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Awaiting Official Legalized Pot System, Wash., Colo., Businesses Test Law’s Limits

iStockphoto/Thinkstock(NEW YORK) -- In Washington and Colorado, where the personal use of marijuana has been legalized, the fledgling pot industry is beginning to take shape.

While both states ban the public use of marijuana, people like Robert Corry, owner and general counsel of Denver's Club 64 -- a private marijuana membership club -- have implemented ways for people to smoke pot together while awaiting state regulations on the drug's sale.

"At this point, there is no permit for a marijuana club. We have the supreme authority of our state. The Colorado Constitution says that we can do this under certain restrictions," Corry told ABC News. "People have been getting together to smoke marijuana for millennia, so it's not really that different."

Named after Colorado's Amendment 64, which permits the personal use of marijuana for adults over 21, Club 64 operates as a membership-only group that provides a venue for members to smoke together in social settings.

"There are alcohol bars where you can go consume alcohol. That's what we wanted to do with marijuana," said Corry, who helped to co-draft Amendment 64.

While there is no brick and mortar location yet for Club 64 members to consistently meet up and light up, those who pay an annual fee are emailed when scheduled events are set to take place at venues around the city. Corry said he tries to plan club events around alcohol-related holidays, like New Years' Eve, Super Bowl Sunday and St. Patrick's Day.

All it takes is $30 to become a yearlong member, but there is an additional fee for each gathering attended. Members of Club 64 bring their own weed, as well as smoking accessories and paraphernalia to events, said Corry.

The club currently has approximately 500 members from all over the world, he said, and many are active in the business and politics of pot.

Corry expects the state will pass regulations for the recreational sale of marijuana by October, but he wanted to start the club before rules for sale of marijuana were set because he saw an opportunity in the marketplace.

"There is no license required to produce [marijuana], possess it, or give it away for free. But when you sell it, that's when the license becomes necessary," he said. "But we figured, why wait for that? We can do a club now, and there's demand there."

The club does not generate revenue, said Corry, but he hopes that by setting up shop, so to speak, and hiring employees, Club 64 can take the next steps to operate a legitimate pot business.

Another business owner pushing the pot law limits is Frankie Schnarr, owner of Frankie's Sports Bar and Grill in Olympia, Wash.

Schnarr has a private smoking room in his bar, where he charges $10 a year for marijuana and tobacco users to light up. The room is within the limitations of Washington's pot laws and the regulations put forth by the Washington State Liquor Control Board, which is drafting the rules for the pot industry, he said.

Schnarr said people of all ages frequent the room.

"You'd be surprised who smokes cannabis," he said. "I had some people come in the other night, born in 1938, 1939, and the 1940s."

Both Washington and Colorado are approaching deadlines with respect to setting up a legalized marijuana system. As a result, the Washington State Liquor Control Board has hired a consultant, BOTEC Analysis Corporation, to assist their decision-making process as they put together state rules and regulations for marijuana by Dec. 1, said spokesman Mikhail Carpenter.

Dr. Mark Kleiman, BOTEC's project manager, said the crime and drug policy think tank will advise the administrative agency on the size of the potential legal market in the state as well as how many grower licenses it should issue.

One of the main concerns, said Carpenter, was adequately estimating the size of the marijuana market.

"If you overproduce marijuana, the natural thing for a surplus is to go into the black market. If you don't produce enough marijuana, you're fueling the black market," said Carpenter. "There's a sweet spot where you're going to get your production level."

But Kleiman said it was unclear how much growth the marijuana industry will see when competing with the already established registered medical marijuana system, like in Colorado.

"Given how easy it is to get a recommendation [in Colorado], it's not obvious how big the non-medical market is going to be," he said. "It's not clear to me how much growth there will be in the [recreational] industry in these two states."

"The notion that it will be a huge agricultural business is wrong," he said.

Copyright 2013 ABC News Radio

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