Not so fast! Licensing could create more delays
By Sean Badgley
Every one of my clients interested in submitting an application for the Washington State Liquor and Cannabis Board’s new medical marijuana license are overjoyed. At last, the absurdity of the lottery and other administrative peculiarities have been eliminated by the state Legislature.
Now, the Liquor and Cannabis Board will allow an open, merit-based process.
Most of the attorneys I’ve talked to about the new process do not share the same optimism as the potential business owners.
First, the Liquor and Cannabis Board only has approximately 20 investigators involved in the process. All the investigators I’ve talked to are still swamped with applications from 2013. In fact, the Liquor and Cannabis Board is so swamped that it will now only allow one change on an existing application, before issuing an intent to deny the application, if that change proves problematic.
Thus, if you have a location you want to switch your application to, you’d do yourself a favor to ensure that location is as good as it gets regarding both state law and local zoning. Although the board will still issue a license in contradiction to local zoning, it probably will not accommodate a second change, meaning you’ll want to be on good footing with the locals.
Secondly, there is a troubling contradiction of interpretation concerning the new “prioritization system.” As most readers know, the board held a lottery in 2013 to determine which applicants would be licensed in Washington. The board claimed this was because it did not have the expertise to make merit-based decisions. Now, the Legislature has commanded the board to use a priority system, which gives preference to certain businesses that meet certain qualifications.
The contradiction lies in those doing the interpreting. Most clients and industry folk reasonably believe this system is meant to provide a place in the queue. Top priority candidates will have their applications reviewed first. However, I regularly speak with many different city officials. This group believes those in the second and third priorities will never receive a license. Given the limited staff mentioned above, I’m inclined to believe the latter. If this bears out, a new incentive will be created to join a business with someone who meets the qualifications, but otherwise lacks the resources. Negotiating these transactions will once again slow down the process.
One more note on the prioritization system: a friend called me recently and asked a deeply technical question about the definition of residency within the context of Washington’s marijuana laws. Without getting into the droll specifics, we proceeded to have an hour long chat about the issue. The issue was the definition of the word “residency.” The reason it took a while to pin down the specifics is because it is related to a very important issue — getting his client qualified as a license holder.
Let’s take a look at that prioritization system. Imagine your Liquor and Cannabis Board investigator determines your application does not meet the threshold requirement to be top priority. Now, imagine you disagree for some fairly decent reason. You’ll select a cannabis attorney and we will begin discussing the issue in detail with you, your investigator and possibly other Liquor and Cannabis Board staff. Sometimes we will successfully convince them of your status, sometimes we will go to an administrative proceeding, and sometimes we will win. You’ll be back in the application process, having wasted months dealing with the issue. This need for advice and advocacy on new definitions will surely slow down the process.
Finally, there is the difficult matter of the statewide production canopy. The Liquor and Cannabis Board did not originally wish to limit production, but the agency eventually changed its position, in part to appease the federal government. Unfortunately, the production cap was woefully low, and the threshold was exceeded with only about 15% of applicants licensed. The Liquor and Cannabis Board has repeatedly claimed that applicants are slowing down the licensing process, but I have my doubts given this cap.
The state Legislature once again told the board to look at this topic. Many folks interpret this to mean the agency is eliminating the production cap, but the reader would be wise to be skeptical. Given that the U.S. Attorney General’s Office wanted this cap, the agency seems likely to simply raise it. Whether the increase will be sufficient seems doubtful.
Sean Badgley is a Washington attorney who’s been working in the recreational cannabis industry for more than two years. He is the founder of C3 Law Group and can be reached at email@example.com.