So, you want to invest in or start a legal cannabis business in Washington? Be ready to undergo a thorough background check.

The recreational cannabis industry in Washington is growing at an incredible pace; New Frontier Data, a leading cannabis data and analytics firm, projects that Washington’s legal cannabis market will be worth $2.14 billion by 2025.

As the cannabis industry expands, the regulatory requirements for anyone looking to invest or start a cannabis business do as well. Everyone that gets into the cannabis industry in Washington (and their spouse) are known as True Parties of Interest. These True Parties of Interest will be required to go through deep background and financial checks to ensure the state knows exactly who is funding and running legal cannabis businesses in Washington.

If you are looking to invest or start a legal cannabis business in the state of Washington, here is a list of the type of information that the Washington State Liquor & Cannabis Board will expect from you. This list is not exhaustive and should not be considered comprehensive.

 

Financial Information:

  • Total Costs and Source of Funds Statement. This should be completed only by the primary business contact. It must list all estimated costs and funding associated with the purchase, start-up, or changes to an existing business. The individual only needs to list their personal contribution towards the total cost in the Source of Funds section.
  • Source of Funds Statement. This should be completed by all individuals other than the primary business contact. Each individual must list their personal contribution to the business. Please note: The amount listed on each Source of Funds form must combine to equal the dollar amount listed in the start-up costs.
  • Financial Statement. This must list all personal assets and liabilities and can include, but is not limited to:
    • Bank and investments accounts
    • Income
    • Properties, vehicles, and other owned assets
    • Debt paid out (notes payable, mortgages, and leases owing)
    • Answer the yes/no questions on page 4 of the Financial Statement form. If the answer is yes, you must provide an explanation with supporting documents.
  • Authorization to Disclose and Furnish Copy of Record. This form must be signed by all true parties of interest, financiers, and spouses.

 

Supporting Financial Documents:

  • Tax Returns for the last two years. These should include all pages of each yearly return and the name of the individual(s) on the return.
  • Bank Statements. These should include the last six months prior to the withdrawal of funds for the cannabis business and should include:
    • Name of financial institution
    • Account number
    • All pages of each monthly statement
    • The name of the account holder
    • An explanation and verification of all transactions that are unusual
    • Adequate amount of funds available
  • Stock & Investment Accounts. These should include the last six months prior to withdrawal of funds for the cannabis business and should include:
    • Name of investment company
    • Account number
    • All pages of the statements
    • The name of the account holder
    • Adequate amount of funds available
  • Loan/Line of Credit Documents. These should include:
    • Name of lender
    • Name of borrower
    • Loan amount
    • Account number
    • Signature of loan officer
    • Collateral (if needed for loan)
  • Credit Card Statements. This should include the most recent statement verifying the funds are available and include:
    • Name of cardholder
    • Credit card company
    • Account number
    • Available balance
  • Bill of Sale or Receipts for Personal Property Sold. This may include things like a sale of a car, coins, jewelry, or other properties. These should include:
    • Name of seller
    • Name of buyer (applicant)
    • Date of sale
    • The type of property sold
    • Amount of sale
    • The buyer’s signature
  • Final Closing Statement for Sale of Real Property. This is only applicable if the applicant has sold a residence vacant land. If so, this document should include:
    • Name of seller (applicant)
    • Name of buyer
    • Location address
    • The settlement date
    • Sales price
    • The buyers signature or certified by an escrow officer (this can be obtained from the escrow office)
  • Promissory Note. This is applicable if the funds are being loaned to the business from a financier. The note should include:
    • Name of lender
    • Name of borrower (applicant)
    • Amount of loan
    • Interest rate
    • Repayment terms

 

Personal/Criminal History

  • Personal/Criminal History Statement. This will include:
    • Residency status. Residency can be proved by a Washington State Driver’s license or other form of ID, voter registration card, mail addressed to the applicant with a WA address, bank statements that show transactions in the state of Washington.
    • Marital status
    • Employment
    • Social security numbers
    • Date of birth

 

Information Required from All Financiers and Their Spouse(s):

  • One Financial Statement per married couple.
  • One Source of Funds and Certification per married couple.
  • Authorization to Disclose form, one for the financier and their spouse.
  • Verification of the source of funds. The original source of funding that needs to be vetted is considered the location of the funds for the last six months. This can include bank statements, loan documents, investment accounts, 401K statements, two years of tax returns, or possibly financial affidavits.
  • Personal Criminal History Statement, one for the financier and their spouse.
  • Fingerprints for both the financier and their spouse.
  • Proof of residency for both the financier and their spouse. This includes a driver’s license, voter ID card, mail, or bank statements to verify six month US-residency requirement.

 

License Requirements:

  • Operating Plan
  • Floor and Site Plan. This must include:
    • A physical barrier and/or perimeter fencing and gates that enclose the licensed premises.
    • Processing area(s)
    • Quarantine area(s)
    • Labels for all rooms
    • Points of ingress and egress to the licensed premises
    • Identification of all doors and windows
    • Location of the secured Surveillance System Storage Device
    • Location of all cameras and alarms
    • Designated waste areas
    • Retail cases
    • Points of sale
  • Transportation Applications. This should include a common carrier permit and vehicle registration.
  • Insurance Policy. This must include:
    • Policy holder name (applicant)
    • Location address
    • Policy amount for no less than $1 million
    • Additional insured. This must include the statement that “the WSLCB and its employees, agents, and volunteers shall be named as an additional insured on all general liability, umbrella, and excess insurance policies.”
  • Examiner approval for closed loop extraction machines (this will be sent via email from the Examiners Unit).
  • WSDA approval for ingestible products (this will be sent via email from the Examiners Unit).
  • Posting Notice.
  • Pictures of facility.

 

Applying for a cannabis license in Washington and/or investing in a cannabis business can be complicated. If you need help sorting through the regulatory requirements, contact us. Gleam Law can help you make sense of the cannabis license application process and help ensure you’re compliant when making investments in Washington’s cannabis industry.