- Associated Press - Tuesday, March 3, 2015

SEATTLE (AP) - With the state Senate passing a bill to regulate medical marijuana, Washington’s House of Representatives is preparing its own version of a pot-market overhaul, one that could cut prices at licensed recreational stores.

The measure, sponsored by Rep. Reuven Carlyle, aims to make the state’s legal marijuana stores more competitive with the black market. It calls for eliminating the three-tier tax structure voters approved in Initiative 502 and replacing it with a single excise tax of 30 percent at the point of sale.

But Carlyle’s bill would take effect only if the Senate’s medical marijuana bill also becomes law. That’s to encourage a coordinated approach to the recreational and medical systems, the Seattle Democrat said Tuesday.

“If a strong medical bill doesn’t pass, my bill self-destructs,” Carlyle said Tuesday. “We’ve got to do both, and we’ve got to do both right.”

Washington’s voters adopted a medical marijuana law in 1998. It allowed patients to grow their own or designate a caregiver to grow it for them, but the state has never had a regulated medical marijuana system. Commercial sales remain illegal except at licensed I-502 stores.

Dispensaries have nevertheless proliferated, and they have been largely tolerated by law enforcement. But pressure has been increasing to rein in the medical stores and direct recreational users into the new, heavily taxed system set up by I-502. Seattle officials say they plan enforcement actions against about two dozen medical dispensaries this month.

Many of the medical dispensaries insist that they’re good actors, would welcome state oversight, already test their products for impurities, and pay taxes. But others don’t, and prices at the medical shops remain lower than in legal stores.

“The legislature finds the implementation of Initiative Measure No. 502 has established a clearly disadvantaged regulated legal market with respect to prices and the ability to compete with the unregulated medical dispensary market and the illicit market,” Carlyle’s bill reads.

Under the measure, which faces a hearing Wednesday evening in the House Finance Committee, authorized medical marijuana patients would get a tax break: They would not have to pay the regular state sales tax, which is otherwise imposed on top of marijuana excise taxes.

To encourage more cities and counties to allow marijuana businesses, the bill would direct the state to share pot revenue with jurisdictions that do so. It would also them to adopt more flexible zoning for where pot grows and stores can be located.

Licensed pot businesses would be able to hire other companies to transport their product - currently they have to do it themselves - and the bill specifies that those companies would be allowed to have armed guards.

Last month, the Senate passed a bill, drafted by Sen. Ann Rivers, R-La Center, to reconcile the medical and recreational markets. Its first hearing in the House is on Thursday.

Among its many provisions, it would create a database of patients, who would be allowed to have more marijuana than recreational users and who could grow up to six plants at home - fewer than the 15 they’re currently allowed.

The measure would crack down on collective gardens, leaving only four-patient “cooperatives” that would be limited to a maximum of 60 plants. The location of the collective would have to be registered with the state, and it couldn’t be within 15 miles of a licensed pot retailer.

But it would also provide an avenue for existing collective gardens to stay in business, by requiring the state Liquor Control Board, which would be renamed the Liquor and Cannabis Board, to adopt a merit-based system for granting marijuana licenses. Among the factors that could be considered are whether the applicant previously operated a collective garden, had a business license or paid business taxes.

Rivers complimented Carlyle for his work.

“This is a huge task that he’s undertaking,” she said. “My colleagues on both sides of the aisle and both sides of the Rotunda recognize that we simply can’t let this go.”

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Follow Johnson at https://twitter.com/GeneAPseattle

AP correspondent Rachel La Corte in Olympia contributed.

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