If you want to start a Washington State cannabis business, now is the time.
If you want to start a Washington State cannabis business, now is the time. (photo by K. Shorter, http://bit.ly/1Ovx2CO)

The Washington State Liquor and Cannabis Board (LCB) yesterday issued new emergency rules for medical marijuana that will take effect immediately and issued proposed rules that regulate medical marijuana cultivating, processing, and retailing and that revise some existing recreational marijuana rules. Most importantly, the LCB also announced the application schedule for new Washington retail marijuana licenses. The LCB’s issuance of these proposed and emergency rules marks a major step in bringing medical marijuana into the regulated marijuana marketplace. Here are some of the highlights:

The LCB will accept retail license applications starting on October 12, 2015. Those hoping to obtain a Washington State retail marijuana license should circle October 12 on their calendars as the date by which they should submit their application, if at all possible. Though there will be a priority order among potential licensees (see below), the initial applications are likely to be a fairly standard business license application. As part of the application, applicants will need to give the LCB a verifiable, physical address where their proposed retail shop will be located.

The LCB isn’t going to cap the number of retail marijuana licenses per jurisdiction and there is no more retail lottery set-up. The former 334 retail storefront cap is now out the window and there will be no retail lottery to determine who gets to go into retail in any given jurisdiction. Though you should not expect the LCB to license just anybody, we expect to see a massive expansion of retail outlets. Retailers will still be limited to owning only three licenses, but they can now own more than 33.3% of the retail licenses in a given jurisdiction.

Applications will be reviewed and accepted on a merit-based, priority system.

  • First priority: The LCB will give first priority to applicants who applied for a marijuana retail license prior to July 1, 2014,  operated or were employed by a medical marijuana collective garden prior to January 1, 2013, and who maintained a state and local business license (where and when required). To get this first priority, you must also have a history of paying state taxes.
  • Second priority: Applicants who operated (or were employed by) a medical marijuana collective garden prior to January 1, 2013, have maintained a state and local business license, and have a history of paying state taxes and fees will be second in line for retail licenses.
  • Third priority: Applicants who do not meet the requirements for priority one or priority two will be the last to receive their retail licenses.

The LCB will review applications on a first come-first serve basis. Every applicant should submit an application as close to October 12 as possible, especially because we anticipate it will take the LCB quite some time to review all applications.

The buffer rules can change if your local government is on board. Cities and counties can lower the 1,000-foot buffer previously required by I-502 for producers, processors, and retailers if they see fit to do so. This change will not apply to primary and secondary schools and playgrounds, and cities and counties cannot lower the buffer distance  below 100 feet as the crow flies. If an applicant submits a location within 1,000 feet of a formerly sensitive site under I-502, they need only provide the LCB with the local ordinance allowing for such site placement to get the LCB to accept the location.

The Washington State Department of Health (DOH) is drafting rules that will affect the marketplace. DOH will define “medical marijuana,” as opposed to recreational marijuana. DOH will also be creating rules to establish a medical marijuana authorization database to create recognition cards for patients and their designated providers. These cards will allow patients and their designated providers to possess larger amounts of marijuana products, to purchase those products without having to pay state sales tax, and will provide patients and caregivers with arrest protection. DOH will also be establishing standards for the new medical “marijuana consultant certificate,” which will allow consultants to work for retail outlets in helping patients select products for their medical needs.

Existing retailers can apply for “medical marijuana endorsements.” Existing I-502 retailers can now apply to the LCB for “medical marijuana endorsements” that will allow them to sell or gift medical marijuana to qualifying patients and caregivers. Stores with medical marijuana endorsements will be required to have a certified medical marijuana consultant on staff.

The LCB lifted restrictions on production capacity. The LCB will allow producers to grow at 100% of their growing capacity. Previously, producers were allowed to grow only up to 70% of their capacity so as to stay under the state’s plant canopy limits. The plant canopy no longer has a defined limitation, though the LCB can put one in place at its will. With the addition of medical marijuana, the LCB is preparing for a bigger marketplace and more consumers and production must therefore increase to meet the perceived greater demand.

The bottom line. Medical marijuana businesses hoping to remain open after July 1, 2016 should read and re-read the LCB’s emergency and proposed rules and should be ready to file for a retail license on October 12.