Cannabis rules changing rapidly

By Chris Crew

A little more than a year ago, I was in my law office working with a client on my first I-502 licensing case. Now that I have made marijuana law my sole practice area, it’s hard to believe all the changes in the rules that have occurred when I look back.

Between the biweekly unveiling of new Washington Administrative Codes and the changing interpretations of those WACs, the rules are substantially different today than they were at the beginning of the licensing process.

The following are some of the changes that my clients most regularly ask me about.

Contractors

Old rule: No Contractors were allowed, no exceptions. I had this told to me many times. Of course this made no sense and so I kept asking the same question of other people trying to get a better answer.

New rule: After many frustrated applicants and their advocates pointed out the absurdity of this interpretation, the Liquor Control Board did a good job fixing the rule. You still cannot use contractors to work on your marijuana or marijuana products or sell them at a retail store. The good news is that you can have contractors do just about everything else, including your accounting, electrical issues, plumbing issues and fixing that leak in the roof.

My recommendation: Stay clear of any group or company that will come trim your harvest, do your extraction or complete your packaging. All of that needs to be done in house. You are not allowed to outsource it despite what they may tell you. If you are considering using such a group, be sure to ask your investigator or enforcement officer before you start. Make sure they are not going to accidentally get you in a heap of trouble.

If you don’t want to deal with the headache of the hiring process for your marijuana workers, consider making it easier by using a quality head-hunting agency like Viridian Staffing to find quality employees to put on your own payroll, rather than taking the risky outsourcing route.

Guns

Old rule: Although no WAC explicitly said guns were not allowed, my office was told this by more than one Liquor Control Board representative and by multiple clients who were told this by their investigators.

New rule: Somewhere around May or June, we began hearing from investigators that the gun prohibition does not exist. After following up on that info with others within the Liquor Control Board, I was told that under the LCB rules you are allowed to have legal guns within your I-502 premises, or at least they were not regulating them.

The main issue with guns revolves around federal law, which is a big concern for most security companies that are federally licensed. The mix of firearms and a federally illegal substance can trigger the federal government to get involved even in state-legal marijuana businesses. If a security guard has to use their gun, it may violate federal law in that they are using a firearm in the commission of a federal crime (selling/growing marijuana).

My recommendation: Your business may go through more cash than some small banks. Hire security people to help protect all that cash, especially because insurance will never cover the cash. If you decide to hire armed security, do not get a bargain basement guy. Spend the time to find a well-trained professional. Of course, you will have to weigh the risks of not having an armed guard against the risks of the feds getting involved.

Canopy size

Old rule: Tier 1 producers had up to 2,000 square feet, Tier 2 producers had up to 10,000 square feet, and Tier 3 producers had up to 30,000 square feet of canopy allotted. Canopy was defined as the square footage of the areas where plants were growing (walkways were included).

New rule: The Liquor Control Board reduced the total canopy for all producers by 30 percent. Tier 1 producers became limited to 1,400 square feet, Tier 2 producers became limited to 7,000 square feet, and Tier 3 producers became limited to 21,000 square feet of canopy allotted. Canopy was redefined as the square footage of the areas where plants were growing above (walkways are not included as long as the plants do not crowd into the walkways).

My recommendation: Don’t risk being deemed to be using more than your allotted space because of growing in your designated walkway space. In your square footage calculations, do not reduce the canopy amount by the entire square footage of the walkways, even though they say that is allowed. Consider only reducing it by half of their square footage or less to avoid the risk of your plants growing too big and causing you to be in violation on the day of your surprise inspection.

Seeds

Old rule: At the beginning, no seeds were allowed into the traceability system, meaning you had to start all of your seeds in your 15-day window at the start of your garden. It effectively outlawed seed banks and really did not speak to the issue of seeds being grown or allowed for sale.

New rule: You can bring seeds into the traceability system and use them in the future. Seed banks are allowed. Seeds are only allowed to be sold from licensed producers to other licensed producers. Seeds are not allowed to be sold to processors, retailers or the public.

I have a case where my client, a retail store, bought a bunch of seedy weed without knowing it. My client called the Liquor Control Board for guidance as she was deceived by the grower in a way that could ultimately undermine the entire traceability system. We are currently litigating this case and I am confident that we will prevail.

My recommendation: If you end up growing seedy pot, do not sell it as flowers! Not only is this illegal and putting your license in jeopardy, it’s also going to totally piss off whoever you sell it to (and could result in a lawsuit). Luckily, you still have some serious value in your crop, but it will require some work to make it viable. You need to remove all of the seeds and then sell the rest to a processor for extractions. Quality-wise, it is somewhere between trim and flowers. For whatever reason, the quality of flowers goes down considerably when they are fertilized and become seedy, but they are still worth more than trim to an extraction maker.

Those seeds also have considerable value on the production market. A big influx of seeds allows a grower to avoid a round or two of cloning (taking cuttings) which will increase yields in the cycles that no trimmings were taken. Of course your seeds are not sexed. This means the buyer will need to be able to successfully sex the young plants and remove the males in order to avoid another round of seedy pot. Some experienced growers believe seeds are better than clones in that they come with no previous stress/inflammation or bugs. Some growers argue that once you learn how to sex a plant, the main value of the clone is that you don’t have to grow seeds first. That said, most growers tend to prefer clones.

Chris Crew is owner and senior attorney at THC Law Firm, which represents around 60 marijuana businesses in Washington. He is the owner and lead speaker for Marijuana Workshops and is the counsel for the Marijuana League.