Last week the Washington State Legislature passed Engrossed Senate Bill 5131, which both revises existing marijuana laws and adds provisions regarding retail licensing, sale of immature plants and seeds, advertising, licensing agreements, gifting of marijuana, and tribal oversight. Highlights of the new law are as follows:
- An individual may hold a financial and/or ownership interest in up to five retail licenses. This is an increase from the current limit of three retail licenses.
- With certain exceptions, a retail licensee will face forfeiture if they fail to become fully operational 24 months after license issuance.
- Retail marijuana license applications will be evaluated in the same manner as producer and processor applications as the merit system for issuance of retail licenses is now abolished.
Sale of immature plants and seeds
- Licensed producers are allowed to sell immature plants or clones and seeds to qualifying medical marijuana patients and designated provides as well as cooperatives.
- No outdoor billboards allowed except that a retailer may use an outdoor billboard sign to advertise the name and location of its business.
- No transit (i.e. bus stop, tax stand, train station, etc.) advertising allowed.
- Advertising targeted at out of state residents is prohibited.
- Any advertising targeted directly or indirectly at youth is prohibited
- objects such as toys, movie or cartoon characters and similar images are prohibited in advertising
- commercial mascots are prohibited outside of or near licensed marijuana businesses
- Cities, towns and counties are empowered to enact even more restrictive advertising rules.
- Marijuana businesses may enter into licensing agreements or consulting contracts for goods or services, unregistered trademarks and trade names, trade secrets, technology, or proprietary information and these agreements must be disclosed to the Washington State Liquor and Cannabis Board (the “LCB”).
- Trade secrets, technology and proprietary information contained in these agreements are exempt from public disclosure.
- Adults may gift each other marijuana as long as the marijuana remains in its original packaging as purchased from a licensed retailer and the amount gifted is within the legal limits of what an adult may possess
- The LCB cannot issue a marijuana license within Indian Country without the consent of the federally recognized tribe associated with the reservation or Indian country
ESSB 5131 currently awaits signature by the Governor. One of the most interesting things I find in this legislation is the possible further consolidation of the retail marijuana market. The LCB has been slow to act on allowing producers to hold an ownership interest in more than one license and thus, it will be interesting to see how quickly rules are in place to implement ESSB 5131 allowing retailers to hold an interest in up to five retail licenses.
For more information on the regulation of marijuana businesses in Washington State, please contact Heather Wolf.