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Why Washington's marijuana businesses wouldn't mind some competition in Oregon

Marijuana business owners from Washington state explain why they back Measure 91, even if it means more competition
Washington's marijuana entrepreneurs back Oregon's pot initiative 03:16

Washington state in 2012 made history as one of the first states in the nation to legalize marijuana. So far, it's been a financial boon for the state -- retail stores have reaped millions since they opened in July.

New Vansterdam in the city of Vancouver -- just north of Portland, Oregon -- is one of the best performing marijuana stores in the state. By the end of September, the store had made $1.6 million in revenues. Owner Brian Budz credits the store's success to his service-oriented staff, as well as the store's proximity to Portland.

"If we were somewhere else, I really just don't think we would have the foot traffic that we have," Budz told CBS News. Thanks to the nearby Portland International Airport, he said, "we get calls from people saying, 'What time are you open, I've got 2 hours, can I come by?'"

Meanwhile, Portlanders can zip over the Columbia River to Vancouver in as quickly as 10 minutes, via the I-5 bridge or the I-205 bridge, to enjoy marijuana where it's legal.

"There was a lot of enthusiasm from Oregonians when the law passed," Budz said.

But Budz stands to lose some business if Oregonians decide to pass Measure 91 next week and legalize marijuana sales in their own state. The most recent poll, commissioned by the Oregonian, shows voters effectively split over the measure, with 44 percent of likely voters in favor of it, 46 percent opposed and 7 percent undecided. Previous polls showed more voters in favor of the measure than against it.

Should the measure pass, Oregon officials wouldn't issue licenses to marijuana retailers until 2016. Still, Budz said, "They're going to kill us... when they pass that law and open stores in a few years because their law is much differently written."

Perhaps most critically, if Measure 91 passes, Oregon's pot industry will be subject to fewer taxes, most likely putting retail prices below Washington's. In Oregon -- where there is no sales tax at all -- only marijuana growers would be subject to a tax. By comparison, Washington's law imposes a 25 percent excise tax on each level of the industry, including production, processing, and the retail level.

"Drafting the tax issue took a lot of time," Attorney Leland Berger, who helped draft Measure 91, told CBS News. "The challenge is to find the sweet spot where it generates enough revenue that the government is interested, but not so onerous that it drives people to the underground market."

Oregon's measure would try to improve on Washington's law in other ways as well. For instance, unlike in Washington, Oregonians would be allowed to grow weed at home. Additionally, Measure 91 would put in place a regulated medical marijuana system.

Oregon would also let non-residents enter the market, unlike Washington. Brian Stroh, whose business Cannaman Farms produces about 25 pounds of marijuana a month for Washington stores, sees an opportunity there.

"Oregon's going to be the first real example of entrepreneurs getting into this from other places.. entrepreneurs that actually have capital behind them," Stroh told CBS News. "You're going to see things in Oregon mature much faster, as it will in the next state and the next state... Everybody wants to find a way into it."

Given the extent of cannabis use in the country -- Gallup in 2013 found that 38 percent of Americans have admitted trying it -- Stroh said that at some point, he expects the rules governing marijuana use to be "no different than alcohol or tobacco" regulations. Surveys from both Gallup and found that around 7 percent of Americans were

Also presenting a challenge is what Berger called "the 400-pound gorilla in the room: It's a federal crime, everything that we're talking about is a federal crime."

The sales and possession of marijuana -- whether it's for recreational or medical purposes -- remains completely illegal under federal law. The Obama administration has been willing to let states experiment with legalization, although it hasn't always been clear about what triggers enforcement of the federal law. The Justice Department has issued a couple of memos giving guidance on the matter.

That's another reason why Stroh supports Measure 91, and why Budz supports it -- even though he could lose some Portland customers.

"It's kind of counter-intuitive from a business perspective," Budz said. "Nobody knows what's going to happen at the federal level... in a couple years. There's no telling who's going to take office. We need as many states as possible to approve the legalization of marijuana."

The next president, he continued, "may very well change their mind about the leniency that President Obama is showing right now."

More states are likely to vote on the issue in the coming years, and as more states sanction marijuana use, Budz hopes it will be harder for federal lawmakers to push back against the experiment. This year, in addition to Oregon, Alaska and Washington, D.C. are also voting on ballot initiatives to legalize marijuana. Florida is voting on a medical marijuana initiative.

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