When this crazy initiative called I-502 was filed way back on July 8, 2011, I remember reading through the Washington Administrative Code for the first time and thinking how incredibly difficult the process looked, and how evil the Washington State Liquor Control Board would be to deal with. At least I was half right.
For all its faults and missteps, the Liquor Control Board has turned out to be an absolute pleasure to deal with in many respects. In the beginning of this process, they took great care to ask all interested parties what their opinions were, and I dare say, they actually listened to many of those opinions when implementing the rules. Even though voters approved this initiative more than a year ago and the state legislature adopted the rules four months ago, most people agree the majority of those changes were to everyone’s benefit, despite how much we all hate the ups and downs and never-ending changes.
As an I-502 license applicant myself, I can tell you that every interaction I’ve had the Liquor Control Board has been positive, and every question has been answered in a timely manner — often less than a day. Certainly, there are many things I might’ve suggested they do differently. If you’ve been at this game full-time for almost two years like I have, and you’ve really been keeping your eye on the ball, you know all too well the Liquor Control Board is the least of your problems when trying to get your I-502 operation up and running.
The real hurdle to getting your I-502 operation up and running is with code enforcement and the hidden costs related to construction. We’re talking county building inspectors, fire marshals, state health inspectors, federal OSHA inspectors and a litany of other agencies that are all putting our industry under a microscope right now. Code enforcement officers that may have turned a blind eye to “rough” buildings in the interest of economic development before are suddenly requiring everything be brought to code — to the letter. Far be it from me to suggest that these code enforcement officials are going by the book (or throwing it at us) because our product was illegal a few months ago, but the bottom line is that any budgets you did for build-out need to be tripled or quadrupled.
Let’s start with permitting, shall we? Most counties will require a pre-permit meeting, which is usually $400-$500. This is a meeting with all the various code officials, who all take turns laughing at your plans and telling you how foolishly far you are away from even applying for permit. Many counties are requiring that your building plan AND your site plan AND your septic plan need to be “engineered” — meaning stamped by a state-licensed engineer. If you paid a drafter buddy to do your plans, or heaven forbid, hand drew them, when the laughing stops, add $4,000-$8,000 to your budget for approved plans.
Some other counties are requiring that you do a SEPA or full environmental study; others are requiring special-use permits. If you are in one of these counties, add nine months to the “pre-permit” process, then add another $5,000-$20,000 to your budget. And remember, you don’t even have your building permit yet. In early April, I spoke with one I-502 licensee in our county on the Olympic Peninsula, and in this little rural backwater, his litany of permits totaled over $10,000. What’s in your budget for permits?
Here’s a real shocker: How many of you thought you could run your own security wiring or maybe run some of the conduit, or you’re real handy, so you planned to do most of your wiring then just have an electrician “buddy” look it up at the end before the inspector came? That would be a very costly assumption indeed, because all I-502 entities are considered “commercial” structures — even if they used to be a house or a barn. In that case, the Department of Labor & Industry (L&I) requires that all electrical work — even low-voltage work like security and alarm wiring — must be done by an L&I-licensed electrician. You can darn-well bet they will be checking too. Take whatever you thought your costs would be for electrical components, multiply that number by five, and that will be the low-ball estimate for your real electrical costs. This alone added $23,000 to our budget.
How much do you know about buildings meeting the new energy efficiency codes? My favorite are those steel buildings — the ones that previously rented for 25 cents a square foot prior to I-502. I know an entity that had their plan fall apart on this insulation issue alone. Sure, the rent was cheap, but they had to spend more than $50,000 to bring those paper-thin walls up to R-21 and the flat tin roof up to R-38. Many counties also have rules requiring these buildings to exchange air at such a high rate, it will cost thousands — tens of thousands, maybe even hundreds of thousands — of dollars in HVAC to comply. The most recent HVAC bid we had on our 4,800-square-foot building was a cool $138,000.
How many of you plan on developing a rural property that has a well? For starters, you may need a $4,000 satellite system to hook your IP-enabled security system to. And when it comes to wells, your county may require that you get a “state-certified” monitoring service – at $1,000-plus per month! They may also require you to upgrade to a higher well class, put in holding tanks, filter it and possibly more. Why all this you ask? Because this building “might” be open to the public and therefore one would need to have the water monitored every month to make sure it is safe for the public, even though our buildings are tighter that Fort Knox, and visitors are generally verboten. Your restrooms better be ADA compliant too, for both little girls and little boys. If not, add another $10,000-$15,000 in hidden costs to your budget, and then go directly to the fire marshal.
Planning on a building of more than 6,000 square feet, or building out rooms within rooms? Even though that building hasn’t had sprinklers for the last 40 years, plan on spending tens of thousands of dollars adding them to appease the fire gods.
Don’t have the latest battery backup emergency lighting in case your power shuts off? You’ll need them, and they are expensive. We were particularly inflamed by the cost of a wired fire alarm, which can be upwards of $5,000 – installed by your (now-partnered) L&I-certified electrician of course. Don’t forget that lock box with your key on the outside of your building either. And whatever you do, DO NOT tell them you’re planning on making butane hash oil.
I wish I had a camera to capture the look on the fire marshal’s face when I told him we planned to use butane to extract THC from cannabis. His first questions were, “If your building catches fire, and my men open your door, will this stuff blow up in their faces? What is this stuff anyways? Where’s the MSDS on it, the UL reports?”
All fair questions, but as far as I know there is no MSDS on BHO. I did find out Underwriter Laboratories will put BHO in a cup, try to light it on fire and report the results for about $12,000. They want a liter to test (about $20,000 worth) and they will not return the unused portion. No doubt, they want to study the effects of the smoke…
The health department was somewhat interested in the production end of our business, but mostly they rule the processing world. An expensive new world where everything is washable, all the walls are seamless, sinks come in threes and pricey vent hoods with fire extinguishers need to be installed by state-certified technicians. Everything that touches the food product (our cannabis) has to be food-grade. We’ve learned that it’s better to build a separate building for this rather than outfit a smaller space inside a grow operation. If you’re planning a small kitchen, add $25,000 to $50,000 to your budget.
Just when you thought you were done, and convinced you were going to be way over budget, a large man with a scraggly beard and dirty coveralls stands up. He’s with the road department. Turns out, now you have a business down that rural road; you need to bring it up to “commercial” grade. It needs to be flat, obstruction free and wide enough to land a 747. At the very least, you’ll need to be able to turn a large fire engine around on it. We just added $20,000 for road upgrades to be safe. (And that might not be the end of the hidden costs.)
I don’t recall reading anything about having to make major road improvements, upgrade wells or appeasing the fire gods in the Washington Administrative Code, but I can promise you that all my days and sleepless nights are filled with these horrors now.
I recently spoke with a well-respected I-502 attorney who said many of his clients are being blindsided by building inspectors and fire marshals, even though the Liquor Control Board approved their plan. They seemed easy to deal with, probably because they are if you’re straight with them.
The lesson here is don’t be fooled into thinking you hit a home run just because you sprinted through the Liquor Control Board application process. You may be closer to earning your license, but that doesn’t mean the game is over by any stretch.
It means hardball season is just beginning and you need to keep your eye on the ball.