Washington State Liquor and Cannabis Board To Increase Number of Enforcement Officers To Meet Growing Backlog of Marijuana-Related Complaints

Written by Neil Juneja, Founder & Managing Partner of Gleam Law, PLLC.

Justin Nordhorn, Chief of Enforcement for the Washington State Liquor and Cannabis Board (WSLCB), announced that the agency will be increasing the size of their enforcement division to clear a backlog of violation complaints against cannabis companies, with special attention given to True Party of Interest Violations.

The increase will include five new officers to their Marijuana—Non Retail Unit. It is intended to reduce the workload of the unit, whose officers currently, on average, handle 5.4 cases per year. By adding five new officers, the average caseload per officer will drop to four cases per year, a 20% decrease.

Of all WSLCB cases, True Party of Interest complaints took an average of 210 days to complete in 2016 and 179 days to complete in 2017. That is 83 days longer on average than all other marijuana-related complaints, including violations based on advertising, selling to a minor, and more.

A “True Party of Interest” is defined in WAC 314-55-035 as, “Any entity or person (inclusive of financiers) that are expecting a percentage of the profits in exchange for a monetary loan or expertise.”

This definition includes any entity or person that is “in receipt of, or has the right to receive, a percentage of the gross or net profit from the licensed business during any full or partial calendar or fiscal year,” and “Any entity or person who exercises control over the licensed business in exchange for money or expertise.”

According to data presented in a WSLCB Executive Management Team meeting, and made available via a Public Records Request, the WSLCB cancelled eight marijuana licenses and issued 10 Administrative Violation Notices (AVNs) in response to 32 True Party of Interest complaints in 2015.

In 2016, all of these data points increased. The WSLCB cancelled 16 licenses (a 100% increase year over year) and issued 18 AVNs based on 62 True Party of Interest complaints.

The disciplinary trend began to change in 2017, with 15 licenses cancelled and 16 AVNs issued based on 81 True Party of Interest complaints. By mid-2017, the number of complaints coming into the WSLCB stabilized.

In his presentation, Chief Nordhorn speculated that the stabilization in the number of complaints received could indicate that the cannabis market has reached a level of maturity that the “growth in ‘True Party of Interest’ violations/complaints has reached its peak.”

Unfortunately, it is clear that the Enforcement division of the LCB bases the majority of their cases on complaints made by the public. The rate of these complaints continue to grow steadily each year, creating a backlog that cannot be handled by the current number of WSLCB officers and has provided the basis for increasing the number of officers on staff.

Chief Nordhorn also speculated that the greatest improvement on workload for officers will come as the marijuana market matures even more. It is his analysis that as the cannabis industry is further normalized, with access to things like improved banking availability, business practices, and adaptation of legalized marijuana in additional states, the legal cannabis industry will take on a more “business-like climate similar to liquor, which has limited True Party of Interest issues.”

Also discussed in the meeting was the WSLCB’s interim charge from the state legislature to perform a study on home delivery of medical products to patients. Delivery is not allowed under current law. The study will be led by Chris Thompson.

The WSLCB may also convene a workgroup with patients and industry stakeholders to discuss medically-compliant cannabis products in the I-502 system.

Finally, those in the meeting also discussed the high-profile announcements from current and former Republican Party members, like former Speaker of the House John Boehner, who have changed their positions to be more friendly, and in some cases downright approving of, cannabis policy reform.

If you are a cannabis business owner and are dealing with a True Party of Interest violation, or want to make sure your company is compliant with True Party of Interest laws, give Gleam Law a call at (206) 693-2900 or contact us.