By David Kerr
There are many elements of the I-502 Operating Plan that require detailed planning and careful consideration because they hide some complex and thorny issues. The transportation element is one of the elements in which danger lurks.
Applicants are understandably eager to discuss their grow operations, cool techniques, inventory projections, fancy labels and logos, and security, security, security. These are all good and valuable elements that require an applicant’s attention. Then we get to the transportation element and it is easy to consider this sort of a throwaway – after all it is just making a simple delivery, right?
The problem with not allowing vertical integration
The Washington State Liquor Control Board rules do not allow cannabis businesses to participate in both the production and retail side of the cannabis trade. This disallows the business model known as vertical integration, and it reflects the Liquor Control Board approach to alcohol and liquor regulation.
That means you can’t grow marijuana in the back of your production warehouse and just carry the packaged products up to the front end retail space of the facility for sale to the general public (note: Colorado decided it was the safer route).
Instead, in Washington we require that unaffiliated producer/processors take large quantities of marijuana out of their production facilities (secured with 24/7 video surveillance and alarm systems) and stow this product in a locked compartment in the back of a vehicle, and then drive around the highways and byways of Washington State, making deliveries to one or more I-502 marijuana retail shops.
So, we take marijuana out the most controlled and secured environment we can construct, with video surveillance and alarms and reporting and tracking, and we turn it loose on the roadways where, aside from putting it in a locked compartment, there is no security at all.
It gets weirder
For a moment, let’s forget that your professional ambition is to be a fine, upstanding and completely reputable producer, processor and distributor of a federally illegal, Schedule 1 narcotic. Instead, let’s assume you are a much less savory individual. Let’s pretend you are a thief and a robber and your preferred crime is to steal illegal drugs.
You are also kind of a lazy criminal that would prefer not to work very hard. So, then, consider how the mandatory transportation provisions under Washington Administrative Code 314-55 make it easier for you.
There are three serious issues with I-502 and the transportation rules as they are currently drafted.
- Transport must be by an employee of the licensed entity.
As a thief and a robber, you love this provision. It means that an I-502 business cannot contract with a professional delivery company to deliver their products. Marijuana in Washington State is not going to be transported by armored car companies, with trained and armed security personnel on board.
It is not even going to be delivered by regular shipping companies with their proven systems of dispatch and control. Rather, it is going to be entrusted to one of the employees of the licensed I-502 processor business, who most certainly doesn’t have training in how to respond to potential criminal activity.
- Drivers must take the direct route to the destination.
As a thief and a robber, this again makes your job somewhat easier. Since WAC 314-55-085 says transport drivers must travel directly from the shipping licensee to the receiving licensee and not make any unnecessary stops in between, the routes will tend to be fairly regular and predictable. You might expect the route followed by the I-502 transport driver will be the same, shortest route between the production facility and the retail outlet every time.
The thief loves this provision, because, if it becomes the most direct route every time, it will narrow delivery routes to a few known — and possibly less safe — routes of travel.
As an I-502 business, possibly located in a remote part of Washington, consider choosing a safer, even of longer, route. Avoid cell phone coverage dead zones. Bypass isolated or remote areas in favor of the more heavily traveled routes. Consider varying your routes.
- Addresses and operating plans are public documents.
For the thief and robber, perfect! Let’s say you’ve come up with some clever and expensive way to protect your product and employees during the transportation and delivery process. You are required to spell this all out in the Operating Plan you submit to the Liquor Control Board.
Anyone who files a public records request can determine: 1. The address of your facility; 2. Exactly what kind of security and alarm system it has; 3. What your transportation and delivery procedures and protocols are going to be; and 4. Just about everything else about your operation.
You can’t exaggerate the level of security you will have or the steps you will take in the transport and delivery process to make your transport seem more secure than it really will be.
If your Operating Plan says you are going to hire off-duty police officers to follow your delivery vehicle (very expensive), or that you are going to keep three attack Dobermans in the back of your delivery van (loud and awkward), or that you are going to send out three identical vehicles at the same time, so no one can tell which one actually has the product (complicated and expensive), then the Liquor Control Board is going to require and expect to see those off-duty cops, Dobermans or multiple vehicles.
Think about this, and be smart
Here’s the good news: you can address each of these issues, and these mandatory provisions should inform your transportation safety and security choices.
Further, and I cannot stress this point enough, now is the perfect time to figure it out! When you are actually running a business, how much time will you have to consider preventative measures? Do you suppose it may be less than the time you have now to work it out?
Consider what kind and level of training you are going to provide to your transportation employees, and then provide it. Think about how many employees you can afford to send out to transport your product (just sending one might be foolish), and whether or not it is worth it to have specifically dedicated and trained employees for just this task.
Think about how often and how your transportation employees are going to report back when they are out on delivery. What happens when the delivery vehicle breaks down in the middle of nowhere Washington? What is your driver supposed to do? Do they have a cell phone? Do they have a backup cell phone?
Then, assume that sometime, some place, your delivery just may get hit. Think about how you want your employees to handle this, with their safety and welfare as paramount concerns.
Let’s fix this
The legislature can fix this. It’s easy. Let I-502 producer/processors contract with professional delivery companies to deliver their products. The companies will spring into existence the minute the legislature passes the fix. It will make the industry safer, more efficient and more professional.
Lastly, a final word about guns: No
I will leave it to the criminal defense attorneys to explain how having a gun in your possession, along with the marijuana you are delivering, gets you a federal penalty enhancement and earns you an extra five years in federal prison.
Attorney David Kerr serves business clients throughout the state, including an emphasis on the emerging legal, regulatory and compliance issues facing new cannabis businesses.