A bustling Seattle marijuana marketplace, where thousands of customers buy pot each year, could be on the verge of legal trouble with the city over a building code violation.
The City Attorney's Office is deciding whether to file a legal complaint against Northwest Cannabis Market, Inc., a company that operates two marketplaces where dozens of independent medical marijuana retailers sell their goods. One is on Seattle's Rainier Avenue; the other is in White Center. The case stems from a Department of Planning and Development inspection, which found that the Rainier Avenue location had run afoul of building permit rules and may need seismic upgrades.
Steep fines accompany the rule violation, accruing at a rate of $150 for the first 10 days of non-compliance and $500 per day thereafter. As of Thursday, the fines that the city could levy against the market totaled about $80,000. That number will continue to rise until the permitting problems are resolved. Michael Keysor, the CEO of the Northwest Cannabis Market, said he is working to comply with the rules and is hopeful that the city will not file the lawsuit needed to collect some or all of that money.
If the city does try to collect the fines, Keysor said he would attempt to keep the market running, but that he would probably have to turn to new investors to raise more cash. "We're not stopping," he said. "I have no intention of shutting down."
But the permit violation is not the only uncertainty the marketplace is facing. State lawmakers have yet to come up with rules to align the state's medical marijuana industry with the new system for recreational pot. It is not clear whether future legislation will leave room for the Northwest Cannabis Market, or the medical marijuana dispensaries that pepper the streets of Seattle.
Meanwhile, City Attorney Pete Holmes recently indicated that his office planned to work closely with DPD to enforce building code violations at marijuana businesses. And the U.S. Justice Department has been critical of the state's loose rules for medical pot.
On Wednesday, at the Northwest Cannabis Market on Rainier Avenue, 37 customers passed through the business' lobby between 4 p.m. and 4:30 p.m. As they entered the market, staff members checked prescriptions. The majority of the customers were males that looked to be in their 20s and 30s, but there were also a handful of older and female customers.
"A lot of them, their authorizations are questionable," Keysor said. But he added: "It's not our place to question doctors."
Keysor wonders if his business is being used to set an example. While he says that no city officials have treated him badly, he also feels they did not provide clear information about what it would take to achieve compliance with the building code, and that he wasn't given adequate time to meet the permit requirements. "It feels like a game of trickery," he said.
DPD maintains that they are just trying to enforce building code rules meant to keep people safe. "The business never applied for a permit and just moved into an existing warehouse space," DPD spokesperson Bryan Stevens wrote in an email.
Like all investigations into city building and land use code violations at marijuana businesses, this one was triggered by a complaint filed with DPD. Keysor does not know who filed the complaint against him and the owners of a neighboring fish shop and bakery were unaware of it. Either way, he's stuck with the consequences.
In order to comply with the permit requirements, Keysor said that city officials told him that he needed to submit updated floor plans for the building -- a request he found confusing since the building had not changed since the 1970s.
"It's an odd, odd thing," he said.
DPD issued a notice of violation to the market on Jan. 15 and gave the business until Feb. 14 to meet the permit requirements. After the February date, the fines kicked in.
"Try getting a set of blueprints in 30 days," Keysor said. "I laid out five grand and said do it as fast as you can. I was working diligently."
In DPD's view, Keysor was not moving fast enough.
According to Stevens, the market failed to make "necessary progress" toward compliance, which would have included taking steps prior to the Feb. 14 deadline, like turning in preliminary paperwork or setting a submittal date for the permit application.
"By the end of March, the owner had not yet submitted plans for review, so the case was referred to Law [the City Attorney's office]," he said. "He had over three months to make an application for a permit, which is a reasonable amount of time for any business to make substantial progress."
Keysor finally submitted a permit application in June. By then, he had hired a lawyer. So far, Keysor says he has spent about $14,000 trying to resolve the permitting problem.
"I think it’s pretty apparent that the owner would benefit by hiring a professional to help with the permitting process," DPD's Stevens said.
The City Attorney's Office would not comment on the case because it is under review. But Kimberly Mills, a spokesperson for the office, said that the business would be able to continue operating while the case is being resolved.
Speaking at a City Council committee meeting last week, City Attorney Holmes mentioned building code and tax violations as two areas where the city could ratchet up its enforcement efforts in the marijuana industry. He noted a lawsuit the city filed the prior week against the recreational marijuana grower, Sea of Green Farms, over building code compliance problems.
"We plan to file more," Holmes told the committee.
Mills, the City Attorney's Office spokesperson, confirmed that three cases involving DPD notices of violation issued to marijuana businesses were currently under review, including the one for the Northwest Cannabis Market.
Bob Leeds, who owns Sea of Green, said on Wednesday that he was meeting with city officials to work through the problems that led to his suit. "We discovered that we had made some mistakes and that they had made some mistakes," he said.
Though he declined to get into the details of the case, he emphasized that the suit was not presenting major problems for the company, which will begin harvesting a fresh crop of pot next Monday.
Like many others on the medical side of the marijuana business, Keysor said that he would like to see clear signals from the city and the state as to what they expect from the industry. "It's not sour grapes," he said. "Pave the way, tell us what it takes."
At the moment, that is difficult, because state lawmakers failed to pass new medical marijuana laws in the last legislative session. A renewed effort to come up with new rules for medical growers and sellers is expected in 2015.
On Wednesday afternoon, back at the Rainier Avenue market, Keysor sat in a chair on the porch outside of a second floor office, smoking cigarettes and drinking coffee. Retailers at his two locations, he said, provide marijuana to about 50,000 medical customers. On a full day, 32 vendors occupy stalls and other spaces within the Rainier Avenue location. Gang activity and tax evading sellers are not tolerated, he said.
"I hope the city doesn't have plans to lay waste to what we're doing," he said. "We're at their mercy."
