unable to advance a medicinal use agenda as comprehensive as that found in Colorado. As a result, Washington’s recently-enacted Initiative 502 is a much newer concept for lawmakers, law enforcement personnel, retailers and residents.

What buyers need to know

All buyers and possessors of recreational marijuana in Colorado or Washington must be at least 21 years of age. Remember, recreational marijuana use is only permitted in these two states, so legal buyers in either jurisdiction could face criminal penalties for consuming lawfully-purchased pot in any other state.

When it comes to home growers, a stark distinction arises between the states. In Colorado, recreational users may grow and cultivate up to six marijuana plants – only three of which may be flowering at the same time. Washington, on the other hand, strictly prohibits the cultivation of any marijuana plants whatsoever.

The states also differ in their affinity for the Second Amendment. Recreational marijuana stores are required to operate as cash-only operations due to federal banking laws prohibiting financial transactions related to the sale of drugs. All-cash operations inevitably present a higher risk of robbery. Buyers in Colorado shops can expect to see armed security guards, but Washington State has been less inclined to allow the pistol-pot combination.

Lastly, out-of-state buyers in Colorado are limited to purchasing just one quarter-ounce of marijuana per transaction, whereas residents are permitted to purchase one ounce. There is no similar residency restriction under Washington law. 

Laws for licensees

Both states require marijuana producers, processors and retailers to obtain and maintain a license. However, one of the largest and most controversial distinctions between the two states involves a concept known as “vertical integration.”

Vertical integration refers to the practice of producing a product yourself, preparing it for sale, then retailing the product directly to consumers – essentially controlling the entire process without the involvement of middlemen or other parties.

Colorado encourages entrepreneurial growers to sell their own product at retail and actually imposes mandatory sales requirements for dispensaries to sell at least 70 percent of their own goods. In so doing, its licensure structure allows for citizens to carry one license which allows the licensee to grow, cultivate, process and sell the product.

By stark contrast, Washington prohibits vertical integration within the recreational pot industry and requires separate licenses. Producers and processors may not also obtain a retail license, though Washington law does allow for a dual producer/processor license.

With regard to local control, licensees in Colorado are subject to municipal opt-out, whereas Washington’s laws do not expressly address the issue. In Washington, revenue-sharing schemes have not been arranged to allow municipalities the opportunity to receive funds from marijuana taxes, so many towns have opted to amend zoning laws to prohibit recreational marijuana shops from conducting business in the area.

Newcomers seeking a retail license in Colorado can expect to pay $19,000 for the privilege to sell their product, as compared with the $1,250 retail licensee fee imposed by Washington. Washington makes up the difference in other ways …

Taxes

Washington lawmakers have imposed a whopping 25 percent excise tax on sales from the grower to the processor, processor to retailer, and retailer to consumer. This is on top of the 9.6 percent general sales tax.

Overall, financial analysts expect the state to receive over $50 million revenue from the sale of marijuana between 2015 and 2017. This revenue is first allocated to fund the administrative costs of I-502, several research projects and substance abuse programs. From there, revenue is to be split between healthcare spending and the state’s general fund.

Taxes in Colorado are a bit more modest and include a 15 percent excise tax on the cultivator, a 10 percent special sales tax and a 2.9 percent standard sales tax. Tax revenues generated in Colorado are allocated for the Marijuana Enforcement Division, school construction, substance abuse prevention and law enforcement. The state also plans to revenue-share with local governments that permit the sale of recreational marijuana. 

Residency

Colorado imposes a strict and lengthy residency requirement against anyone interested in obtaining a license to produce, process or sell marijuana. Applicants must prove residency within the state for a least two years prior to applying. Washington requires proof of residency for just three months prior to applying.

Advertising

Advertising laws have proven especially controversial, prompting several lawsuits by prominent marijuana publications, including High Times. Currently, Colorado’s advertising rules prohibit advertising marijuana – including online, print and broadcast – unless the producer can show that no more than 30 percent of readership or viewership is expected to be by minors. This restriction was quickly met with a First Amendment challenge, and the outcome of the case is yet to be determined.

Washington’s laws are actually much more restrictive and specific than Colorado’s. State laws prohibit advertisements on public property, mass transit, or within 1,000 feet of a school, playground, recreation center, child care center, public park, library or arcade.

Dispensaries are allowed to hang one sign out front that can be no larger than 1,600 square inches. In addition, Washington advertising rules prohibit the dissemination of any ad directly targeted or likely to appeal to minors.