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A bipartisan bill aimed at “reforming the compliance and enforcement provisions for marijuana licensees” in Washington passed through committee with a “Do Pass” recommendation. HB 1237-S has yet to be scheduled for a vote. If it does pass in its current form, it will usher in sweeping enforcement and penalty changes for Washington’s legal cannabis industry.

What’s in Washington HB 1237?

  • Strips the Washington State Liquor & Cannabis Board (WSLCB) of law enforcement authority as it relates to cannabis, converting  the WSLCB’s marijuana “education and enforcement” “officers” into “inspectors.” Currently, the WSLCB is empowered with limited law enforcement authority over marijuana activities, and even broader  law enforcement authority over alcohol production and sale.  
  • Require the Board to consider mitigating circumstances and remedial measures as they relate to violations in far more circumstances than they currently do.  
  • Limit license cancellation penalties to cases with a “clear, cogent, and convincing” evidence of serious illegal activity or a “pattern and practice of intentional and flagrant disregard of the law” with four or more violations.  
  • Establishes a cut off date for considering past violations in future licensing decisions. The WSLCB would not be able to use past violations as a justification for refusing a future license unless the violation involved criminal behavior.

What Does HB 1237 Mean for Cannabis Businesses?

As Gleam Law cannabis attorney Justin Walsh states it, “Currently, LCB officers are considered a limited law enforcement agency. This means that they have the power to make arrests on laws under their criminal jurisdiction.”

Currently, their enforcement authority is found in relation to RCW 66 (Alcohol Laws), RCW 70.155 (Tobacco access to minors), RCW 69.50 (Drugs), RCW 82.24 (Cigarette Tax), RCW 82.26 (Tobacco Tax), and RCW 26.28.080 (Selling tobacco to minors). Under I-502, LCB officers were given enforcement power over enforcement of drug laws in Chapter 69.50.

The change in the law would strip them of law enforcement power as it relates to I-502 businesses. Instead, they would become inspectors. For cannabis business owners in Washington state, that means that if there is a violation, the LCB would not be able to arrest anyone, instead they can simply issue violation notices as an inspector. This is supposed to create a more collaborative process. If a cannabis business can correct the violation within seven days (or a shorter period specified by the Board), they do not receive any fees, civil penalties, or administrative sanctions.

In addition, the proposed law requires the implementation of a compliance program where an I-502 business could proactively request an inspection, and no violation could be issued if the items are corrected within a specified timeframe.  

The bill also establishes a cut off date for considering past violations in future licensing decisions. As Gleam Law cannabis attorney Ammon Ford describes it, “If a person was applying today for a retail cannabis license, but owned a producer/processor that received violations in 2016, the LCB would not be be able to use those violations as a justification for refusing him the license unless the violations involved the criminal behavior they describe in the bill.”

This doesn’t mean they are reversing any violations issued before April 30, 2017. On this point, they are primarily reforming enforcement going forward by taking old violations out of official consideration.

What’s Causing This WSLCB Change?

We do not have to guess why legislators are pushing for these changes; they outline their argument in the Bill. The authors cite the nascent status of the industry, saying, “It should not be surprising that mistakes have been made both by licensees and regulators, and that both have learned from these mistakes leading to a stronger, safer industry.”

The bill makes it clear that strong enforcement and regulation of cannabis is, of course, required. Except now, it’s clear those enforcement priorities should be reserved for “violations that directly harm public health and safety.”

One sentence from the bill really sums up the argument of the legislators: “The risk taking entrepreneurs who are trying to comply with board regulations should not face punitive consequences for mistakes made during this initial phase of the industry that did not pose a direct threat to public health and safety.”

Cannabis businesses throughout Washington experience excessive fines and even license cancellation for violations as minor as smudged ink on tracking tags. This bill seeks to reel the power of the WSLCB in, creating a more collaborative process that allows cannabis businesses an opportunity to right their wrongs rather than close up shop.

Will HB 1237-S Pass?

It’s too early to claim victory on HB 1237-S. The “Do Pass” recommendation from the committee does bode well for its ultimate success. If it does pass, it will likely make many cannabis business owners and managers happy. On the other hand, it isn’t likely to make the WSLCB as happy. The Board would likely be happier with HB 1626, which would expand enforcement capabilities of the WSLCB.

If you have had experience dealing with WSLCB enforcement and would like to contribute to the legislative discussion, contact your senator or representative today and let your voice be heard!