Almost every day, our firm gets inquiries as to when Washington State will be accepting new marijuana producer license applications. What we always try to explain is that new license applications are not on the horizon, but, at some point the LCB will likely allow existing marijuana producers to hold up to three producer licenses as envisioned when I-502 passed in 2012.
It looks like the time is finally approaching for marijuana producers to hold more than one license. The Washington State Liquor and Cannabis Board (“LCB”) recently notified marijuana license stakeholders that it is accepting comment on possible rule changes in regard to allowing marijuana producers to hold more than one license as well as modifying the marijuana producer tier structure.
In May of last year, the LCB issued a memo stating that existing licensees would be able to hold an interest in up to three marijuana producer licenses starting in 2017. Thus, marijuana producer licensees have been waiting since January of this year for the LCB to accept additional license assignments/assumptions from existing producer licensees.
With rule making just commencing in regard to this issue, it may not be until the latter part of this year at the earliest that existing producer licensees will be able to assume additional producer licenses. That is unfortunate as many producer licensees are looking to sell their license or an interest in the licensed business to other licensed producers with proven track records. Delaying the acceptance of these licensed assumptions could impede the successful transfer of some of the underperforming licensed marijuana businesses and hinder the creation of new business partnerships.
Also being considered is allowing the expansion of the smallest marijuana producer businesses. Currently, Tier 1 marijuana producer licensees are limited to 2,000 square feet of marijuana canopy. Some of these Tier 1 businesses are finding it difficult to operate a successful business with this square footage limit and are finding it very difficult if not impossible to find buyers for their Tier 1 license. Allowing expansion of this canopy size may help these small growers succeed in the very competitive marijuana market.
Retail marijuana sales in Washington State have now exceeded $1 Billion. Yet, there are still a number of marijuana businesses struggling in the state. It appears that the LCB understands the need for rules to evolve over time to create the opportunity for more legal marijuana businesses to succeed. Hopefully new rules can be implemented sooner rather than later. Information on how interested parties can participate in this rule making process can be found here.
For more information on the regulation of marijuana businesses, please contact Heather Wolf.