Medical dispensaries in Washington State are required to close their doors by July 1 of this year. The question on everyone’s mind has been whether this would lead the Washington State Liquor and Cannabis Board (the “LCB”) to increase allowed plant canopy and/or issue additional producer licenses.
Last week the LCB answered this question by announcing that sufficient marijuana plant canopy has been approved to serve both the recreational and medical marijuana markets. This means that there will not be a new licensing window opening up for marijuana producers in Washington State.
The LCB has licensed over 12 million square feet of plant canopy. According to a University of Washington Study, 1.7 to 2 million square feet of canopy will be needed to serve the medical marijuana market. The study goes on to state that 10 million square feet of plant canopy will be sufficient for both the recreational and medical markets.
What about those 2nd and 3rd producer applications held by existing licensees? The LCB also announced that these applications would not be processed. The on-hold applications will be withdrawn by the LCB and application fees refunded.
Going forward, the only way to obtain a marijuana producer license will be via purchasing and assuming an existing license or licensed business. Licensees, however, will no longer be limited to one producer license. Existing licensees will be able to hold up to three producer licenses. The LCB will begin processing new license assignment/assumption requests in early 2017.
It remains unclear whether licensed producers and processors will actually create sufficient product for the medical as opposed to recreational market; and whether there will be sufficient retail outlets to serve both markets. Time will tell if the UW’s study was accurate in terms of determining a sufficient supply for the recreational and medical marijuana markets. Unless a sufficient supply of both medical and recreational marijuana is legally available, the black market will continue to successfully operate.
What is clear is that producer licenses will remain a valuable commodity. As long as there is no opportunity to apply for a new license, the market will continue to heat up for the purchase of existing licensed businesses.
For more information on the regulation of marijuana businesses, please contact Heather Wolf.