At its August 9th Board Meeting, the Washington State Liquor and Cannabis Board (the “Board”) rescinded its policy that prohibited licensed producers from holding more than one producer license. Thus, any individual or business entity can now hold up to three producer licenses pursuant to WAC 314-55-075. In making this decision, the Board said it wanted to “get out of the way” of existing licensees that want to expand their businesses.
To be clear, this does not mean that the Board is opening a new application window for producer licenses. No new licenses will be issued by the State of Washington. Rather, anyone interested in obtaining a new or additional producer license will need to purchase or partner with an existing licensed business.
Interestingly, the Board’s notice states that additional licenses may only be acquired by assuming part or all of a licensed business (as opposed to just assuming the license itself). Hopefully, however, the Board will in fact continue to process license assumptions since a license assumption generally represents less risk to a buyer than having to purchase a licensed business, which may have liabilities associated with it.
In anticipation of this policy change, many licensees have been lining up additional producer licenses to purchase and/or potential business partners. The Board is likely to see numerous applications for license/business assumptions as successful marijuana producers seek to expand their businesses and gain a larger market share. Market consolidation appears inevitable.
Another decision of note made by the Board last week was to halt its rulemaking activities in regard to expanding the amount of canopy allowed for tier 1 producers. According to its Notice to Stakeholders, the Board is tabling this issue while it further evaluates the industry and the amount of canopy needed statewide. It is likely, that the hostility coming from US Attorney General Jeff Sessions towards state legalization efforts is discouraging the Board from making any changes that could possibly be seen as expanding the state’s marijuana industry at this time.
For more information on the regulation of marijuana businesses in Washington State, please contact Heather Wolf.