In May of last year, the Washington State Liquor and Cannabis Board (the “LCB”) announced that existing producer licensees would be able to hold up to three producer licenses starting in early 2017. There is still no word, however, from the LCB on when they will actually accept applications from existing producers to assume additional licenses.
There are a number of businesses that would like to sell their producer licenses. In some cases, the marijuana business has not been able to turn a profit or in other cases the licensee was never able to get the business off the ground. Existing licensed producers that have a successful track record are seeking to buy these licenses to expand their market base. But at this time, there does not appear to be a path forward for existing licensees to purchase these additional licenses and/or businesses.
It is important to note that the LCB’s rules currently allow any qualified person or entity to hold up to three marijuana producer licenses. The decision to limit any person or entity to one producer license is a policy decision and stems from a statewide report on the demand for legal marijuana; see my prior post on this issue. Allowing existing licensees to purchase existing licenses will not necessarily create an oversupply of marijuana and thus, it is unclear why the LCB is not currently processing license assumption applications for existing licensees.
It may be that both the LCB and the state legislature are reluctant to make any changes to current policies and/or laws in regard to marijuana regulation given imminent appointment of Jeff Sessions as the United States Attorney General. Understandably, the state legislature may not want to be seen as expanding the state’s marijuana industry given that it will likely face higher scrutiny of its marijuana regulatory system in the next four years.
A change of LCB policy, however, to allow any qualified person or entity to hold up to three marijuana producer licenses should not create any significant issues re federal law. Reversing the policy would simply bring the LCB’s policies back in line with the existing rules. Although the policy change may result in further consolidation of the marijuana producer market, there should not be a net increase in the number of licensed producers.
For those existing licensees seeking to obtain additional licenses, keep a close watch on the LCB’s website for any announcement on when these assumption applications will be accepted.
For more information on the regulation of marijuana businesses in Washington State, please contact Heather Wolf.