As more states legalize recreational marijuana, regulators face a steep learning curve when it comes to rules on when and where pot retailers can set up shop. For example, it might make sense to restrict marijuana sellers from operating near places where you’ll find lots of kids, but could that same rule be gamed just to prevent a retailer from opening a legal business?

That’s a question that city leaders in Spokane, WA, are asking about a marijuana retailer who recently found out his license to sell the drug had been rejected because an “arcade” with very few games and anonymous owners opened nearby.

According to the Spokesman-Review, a marijuana shop called Smokane received permits from the city back in Aug. 2016 to move to an industrial park on the east side of the city. Fast forward seven months, and the Washington Liquor and Cannabis Board rejected its application for a license to start selling pot.

Why? Because a business called “Old Fashioned Fun Arcade” recently opened up about 600 feet away from the planned Smokane store. A Spokane ordinance says marijuana businesses can’t be licensed within 1,000 feet of any business that caters specifically to children, including arcades.

But is this really an arcade? It only has four operating video arcade machines, three pinball machines, and ping pong and foosball tables. There’s no admission fee, and there wasn’t anyone in the place when the Spokesman-Review dropped by recently. The only person who works there said he’s a volunteer. The identities of the arcade’s owners is not clear.

All this mystery has led some to suspect that the arcade — which is paying a rent of $5,000 a month to house its few games and no employees — may be the brainchild of other pot retailers who want to keep Smokane from opening its doors.

One city councilman — who has criticized the marijuana industry in the past and has even pushed to keep it from spreading in Spokane — nevertheless thinks the legitimacy of the arcade is questionable, and that it could be a move to suppress competition.

“By all appearances, I’m looking at shenanigans,” said Councilman Mike Fagan.

He believes that the marijuana move should’ve been grandfathered in when its initial paperwork went through, and is proposing that the city temporarily ease the 1,000-foot buffer zone that prevents state-licensed pot shops from opening near video arcades for six months, giving Smokane’s owners enough time to move in near the arcade.

The council’s president says he’s going to vote in favor of Fagan’s proposal.

“I have not personally been there, but it seems hokey to me,” said City Council President Ben Stuckart.

But the arcade’s self-described caretaker says the location caters to kids visiting the offices of a youth theater next door, and says it’s the real deal, even if there’s no admission fee.

An attorney and landlord who’s listed as the registered agent for the corporation running the arcade also says it’s legit, and that the arcade brings in most of its money from renting out rooms for private parties.

He denies that the arcade moved in specifically to stop Smokane, though he did file a complaint on behalf of his clients with the state liquor and cannabis board calling out the shop for posting signs advertising the sale of marijuana before it was open for business.

This isn’t the first time the Liquor and Cannabis Board has seen an arcade proposed near a planned pot shop, notes the Spokesman-Review: The owner of a popular Seattle pot shop called Uncle Ike’s wanted to open an arcade venture near where a competitor was moving in, but the city determined that he hadn’t secured all the necessary permits, and allowed the new shop to open up after a delay.

Ike’s owner admitted to the Seattle Times that his attempt to open the arcade was meant to frustrate his competitor.

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