Compliance over Enforcement: The New Regular For Washington Marijuana Companies

Compliance over Enforcement: The New Regular For Washington Marijuana Companies


On July 28, 2019, Senate Invoice 5318 (“SB 5318“) went into impact. I wrote about this invoice again in April when it was awaiting Governor Jay Inslee’s signature. SB 5318 forces the Washington State Liquor and Hashish Board (“LCB”) to make some main institutional modifications, requiring the LCB to work with licensees on compliance issues and limiting the LCB’s capability to situation violations. Beneath is a abstract of the brand new regime.
Training and Technical Help
SB 5318 provides a brand new part to RCW 43.05, which governs “Technical Help Applications.” Technical Help Applications are designed to permit state companies to collaborate with people and companies topic to that company’s laws with out issuing civil penalties. SB 5318 requires that the LCB undertake a Technical Help Program the place “licensees could request compliance help and inspections with out issuance of a penalty, sanction, or different violation offered that any noncompliant points are resolved inside a specified time frame.” As well as, the LCB should “develop present packages for compliance training for licensed marijuana companies and their workers.”
Recommendation and Session Providers
Licensees can have the chance to use for recommendation and session providers from the LCB. Throughout these visits, the LCB can not situation notices, citations, or civil penalties. If throughout an on-site go to, the LCB discovers a violation with a direct or speedy relationship to public security and the violation isn’t corrected, the LCB could examine. A licensee will solely be offered immunity if the go to is really voluntary. Immunity received’t be offered for a go to that’s associated to a grievance.  That can create a chance for licensees to request technical help visits from the LCB to confirm licensee is working in compliance with related legal guidelines and laws.
Discover of Correction
Moreover,  throughout an inspection or go to “that isn’t a technical help go to, the [LCB] turns into conscious of situations that aren’t in compliance with relevant legal guidelines and guidelines[,] the [LCB] could situation a discover of correction to the licensee[.]” The LCB can not situation a penalty for a violation recognized in a Discover of Correction except the licensee fails to adjust to the discover. A Discover of Correction should describe the non-compliant situation with references the relevant legislation or rule, describe what’s required for compliance, present a date for the licensee to handle the problem, and supply contact data so the licensee can ask for help and for an extension of time if vital. Nonetheless, the LCB could situation a civil penalty with out first issuing a Discover of Correction if (1) the licensee is a repeat offender or (2) the violation is a danger to public well being and security.  For the primary class, the LCB could go straight to a civil penalty if it uncovers a violation and the licensee has beforehand been penalized for a similar or the same violation, has beforehand been notified of the identical or comparable violation, or has didn’t right a violation as required by a Discover of Correction within the relevant timeframe.
Public Well being and Security Violations
As well as, the LCB could forego the Discover of Correction and situation a discover of violation or different civil penalty if it could actually show by a preponderance of the proof a number of of the next public well being and security violations:
Diversion of marijuana product to the illicit market or gross sales throughout state strains;
Furnishing of marijuana product to minors;
Diversion of income to legal enterprises, gangs, cartels, or events not certified to carry a marijuana license primarily based on legal historical past necessities;
 The fee of nonmarijuana-related crimes; or
Knowingly making a misrepresentation of truth to the board, an officer of the board, or an worker of the board associated to conduct or an motion that’s, or is alleged to be, any of the violations recognized in [(i) through (iv) of this subsection.]”
The identical 5 public well being and security violations are vital for LCB penalties. SB 5318 mandates single violation can not lead to license cancellation except the LCB can show by a preponderance of the proof that it was one of many violations listed above.  Moreover, the cumulative impact of any escalating penalties can not prolong past two years and cumulative violations could lead to license cancellation solely when a licensee commits not less than 4 violations inside a two-year interval.
The primary two classes are pretty easy: don’t promote marijuana outdoors of the regulated market place or ship it throughout state strains, and don’t promote to children. The third class is attention-grabbing as a result of it prohibits the sharing of income with legal actors. The LCB has all the time been hyper-vigilant in stopping licensees from revenue sharing with undisclosed events. Beneath SB 5138, the LCB can not cancel a license attributable to revenue sharing except the occasion is a legal enterprise, gang or cartel or if the occasion could be disqualified attributable to legal historical past. That nuance is prone to show vital. The fourth class is broad because it covers different crimes. This might embrace tax-related crimes and different white-collar offenses. The fifth class of violations pertains to dishonesty however solely dishonesty because it pertains to the opposite classes. Mendacity could not warrant license cancellation, however mendacity about different public well being and security violations does.
Backside Line
The LCB has but to launch guidelines beneath SB 5318. I anticipate that the LCB will draft laws that develop the 5 violations associated to public security in order that it has broader authority to situation notices of violation with out first issuing a Discover of Correction. That being stated, I hope that I’m improper on this level and that the LCB drafts guidelines that seize each the textual content and spirit of SB 5318. Marijuana legal guidelines and laws in Washington are very difficult and I’m hopeful that SB 5138 will assist licensees and the LCB work collectively. Regardless,  stakeholders within the Washington marijuana trade ought to observe this rulemaking carefully.



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