By David Kerr
Once your application is submitted and starts working its way through the Washington State Liquor Control Board review process, there are any number of actions the Liquor Control Board can take:
Denial — If the Liquor Control Board believes that you are not qualified for an I-502 license for one reason or another, the LCB can issue a Notice of Intent to Deny. This sets up a right for you to appeal the denial.
Withdrawal — If the Liquor Control Board finds your application was defective or incomplete in some way, the LCB can administratively withdraw your application. If you don’t want to appeal a potential denial, you can also voluntarily withdraw your application. It will be as if you never applied in the first place so there is not right to appeal.
Notice of Intent to Deny
If you receive a Notice of Intent to Deny (NID), you have some decisions to make, and you don’t have very much time to make some of them. If you do nothing, the application will be denied. However, you can elect to appeal the denial.
Washington Administrative Code 314-55-070 provides that if the Liquor Control Board decides to deny your application, you can appeal that decision under the Washington State Administrative Procedure Act (RCW 34.05). The administrative hearing appeal process starts with a written request to the Liquor Control Board. You have 20 days from the date of the NID to request a hearing to appeal the denial.
The Washington State Office of Administrative Hearings (http://www.oah.wa.gov) conducts the administrative hearings on a wide range of government actions, from child support issues to denial of unemployment benefits (you’ve got to think hearing appeals from people that want to produce and sell tons of marijuana ought to add a little spice to their dockets, no?). The department has good resources on its website that explain the hearing process in detail.
The appeal hearing is conducted before an administrative law judge (ALJ), who will make a decision and recommendation to the Liquor Control Board on your application. The decision and recommendation of the ALJ is not binding on the Liquor Control Board, which could decide to not adopt the judge’s decision and recommendation.
The impact of a denial can be significant. Revised Code of Washington 34.05 says an applicant cannot reapply for the license sooner than one year from the date of the final order of denial. Additionally, the personal history disclosure information requested by the Liquor Control Board requires that you list “business licenses that you have ever held, currently applied for, or have been denied/revoked/suspended in any state.” This means that if you believe there may be an opportunity to reapply for an I-502 license in the next year (and there is no indication from the LCB when or if it will open another licensing window), and you end up with a denial, then you may be frozen out of the opportunity to reapply.
Administrative and voluntary withdrawals
If you get a notice of administrative withdrawal, your options are different because a withdrawal is different than a denial. When an application is withdrawn, it is as if no application was ever submitted. There are good and bad aspects to this. Since there is no denial, you do not have a right to an administrative appeal. Therefore, if you want to fight the administrative withdrawal, your recourse is through the courts rather than through Liquor Control Board/Office of Administrative Hearings process.
However, since there is no final denial, the provisions of RCW 34.05 are not applicable. That means there is no one-year freeze on reapplying for a license (assuming the opportunity to apply again ever presents itself) and there is no requirement that you disclose the withdrawal if/when you apply again.
Appeal or withdrawal – which path?
You should be aware that the decision to pursue an appeal, rather than to allow your application to be withdrawn is, to a degree, mutually exclusive. Once you start down the appeal process path, the opportunity to withdraw is gone. That means you can’t start an appeal and then suddenly withdraw your application if it looks like you are going to lose your appeal and end up being denied.
Before you appeal you should talk with your attorney, carefully consider your options, make a clear-eyed assessment of the likelihood that you will prevail in the appeal, and weigh the potential downside of being frozen out of reapplying for a year and having to disclose the denial if/when you do get the opportunity to apply again.
Attorney David Kerr serves business clients throughout the state, including an emphasis on the emerging legal, regulatory and compliance issues facing new cannabis businesses.