I previously wrote how “change would be coming” to Washington State’s cannabis law were Governor Inslee to sign SB 5131 into law. Governor Inslee has signed SB 5131 and is now set to go into effect on July 23, 2017.
If you hold a license to produce, process, or sell marijuana in Washington, you need to prepare for the legal changes stemming from SB 5131. This post summarizes some key of the key changes you should expect from SB 5131.
Requires disclosure of IP licensing deals. We previously wrote how the passage of SB 5131 would impact cannabis branding and intellectual property transactions and rights because it requires licensed cannabis businesses to disclose their IP licensing deals to the Washington State Liquor and Cannabis Board (the LCB).
Restricts advertising by licensees. SB 5131 focuses heavily on advertising. Since passage of Initiative 502, cannabis licensees have been banned from advertising marijuana or marijuana products within 1,000 feet of a school or other sensitive area where children regularly populate. This largely prevented advertising cannabis products by radio, TV, or in publications likely to be heard or distributed in or near schools. This is why you mostly see marijuana advertisements only in publications geared towards adults. SB 5131 extends this cannabis advertising prohibition to include not only cannabis products but cannabis businesses. In other words, cannabis licensees now need to be cautious about advertising their cannabis business in any medium where their ad could end up within 1,000 feet of a sensitive area.
SB 5131 also makes the following changes to advertising:
- No advertising on cars. The use of “transit advertisements,” which includes any cannabis advertisement on public or private vehicles, is prohibited.
- No targeting tourists. Advertisements and marketing practices may not target “persons residing outside of the state of Washington.”
- 21 plus. All advertising must contain text stating that marijuana products can only be purchased by persons 21 and older.
- No marketing to kids. Cannabis licensees cannot market to kids and cannot “use objects such as toys or inflatables, movie or cartoon characters, or any other depiction or image likely to be appealing to youth.”
- No mascots. Cannabis licensees cannot use commercial mascots outside of or near a licensed marijuana business. “Commercial mascots” include humans, animals, or mechanical devices used to draw attention to a business, and specifically includes inflatable tube displays, persons in costumes, and sign spinners.
- Limited outdoor advertisements. Outdoor advertisements are limited to only text that identifies the “retail outlet by the licensee’s business or trade name, states the location of the business, and identifies the type or nature of the business.”
- Limited indoor advertisements. Indoor advertisements are only permitted in facilities where minors are not permitted, such as bars. Under SB 5131, cannabis advertising is explicitly prohibited in arenas, stadiums, shopping malls, state fairs, farmers markets, and arcades.
- No billboard advertising, except by retailers. Retailers will be the only cannabis licensees permitted to use billboards, but like all outdoor advertising, they too may only include text identifying the name, location, and the nature of their business on these billboards.
Allows ownership of five retail stores. SB 5131 will allow individuals to possess an ownership interest in five retail stores. up from three under current law. Existing retailers may (and no doubt will) be able to purchase other licensed retailers and rebrand them with their own name and open new storefronts under their already established name.
Changes for producers & processors. Though medical marijuana patients in Washington are already permitted to grow cannabis in their homes for personal use and may form a collective to grow medical cannabis together there has been no legal means for medical patients to buy cannabis plants because cannabis producers were prohibited from selling cannabis to individuals who did not hold a license to produce, process, or sell marijuana. SB 5131 changes this by allowing “qualified medical marijuana patients and designated providers to purchase immature plants, clones, or seeds from a licensed producer.” This means cannabis producers can now legally sell immature plants, clones, and seeds to medical marijuana patients. However, “to purchase plants or clones, the patients and providers must hold a recognition card and be entered in the medical marijuana authorization database.” Patients that choose not to enter Washington State’s medical marijuana database cannot obtain a recognition card and may only purchase seeds. Though SB 5131 goes into place July 23, the LCB will likely need time to create rules and implement this program.
SB 5131 requires the LCB to adopt regulations for designating cannabis as organic similar to the federal the “organic” classification granted pursuant to federal regulations. Since cannabis is illegal under federal law, it cannot qualify under federal standards for organic certification. Cannabis producers and processors who choose to comply with Washington State organic standards can market their cannabis products as compliant with the LCB’s organic-style regulations.
SB 5131 also tasks the LCB with studying the viability of allowing processors to process industrial hemp. Under current Washington State law, processors may only process cannabis material grown by a producer. SB 5131 will not change this. However, depending on the results of the LCB’s study, processors could eventually be allowed to process hemp products grown by Washington farmers with permits to grow industrial hemp.
Washington marijuana businesses for years have faced a very robust set of rules and laws. SB 5131 only adds to the Evergreen State’s complex regulatory framework. Though businesses may view these regulations as overly burdensome, compliance is not optional and come July 23, SB 5131 will be the law of the land. Washington marijuana businesses should do all they can now to avoid pitfalls after July 23.