WSR 17-12-116 PROPOSED RULES LIQUOR AND CANNABIS BOARD [Filed June 7, 2017, 11:19 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 17-07-036 on March 8, 2017.
Title of Rule and Other Identifying Information: WAC 314-55-045 What marijuana law or rule violation history might prevent an applicant from receiving a marijuana license? and 314-55-075 What is a marijuana producer license and what are the requirements and fees related to a marijuana producer license?
Hearing Location(s): Washington State Liquor and Cannabis Board (WSLCB), Board Room, 3000 Pacific Avenue S.E., Olympia, WA 98504, on July 12, 2017, at 10:00 a.m.
Date of Intended Adoption: On or after July 26, 2017.
Submit Written Comments to: Joanna Eide, Policy and Rules Coordinator, P.O. Box 43080, Olympia, WA 98504, email rules@lcb.wa.gov, fax (360) 664-9689, by July 12, 2017.
Assistance for Persons with Disabilities: Contact Joanna Eide by July 5, 2017, (360) 664-1622.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: This rule making proposes to allow persons or entities to hold interests [in] up to three producer licenses, and to adjust the maximum square feet for Tier 1 producers from two thousand to four thousand. Other rule adjustments are made to ensure proper consideration of an applicant or renewing licensee's law, rule, and fine payment history, as well as other technical changes for clarity and to ensure rules accommodate upcoming changes in law.
Reasons Supporting Proposal: WSLCB has heard concerns from smaller producers that they are unable to grow their business due to being limited to no more than two thousand square feet of marijuana, and an interest for licensees to hold an interest in more than one producer license. Initially, WSLCB rules stated that a person or business entity may hold interest in up to three producer licenses, which was later limited to interest in only one license due to the high volume of producer license applications received. Rule making is required to accomplish these items, as well as ensure that rules accommodate changes as a result of the passage of ESSB 5131 during the 2017 legislative session that will become effective on July 23, 2017. Additional rule making needed for legislative changes will occur in a separate rule making. Technical and clarifying changes are needed to ensure rules function properly, are clearly understood by licensees, and improve enforceability.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: WSLCB, governmental.
Name of Agency Personnel Responsible for Drafting: Joanna Eide, Policy and Rules Coordinator, 3000 Pacific Avenue S.E., Olympia, WA 98504, (360) 664-1622; Implementation: Becky Smith, Licensing Director, 3000 Pacific Avenue S.E., Olympia, WA 98504, (360) 664-1600; and Enforcement: Justin Nordhorn, Enforcement Chief, 3000 Pacific Avenue S.E., Olympia, WA 98504, (360) 664-1726.
No small business economic impact statement has been prepared under chapter 19.85 RCW. A small business economic impact statement was not prepared as the proposed changes involved do not impose new reporting or recordkeeping requirements and should not impose more than minor costs on licensees. There are no anticipated equipment, supplies, labor, professional services, and increased administrative costs that will be needed by licensees to comply with the proposed changes. No loss of sales or revenue should occur based on the proposed new requirements.
Additionally, any increases in growing operations of a Tier 1 producer under the proposed changes in this rule making will be voluntary and initiated by the licensee. Any assumption of an existing license by a licensee or other person or entity will also be voluntary and subject to existing qualification requirements. Similarly, technical changes allowing producers to sell immature plants or clones and seeds to members of a registered cooperative, qualified patients, designated providers, and marijuana research licensees are voluntary in nature. A separate rule making will provide additional guidance for the new allowances for sales of immature plants or clones and seeds similar to the requirements for sales of plants to members of a registered cooperative in WAC 314-55-410.
New requirements are included in the proposed changes regarding the ability for WSLCB to take administrative violation history and fine payments, or lack thereof, into account for license renewals and new license applications (through assumptions only). Because a licensee may only receive an administrative violation is dependent on individual licensee conduct associated with complying with existing regulatory requirements, which cannot be anticipated.
A cost-benefit analysis is not required under RCW 34.05.328. A cost-benefit analysis was not required under RCW 34.05.328 because the proposed new rule does not qualify as a significant legislative rule or other rule requiring a cost-benefit analysis under RCW 34.05.328(5).
June 7, 2017
Jane Rushford
Chair
AMENDATORY SECTION (Amending WSR 16-11-110, filed 5/18/16, effective 6/18/16)
WAC 314-55-045 What marijuana law or rule violation history might prevent an applicant from receiving or renewing a marijuana license?
The WSLCB will conduct an investigation of all applicants' marijuana law or rule administrative violation history.
(1) The WSLCB will not normally issue a marijuana license to a person, or to an entity with a true party of interest, who has the following violation history((; or to any person who has demonstrated a pattern of disregard for laws or rules.)):
(2) The WSLCB will not normally issue or renew a marijuana license to an applicant or licensee who has accumulated eight or more points as indicated below:
(3) The WSLCB will not normally issue or renew a marijuana license to a person or entity who has demonstrated a pattern of disregard for laws or rules including, but not limited to, written or verbal warnings.
(4) The WSLCB will not normally issue or renew a marijuana license if the applicant or licensee has unpaid fines related to violations of rules under this chapter.
AMENDATORY SECTION (Amending WSR 16-19-102, filed 9/21/16, effective 10/22/16)
WAC 314-55-075 What is a marijuana producer license and what are the requirements and fees related to a marijuana producer license?
(1)(a) A marijuana producer license allows the licensee to produce, harvest, trim, dry, cure, and package marijuana into lots for sale at wholesale to marijuana processor licensees and to other marijuana producer licensees. A marijuana producer can also produce and sell:
(i) Marijuana plants, seed, and plant tissue culture to other marijuana producer licensees; ((and))
(ii) Immature marijuana plants or clones and marijuana seeds to members of a registered cooperative, qualified patients, or designated providers under the conditions provided in ((WAC 314-55-410)) this chapter; and
(iii) Immature marijuana plants or clones and marijuana seeds to a licensed marijuana researcher under the conditions provided in this chapter.
(b) Marijuana production must take place within a fully enclosed secure indoor facility or greenhouse with rigid walls, a roof, and doors. Outdoor production may take place in nonrigid greenhouses, other structures, or an expanse of open or cleared ground fully enclosed by a physical barrier. To obscure public view of the premises, outdoor production must be enclosed by a sight obscure commercial-grade security fence or wall ((or fence)) at least eight feet high. Outdoor producers must meet security requirements described in WAC 314-55-083. An outdoor grow must be physically separated at least twenty feet from another licensed outdoor grow. Outdoor grows cannot share common walls or fences.
(2) The application fee for a marijuana producer license is two hundred fifty dollars. The applicant is also responsible for paying the fees required by the approved vendor for fingerprint evaluation.
(3) The annual fee for issuance and renewal of a marijuana producer license is one thousand three hundred dollars. The WSLCB will conduct random criminal history checks at the time of renewal that will require the licensee to submit fingerprints for evaluation from the approved vendor. The licensee will be responsible for all fees required for the criminal history checks.
(4) ((The WSLCB will initially limit the opportunity to apply for a marijuana producer license to a thirty-day calendar window beginning with the effective date of this section. In order for a marijuana producer application license to be considered it must be received no later than thirty days after the effective date of the rules adopted by the WSLCB.)) The application window for marijuana producer licenses is closed. The WSLCB may reopen the marijuana producer application window ((after the initial evaluation of the applications received and)) at subsequent times when the WSLCB deems necessary.
(5) Any entity and/or principals within any entity are limited to an interest, as defined in WAC 314-55-035(1), in no more than three marijuana producer licenses.
(6) The maximum amount of space for marijuana production ((will be imposed at a later date)) cannot exceed the amount licensed. Applicants must designate on their operating plan the size category of the production premises and the amount of actual square footage in their premises that will be designated as plant canopy. There are three categories as follows:
(a) Tier 1 – ((Less than two)) Up to four thousand square feet;
(b) Tier 2 – ((Two)) Four thousand square feet up to ten thousand square feet; and
(c) Tier 3 – Ten thousand square feet up to thirty thousand square feet.
(7) The WSLCB may reduce a licensee's or applicant's square footage designated to plant canopy for the following reasons:
(a) If the amount of square feet of production of all licensees exceeds the maximum square feet the WSLCB ((will)) may reduce the allowed square footage by the same percentage.
(b) If fifty percent production space used for plant canopy in the licensee's operating plan is not met by the end of the first year of operation the WSLCB may reduce the tier of licensure.
(8) If the total amount of square feet of marijuana production exceeds the maximum square feet, the WSLCB reserves the right to reduce all licensee's production by the same percentage or reduce licensee production by one or more tiers by the same percentage.
(9) The maximum allowed amount of marijuana on a producer's premises at any time is as follows:
(a) Outdoor or greenhouse grows – One and one-quarter of a year's harvest; or
(b) Indoor grows – Six months of their annual harvest.
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