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Compliance over Enforcement: The New Regular For Washington Marijuana Companies

washington marijuana enforcement

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 adjustments, requiring the LCB to work with licensees on compliance issues and limiting the LCB’s capacity to situation violations. Under is a abstract of the brand new regime.

Schooling 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 rules 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 period.” As well as, the LCB should “increase current packages for compliance schooling for licensed marijuana companies and their staff.”

Recommendation and Session Providers

Licensees could 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 fast relationship to public security and the violation shouldn’t be corrected, the LCB could examine. A licensee will solely be offered immunity if the go to is actually voluntary. Immunity gained’t be offered for a go to that’s associated to a grievance.  That may 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 rules.

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 until 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 mandatory. 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 threat 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 did not 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 will possibly show by a preponderance of the proof a number of of the next public well being and security violations:

  1. Diversion of marijuana product to the illicit market or gross sales throughout state traces;
  2. Furnishing of marijuana product to minors;
  3. Diversion of income to prison enterprises, gangs, cartels, or events not certified to carry a marijuana license based mostly on prison historical past necessities;
  4.  The fee of nonmarijuana-related crimes; or
  5. Knowingly making a misrepresentation of reality 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 essential for LCB penalties. SB 5318 mandates single violation can not end in license cancellation until 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 end in license cancellation solely when a licensee commits at the very least 4 violations inside a two-year interval.

The primary two classes are pretty simple: don’t promote marijuana outdoors of the regulated market place or ship it throughout state traces, and don’t promote to youngsters. The third class is attention-grabbing as a result of it prohibits the sharing of income with prison actors. The LCB has at all times been hyper-vigilant in stopping licensees from revenue sharing with undisclosed events. Underneath SB 5138, the LCB can not cancel a license attributable to revenue sharing until the get together is a prison enterprise, gang or cartel or if the get together can be disqualified attributable to prison historical past. That nuance is more likely to show essential. The fourth class is broad because it covers different crimes. This might embody 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 underneath SB 5318. I anticipate that the LCB will draft rules that increase 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 unsuitable on this level and that the LCB drafts guidelines that seize each the textual content and spirit of SB 5318. Marijuana legal guidelines and rules in Washington are very sophisticated 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 intently.

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