Washington State Overhauls Its Medical Marijuana System

Photo by Raphael Labbe https://www.flickr.com/photos/ulikleafar/
Photo by Raphaël Labbé

As we predicted, last week, Governor Jay Inslee inked revised SB 5052 into law. Though Governor Inslee made some minor line item vetoes to the bill before he signed it, revised SB 5052 remains in substantially the same form as when it left the Senate and the House. The signing of this bill merges twenty years of medical cannabis with Washington’s Initiative 502. This makes Washington the first state to significantly pare down its medical marijuana program and roll it into adult use cannabis; Colorado simply combines its two very robust marijuana systems, but allows each one to stand alone under its own regulations and laws. Now, Washington’s medical cannabis industry will be mostly dominated by the rules and laws that make up I-502.

Given that SB 5052 will imminently become the law, medical marijuana stakeholders need to prepare themselves now so as to be able to enter into the I-502 marketplace. This post is intended to help existing medical and recreational cannabis businesses in Washington State prepare for doing exactly that.

What should you do now that SB 5052 has passed? Read the law. And then read it again. And then if you still want to stay in the marijuana business, prepare yourself and your company to have to start complying with a whole host of state and local government regulations. Recognize that your failing to comply with applicable rules could lead to a rejection of your state license application or a serious regulatory violation.

What happens with the Washington Liquor Control Board? The Liquor Control Board has a new name, the Washington State Liquor and Cannabis Board (LCB). The LCB will now oversee both adult use and medical cannabis. This means that the LCB (in concert with the Departments of Health and Agriculture) will be tasked with creating any additional rules necessary to execute the directives set forth in SB 5052 and it will specifically oversee the medical marijuana businesses it licenses. So, for all of the new rules and emergency rules that have caused the I-502 industry multiple headaches, medical marijuana businesses can now expect much of the same. MMJ businesses will now need to stay abreast of ever-changing regulations that apply to them.

How does SB 5052 affect my current collective garden grow under RCW 69.51A? Collective gardens as we know them under RCW 69.51A will all be gone by July 1, 2016. Only “collective gardens” limited to up to four patients (with a maximum of 60 plants) will be allowed to remain, and then only if they are at least fifteen miles from an I-502 retail outlet and if everyone participating in the collective garden has put their name into the State’s voluntary patient registry. Only one cooperative garden is allowed per tax parcel.

If I have an MMJ business, how can I get a state license to continue under I-502? Keep in mind that existing I-502 retailers and cultivators will get first dibs on MMJ by applying to hold “medical marijuana endorsements” to sell or cultivate cannabis for medical use to qualifying patients and designated providers. The LCB must also develop “a competitive, merit-based application process that includes, at minimum, the opportunity for an applicant to demonstrate experience and qualifications in the marijuana industry.” Operating a collective garden before you apply for a state cannabis license with a business license and a history of paying sales taxes to the Department of Revenue likely will be factors used to establish the experience and qualifications of the applicant.” In other words, if you can show that your MMJ business complied with various state and local laws, you will be favored for a state MMJ license. Still, if your current collective garden location does not meet the footage and distance requirements mandated by SB 5052, your locale will be a no-go.

What this really means is that if you are an MMJ business interested in securing a state license, you should start now to determine whether you are complying with applicable laws and you should do everything you possibly can to get into compliance as quickly as possible. You probably will want to start with a legal compliance audit.

What happens to me now as a qualifying patient? Patients that register with the state via its “voluntary” patient registry will enjoy tax breaks and higher possession limits as compared to patients who do not register. Registered patients with a state-issued patient authorization card “may purchase at a retail outlet holding a medical marijuana endorsement a combination of the following: Forty-eight ounces of marijuana-infused product in solid form; three ounces of useable marijuana; two hundred sixteen ounces of marijuana-infused product in liquid form; or twenty-one grams of marijuana concentrates.” Registered patients may also “grow, in his or her domicile, up to six plants . . . and possess up to eight ounces of useable marijuana produced from his or her plants.” Patients that do not register will be legally entitled to only the same single ounce of useable marijuana as all other adults 21 and older can possess under I-502 and will be taxed the same way as well.

If I’m currently operating under I-502, what can I do under SB 5052? If you’re an existing retailer, you will be able to apply for a “medical marijuana endorsement” to serve qualifying patients and designated providers. If you’re an existing grower, you will be able apply to the LCB to dedicate a portion of your grow to the cultivation of cannabis for medical use. SB 5052 pretty directs the LCB to increase the plant canopy again to allow existing marijuana businesses to plan ahead for MMJ. As a result, the LCB is imminently going to allow I-502 cultivators to expand their plant canopies to 100% operative capacity in order to accommodate MMJ users.

Will more MMJ rules be developed, or is SB 5052 it? Undoubtedly, the LCB is going to create more rules around MMJ. In fact, some of the rules from I-502 will very likely bleed over into the state’s governance of MMJ. Again, regulations (as opposed to statutes) can be in constant flux, so it’s extremely important to remain vigilant over any changes if you’re a stakeholder.

Besides overhauling medical marijuana, does SB 5052 do anything to change I-502? The short answer is no. The longer answer is that HB 2136, the bill that contains a significant amount of changes and fixes to I-502, now has a much greater chance of passing because SB 5052 was signed into law by the Governor.

When does the law take effect? SB 5052 becomes effective on July 24, 2015.