State adopts first major changes to system since 1998
By Stephanie Boehl
We all knew it was coming … we just didn’t know when. The wait and uncertainty is over. On April 24, Washington Gov. Jay Inslee signed into law Senate Bill 5052, instituting a major overhaul of the state’s medical marijuana laws.
Seventeen years ago, Washington recognized the medical use of marijuana with Initiative 692, the Medical Use of Marijuana Act. Despite ongoing efforts to further regulate the industry, most notably in 2011 with SB 5073, the state’s medical marijuana laws remained vague, largely unregulated, and more importantly, afforded patients little protection from state civil and criminal enforcement action.
In contrast, the state’s recreational laws, passed in 2012 under Initiative 502, created a highly regulated industry which legalized the manufacturing and sale of state-licensed marijuana.
This discrepancy in state oversight and legalization between medical and recreational marijuana is now over. SB 5052 incorporates medical marijuana into the already existing laws and rules regulating the state’s recreational industry.
Summary of SB 5052
The simple takeaway from SB 5052 is that by the summer of 2016, anyone making money on the sale of medical marijuana will have to be licensed by the Washington State Liquor and Cannabis Board as a producer, processor or retailer (the new legislation changes the name of the Liquor Control Board to the Liquor and Cannabis Board).
In addition, effective immediately, persons under the age of 21 are prohibited from participating in collective gardens; although, a designated provider may patriciate in a collective garden on behalf of a patient under the age of 21.
Although the law is expansive, it is important to note that it does not touch upon a number of extremely important issues facing Washington’s marijuana industry. For example, it does not grant tax relief to patients purchasing medical marijuana at retail stores. In addition, it does not reform the state’s marijuana excise tax, nor share revenues from the marijuana tax with cities and counties. These issues, and many others, are addressed in HB 2136, which, at the time this article was published, was still before the Senate.
Under the new law, who may grow and sell medical marijuana?
By July 1, 2016, collective gardens, medical access points and dispensaries are prohibited. At that time, patients may only purchase medical marijuana from a licensed retail store with a medical endorsement issued by the LCB.
In order to accommodate the medical demand for marijuana, the new law instructs the LCB to evaluate and increase the number of licensed retail stores, which is currently set at 334. It is unknown when the new license window will open and how many licenses will be available. These important questions will be answered in upcoming rulemaking by the LCB.
The bill also allows four patient/provider cooperatives to collectively grow and share medical marijuana. However, due to the restrictions imposed on such cooperatives, this type of collective growing will likely be impractical for most patients.
Finally, under the law patients may continue to possess small home grows. Home grows may range from four to 15 plants. Patients not registered with the state (discussed in detail below) are limited to four plants. Registered patients may grow six plants, or up to 15 plants if a health care professional expressly authorizes such additional plants.
How do I get a license to sell and grow medical marijuana?
The LCB will evaluate and increase the number of licensed retail stores to accommodate medical demand. Similarly, the law instructs the LCB to increase the statewide plant canopy limit (currently at 8.5 million square feet) to accommodate medical demand. The LCB may reopen the licensing window for producers if the current number of licensed producers cannot accommodate this increased area.
Future marijuana licenses will be issued under a new, competitive, merit-based application process. Under this process, the LCB will give preference to applicants that have the following experience and qualifications: First priority is given to applicants who (1) Applied to the LCB for a marijuana retailer license prior to July 1, 2014; (2) Operated or were employed by a collective garden before Jan. 1, 2013; (3) Have maintained a state business license and a municipal business license, as applicable in the relevant jurisdiction; and (4) Have had a history of paying all applicable state taxes and fees. Second priority is given to applicants who meet conditions two through four listed above. Third priority is given to all other applicants.
How is “medical marijuana” different than marijuana products currently sold in licensed stores?
“Medical” marijuana will be regulated and tracked independently from “recreational” marijuana. The Department of Health and the LCB will adopt rules and requirements specific to medical marijuana sold to patients. Such rules include THC and CBD concentration, labeling, prohibition of product that is smoked, including paraphernalia associated with smoking, testing and extraction requirements, safe handling requirements, and required training of employees.
As a patient, do I now have to register with the state?
The new law establishes a voluntary state registry for medical marijuana patients. Patients registered in the state database, and issued a recognition card, may possess three times the recreational limit plus a home grow. Recognition cards will be issued by licensed retail stores with a medical marijuana endorsement.
If a patient has an authorization from a health care professional, but is not registered in the state database, he or she may possess the recreational limits, in addition to a small home grow. This includes: one ounce of useable marijuana; 16 ounces of infused solid; 72 ounces of infused liquid; seven grams of concentrates; and a four-plant home grow, plus an additional six ounces of useable marijuana (yield from the plants). However, a home grow without a recognition card is still technically illegal under state law. Such patients are only afforded an affirmative defense should they be charged with a violation of the state’s uniform controlled substances act.
With regard to medical home grows, there is a limit of 15 plants per household, regardless of the number of patients/providers living there. In addition, growing/processing of plants at home cannot be readily seen or smelled from a public place or neighboring private property.
Will the demand for medical marijuana change?
It is difficult to say how the new law will affect the size and demand of Washington’s medical marijuana market. The law limits the pool of qualified patients by defining a qualifying terminal or debilitating condition as “a condition severe enough to significantly interfere with the patient’s activities of daily living and ability to function.” This severity may be objectively satisfied if the patient is diagnosed with one of the qualifying conditions, such as cancer, intractable pain, glaucoma, etc. However, intractable pain will likely only qualify if such pain significantly interferes with daily living. On the other hand, the law increases the pool of qualified patients by adding traumatic brain injuries and PTSD to the list of qualifying conditions. The new law also imposes additional limitations on a health care professional’s ability to authorize the medical use of marijuana.
Finally, SB 5052 does not grant patients tax relief on purchases of medical marijuana from retail stores with a medical endorsement. Such tax relief is addressed in HB 2136. If the legislature fails to pass tax relief to qualified patients, it is likely many patients will acquire medicine through other means, including home grows and four-patient cooperatives.
Stephanie Boehl is a Washington attorney and co-owner of KB Law Group. She advises on marijuana regulatory compliance, state taxes and general business matters. She can be reached at Stephanie@keblaw.com.