On July 12, the Washington State Liquor and Cannabis Board (the “LCB”) will be holding a public hearing on proposed rules that would affect marijuana producer licensees. Included in the proposed rules are the following changes to marijuana producer licenses:
- Any entity or individual would be allowed to hold an equity and/or profits interest in or exert control over up to three marijuana producer licenses
- Tier 1 producer licensees would be allowed to up to four thousand square feet of plant canopy
- Tier 2 producer licensees would be allowed to grow between four thousand and ten thousand square feet of canopy
- Producer licensees would be able to sell immature marijuana plants, clones and seeds to qualified patients, designated providers and licensed marijuana researchers
The proposed rules would also preclude the issuance and/or renewals of marijuana licenses to applicants or licensees with prior violations involving diversion, criminal conduct, undisclosed financiers and true parties of interest and obstructing law enforcement from performing official duties (i.e. refusal to allow an inspection). Other prior violations involving public safety, traceability, pesticides, security and other regulatory violations would also affect license issuance and/or renewal.
The proposed rules would also formally close the application window for marijuana licensees. As a practical matter, the application window has been closed for a long time and the new rule clarifies this for those unfamiliar with state rules and policies.
What these proposed rules do not do is in any way affect the ability of non residents to hold a marijuana license. We continue to get daily inquiries as to when the LCB will allow out of state residents to own marijuana businesses in Washington. The answer I believe is not anytime soon. As I have discussed in prior posts, non residents may loan money to Washington State marijuana licensees but only as long as they do not take an equity or profits interest in the licensed business.
Given the uncertainty regarding the Trump Administration’s approach to the legalization of marijuana at the state level, the Washington State legislature is unlikely at this time to take any action that would create a major change to its regulatory system. As the industry evolves and as more states legalize marijuana, allowing some out of state ownership of marijuana businesses may be inevitable in Washington State. But, it may be a few years before the inevitable happens.
Existing licensees and other interested parties would be wise to make their voices heard in regard to these rule changes. The LCB will be accepting comment on these proposed rules until July 12, 2017.
For more information on the regulation of marijuana businesses in Washington State, please contact Heather Wolf.