Washington legislation

Washington has very strict rules concerning who can and cannot hold a cannabis license, perhaps the strictest in the nation. Anyone associated with the licensee’s business must have a WA driver’s license, for example. Or anyone involved for $1 or more is subject to financial background checks and fingerprinting. The idea here in the original initiative that residents be given a head-start on the industry before grabby people from CA and OR came in and took over. The feds demanded that the brown-skinned “cartels” from Mexico be kept out of the businesses.

Most of the bills before the legislature seem to be intended to override the Liquor and Cannabis Board’s rule-making; it’s beat-up time on the LCB for the lawmakers. If the LCB can get the message, they’ll clean up their heavy-handed act next week or face a bunch of laws taking away their power. I suspect most of these revenge bills won’t need to be passed if the lawmakers and the regulators can reach a deal offline.

Here’s an example (simplified a bit by me). The LCB uses a standard of “true party of interest” to determine if anyone involved in the business is suspicious. This is a variant on the terms “ownership” and “controlling interest”. 2 years ago the legislature passed a law loosening up the requirements a bit in the interest of encouraging the licensees to succeed. Apparently, the LCB didn’t climb on board.

Willie Nelson, and the Bob Marley family among others, have entered into licensing agreements for their brands with WA growers (and other sates). They don’t actually grow or package product, but they specify the characteristics of what is sold under their name. This is standard intellectual property licensing very common in all businesses. Now, Willie Nelson is not going to acquire WA residence and disclose his financial arrangements and apply for a license to grow weed in Eastern WA to sell his product in WA. (In fact, Nelson is notorious in that he’ll smoke anything anytime, and is oblivious to the subtleties of strains, cleanliness, or origin). Instead, his licensing company specifies what they want to produce and enter into an agreement with a grower to do the work. In exchange, his company gets a cut of the revenue from the grower who uses his name on the label.

Apparently the LCB is trying to enforce their true party of interest rules on these situations, claiming that Willie holds some controlling interest in the licensee’s business. This situation is extremely well-covered in US and state laws no matter what the product be it liquor, tobacco, soft drinks, or frozen corn. It’s standard business practice.

As I point out frequently, the legislature is very friendly to the cannabis industry, and to have the regulatory authority going off in their own direction is quite annoying to them. Not a good position to be in for the LCB.

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