Though state-licensed recreational marijuana storefronts have been open and operating in Washington State since July of last year, the ability of cities and counties to prohibit I-502 businesses through ordinances and moratoria remained an unresolved issue–until now. There is an end in sight though in the form of recently passed House Bill 2136.
Most recently, in the city of Yakima, a marijuana retailer, Happy Time, attempted to take the city to task for its rolling moratorium against state-licensed marijuana businesses. Happy Time opened its retail store despite the ban, but it was ultimately forced to close when the Yakima County Superior Court ruled last Friday that the city was entitled to enforce its ban. Happy Time appears to have thought that it had a decent shot of overturning the ban when a County Court Commissioner ordered the City to appear at a hearing to justify its position for the continued ban. But the Court ultimately sided with the City on the actual merits of the challenge.
The issue here is that I-502 is completely silent on whether local governments can opt out of I-502 implementation. Though the state’s liquor laws, after which I-502 is modeled, explicitly state that cities and counties can go dry, I-502 contains no such equivalent provision for cannabis. As a result, local governments typically argue (and the state Attorney General agrees) I-502 neither expressly nor impliedly prevents cities and counties from totally prohibiting marijuana businesses within their borders. Marijuana businesses argue against this by asserting that I-502 stops cities and counties from banning marijuana businesses because it implies that only the state has authority to regulate cannabis in Washington.
We have firsthand experience suing a city over its I-502 ban. We brought the first challenge in Washington State against a ban when we sued the City of Wenatchee for its marijuana business prohibition. Though we did not prevail in the lower court, the City ultimately opted to drop its ban after the case. That meant we never appealed the lower court decision and our client is now open and operating within the City.
This game of chicken between cities and I-502 marijuana businesses has been costly for all involved. For marijuana businesses that invest tens of thousands of dollars in their locations and operations only to be shut down or to be stopped from opening in the first place, marijuana bans equate to lost investments of time, money, and communal goodwill. For the communities that seek to ban I-502 businesses, they undoubtedly (and inadvertently?) encourage and re-enforce the entrenched illegal markets in their backyard. For the democratic experiment that is I-502, local bans do nothing but undermine the end-goal of I-502, which is to regulate and treat cannabis responsibly where prohibition tactics have clearly failed.
There is now finally some relief in sight for both cannabis businesses and local governments. On Tuesday of this week, Governor Inslee signed HB 2136 into law. In addition to reforming the marijuana excise tax standard and filling some of the gaps in I-502, the bill also finally draws a line in the sand between cities, counties, and marijuana businesses; if local governments want a slice of revenue from I-502, they cannot also ban I-502 businesses. If local governments opt to ban, they won’t receive any I-502 revenue.
So, now we know, cities and counties are free to opt out of I-502. As a result, if a marijuana business was thinking of going into a jurisdiction with a ban only to try to fight the municipality in court on a preemption theory, that strategy is rendered a losing one under HB 2136. In addition, the remaining I-502 legal actions against local governments likely will be moot as a consequence of the passage of HB 2136. Though not a total win for Washington’s cannabis industry, HB 2136 ultimately means that we finally have a concrete answer regarding the freedom and power of municipalities when it comes to banning marijuana businesses.