The LCB

Another December will come and go and Washington citizens who have supported legal, recreational use of cannabis will have no opportunity to legally acquire cannabis. They can posses less than an ounce, they can consume in private, they just can’t acquire it. So, empty stockings, no vaporizers under any tree. The Washington State Liquor Control Board, (LCB), the agency responsibly for implementation of I-502, Washington’s recreational cannabis use law, is taking their time making cannabis available for…recreational use. Good news is the agency is generally a transparent operation, and enjoys wide support for an overly-deliberative regulatory process. No one’s screaming, no one is in a hurry, most stakeholders know the treacherous ledge on which the LCB must operate. Surrounded by federal law conflict, federal regulators and law enforcement who are getting their new orders on a daily basis, and floating in a decade-old medical marijuana, (MMJ) stew, the LCB has built a consensus for go slow, go deep, and go long. Transparency-The Study

Harnessed with a study that really is a survival assessment for Washington’s two cannabis regulatory platforms, the LCB will share a draft with stakeholders, finally, on the 21st of October. According to LCB staff some 7,000 website subscribers will have access to the draft, finally. Probably the agency’s only black eye from their public records and open meeting yoke, the budget mandated study seems to be moving forward at a responsible pace to actually be available for deliberative action by an election-year legislature. Of course no one knows for sure since the meetings have been secret, staff only…unless you are a legislator. Cannabis-centric readers know that this study is at the heart of a workable cannabis statute and regulatory environment. When the parties step back and get a holistic look at the situation they see an established MMJ process without legal dispensaries, nor appropriate oversight of authorizations, and a huge potential for leakage of MMJ product into the recreational market. Legislators on key committees are keenly aware that any change to the recreational use law will still need a 2/3’s vote in both chambers…during an election year. Amendments to the MMJ statute and any reach into healthcare provider’s scope of practice law only need a simple majority. Colorado, the only other recreational use state in the union, has already set in place a process to meld their MMJ and recreational platforms. Can Washington be far behind?If you subtract a week at Thanksgiving, and two weeks for winter holidays we only have about eight work-weeks before the 2014 legislative session starts. If the schedule for the production of the recommendations from the study holds, the legislature won’t even get a “draft” recommendation briefing until November 21st. Finally recommendations are due to the legislature on January 1, 2014.

And the black market watches.

The Golden Rule And The Gold

State government policy has it’s own Golden Rule; “The folks who have the gold get to write the rules.” The conflict with the federal law (cannabis possession is still illegal under federal law) leaves unresolved the problem of what to do with the money. The easiest way to get your branches around this one is just know that any entity, and in one statute “any person”, who touches money produced, or generated from a cannabis enterprise is most likely illegally handling the gold. Bankers, state officials, CPAs and MMJ business consultants all tell us that it’s not their worry. The discretion rests with the person who passes on the money. If the State Treasurer gets money from Department of Revenue (DOR), the Treasurer assumes the agency operates in “legal manner”. Rob Braach, CPA, tells us that he advises his cannabis business clients (many in Washington State) to pay their taxes. In his extensive experience with the cannabis industry he can not recall an income tax or social security payment being rejected by the federal government. We have found the same with state agencies. In fact, due to the serious questions about banking legality and the preponderance of cash transactions, the state DOR has protocol and specific locations for accepting cash tax payments from cannabis enterprises. The federal work-around for the financial issues is like an ice burg. We only see the tip, and hear the pleadings for a remedy. What we don’t see are all the multi-agency meetings at both the state and federal level. It’s going on, let’s hope they hurry.

Recreational Retail Stores Open…When?

Looking down the calendar it is easy to see an April, 2014 storefront recreational cannabis operation. That is if there are any local jurisdictions that will still allow cannabis sales. City after city, and even some counties have or are contemplating moratoriums on cannabis sales and production. Many are inadvertently or intentionally also blocking ongoing MMJ operations. You’ve heard of “dry counties”. They exist in some states. Washington may end up with a patchwork quilt of cannabis product availability. To meet the expected revenue levels for recreational use sales, will the legislature ever consider preempting local government’s cannabis moratoriums? Can they?

Legislative staff say that there is no “opt out” provision in the state law, I-502. Therefore, cities and even counties can write the resolutions anyway they want but if tested, it is unlikely the local governments would prevail.

Hilary Bricken, Attorney at Law, Canna Law Group, (www.cannalawgroup.com) a practice group of Harris & Moure, pllc , responds to the question of opting out with this email response;

“Under I-502, any so-called “opting out” is patently not allowed and also unconstitutional. Moreover, any arbitrary moratorium or rolling moratoria without a serious work/implementation plan will fail in court for the same unconstitutional reason as I-502 now stands.

Pursuant to I-502, cities and counties cannot enact local laws that pre-empt or conflict with State law. If they do, an affected stakeholder will certainly have standing to sue and should. Even if the cities and counties trot out Federal preemption, there certainly isn’t any argument to be made (anymore) that there’s a realistic threat of Federal prosecution (see August 29, 2013 Cole memo) and hopefully the State Attorney General would step in to defend the constitutionality of I-502…because it’s constitutional; States can define their own criminal standards and penalties and that includes the regulation of cannabis. Nonetheless, none of the foregoing means that cities won’t TRY to defy the law. It will just end up being a costly mistake if they do.”

Again, local government moratoriums or prohibitions…can they?

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