Cannabis/employee ownership

AN ACT Relating to employee ownership of licensed cannabis 1
businesses; amending RCW 69.50.331 and 69.50.325; and creating a new 2
section. 3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
NEW SECTION. Sec. 1. (1) The legislature finds that employee 5
stock ownership plans offer a meaningful employee benefit in a 6
variety of industries and could similarly be offered to cannabis 7
employees. The legislature further finds that the legislature 8
unanimously enacted the expanding employee ownership act in 2023 to 9
provide incentives for creation of employee stock ownership plans in 10
businesses in Washington. In addition to competitive salaries and 11
comprehensive benefits, companies with employee stock ownership plans 12
provide employees with unique wealth-building opportunities. This 13
ensures that employees not only share in the success of the company 14
but also have a pathway to financial security and prosperity. 15
Employee stock ownership plans make employees feel more a part of the 16
success of the business and motivate performance.17
(2) The legislature further finds that employee stock ownership 18
plans also benefit companies. They serve as catalysts for enhanced 19
employee engagement, paving the way for heightened productivity, 20
innovation, and retention, all of which are vital for fostering 21
H-0459.1
HOUSE BILL 1348
State of Washington 69th Legislature 2025 Regular Session
By Representatives Hackney, Waters, Reeves, Low, Corry, Rule, Barkis,
Hill, and Nance
Read first time 01/16/25. Referred to Committee on Consumer
Protection & Business.
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superior business performance and sustainable growth. Allowing 1
employee stock ownership plans to be the partial or 100 percent 2
owners of cannabis businesses, will allow these businesses to compete 3
for talent in the workforce that may have a path to participation in 4
an employee stock ownership plan in other industries.5
(3) The legislature further finds that current laws and rules are 6
cumbersome and would require every employee who participates in the 7
employee stock ownership plan, no matter how small the percentage, to 8
be vetted. This is simply impractical for the business, the 9
employees, and the liquor and cannabis board. Therefore, the 10
legislature intends that the board revise rules to change who is a 11
true party of interest where an employee stock ownership plan is a 12
partial or 100 percent owner of a cannabis business. With the 13
appropriate revisions, the board can continue to ensure that the 14
actual people who control the company are properly vetted and 15
licensed. 16
(4) Allowing employee stock ownership plans to be the partial or 17
100 percent owner of cannabis businesses represents a transformative 18
opportunity to empower employees, foster job satisfaction, and 19
promote long-term stability for cannabis businesses. This can be 20
accomplished with simple statutory and rule changes while still 21
preserving the integrity of true party of interest provisions and the 22
liquor and cannabis board's licensing mandate and processes.23
(5) Therefore, the legislature intends to allow cannabis 24
businesses to be up to 100 percent owned by an employee stock 25
ownership plan and establish who in a licensed business owned by an 26
employee stock ownership plan must be vetted as a true party of 27
interest. 28
Sec. 2. RCW 69.50.331 and 2023 c 220 s 2 are each amended to 29
read as follows: 30
(1) For the purpose of considering any application for a license 31
to produce, process, research, transport, or deliver cannabis, 32
useable cannabis, cannabis concentrates, or cannabis-infused products 33
subject to the regulations established under RCW 69.50.385, or sell 34
cannabis, or for the renewal of a license to produce, process, 35
research, transport, or deliver cannabis, useable cannabis, cannabis 36
concentrates, or cannabis-infused products subject to the regulations 37
established under RCW 69.50.385, or sell cannabis, the board must 38
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conduct a comprehensive, fair, and impartial evaluation of the 1
applications timely received. 2
(a) The board may cause an inspection of the premises to be made, 3
and may inquire into all matters in connection with the construction 4
and operation of the premises. For the purpose of reviewing any 5
application for a license and for considering the denial, suspension, 6
revocation, cancellation, or renewal or denial thereof, of any 7
license, the board may consider any prior criminal arrests or 8
convictions of the applicant, any public safety administrative 9
violation history record with the board, and a criminal history 10
record information check. The board may submit the criminal history 11
record information check to the Washington state patrol and to the 12
identification division of the federal bureau of investigation in 13
order that these agencies may search their records for prior arrests 14
and convictions of the individual or individuals who filled out the 15
forms. The board must require fingerprinting of any applicant whose 16
criminal history record information check is submitted to the federal 17
bureau of investigation. The provisions of RCW 9.95.240 and of 18
chapter 9.96A RCW do not apply to these cases. Subject to the 19
provisions of this section, the board may, in its discretion, grant 20
or deny the renewal or license applied for. Denial may be based on, 21
without limitation, the existence of chronic illegal activity 22
documented in objections submitted pursuant to subsections (7)(c) and 23
(10) of this section. Authority to approve an uncontested or 24
unopposed license may be granted by the board to any staff member the 25
board designates in writing. Conditions for granting this authority 26
must be adopted by rule. 27
(b) No license of any kind may be issued to: 28
(i) A person under the age of 21 years; 29
(ii) A person doing business as a sole proprietor who has not 30
lawfully resided in the state for at least six months prior to 31
applying to receive a license; 32
(iii) A partnership, employee cooperative, association, nonprofit 33
corporation, or corporation unless formed under the laws of this 34
state, and unless all of the members thereof are qualified to obtain 35
a license as provided in this section , subject to (c) of this 36
subsection (1); or 37
(iv) A person whose place of business is conducted by a manager 38
or agent, unless the manager or agent possesses the same 39
qualifications required of the licensee. 40
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(c)(i) An employee stock ownership plan may own up to 100 percent 1
of the stock in a licensed cannabis business or a business that is an 2
owner of a licensed cannabis business. With respect to any interests 3
held in a business owned by an employee stock ownership plan, the 4
corporate officers and directors, or persons with an equivalent 5
title, of the business applying for or holding a cannabis license are 6
considered the applicant or owner and must qualify for and be named 7
on the cannabis license under this section.8
(ii) Unless a person is also a corporate officer or director, or 9
holds an equivalent title, of the business applying for or holding a 10
cannabis license, or the person holds an interest in the business 11
outside of an employee stock ownership plan, neither an employee of a 12
cannabis business participating in an employee stock ownership plan, 13
nor the plan administrator of the employee stock ownership plan, nor 14
the trustee of the employee stock ownership plan are:15
(A) Considered an applicant or owner of a licensed cannabis 16
business under this section or chapter;17
(B) Considered a true party of interest with respect to the 18
cannabis license under the board's rules;19
(C) Required to be qualified for or named on the cannabis 20
license;21
(D) Subject to the residency requirement in subsection (1)(b) of 22
this section; or23
(E) Subject to criminal or administrative records checks, 24
financial disclosure, or other vetting required under subsection 25
(1)(a) of this section, this chapter, or board rules, that otherwise 26
applies to applicants or prospective owners of licensed cannabis 27
businesses.28
(iii) For purposes of this subsection:29
(A) "Employee stock ownership plan" has the same meaning as in 30
section 407(d)(6) of the federal employee retirement income security 31
act of 1974, as amended, as it exists on the effective date of this 32
section; and33
(B) "Plan administrator" means an individual or company that 34
manages compliance with the requirements of the federal employee 35
retirement income security act of 1974, as amended, as it exists on 36
the effective date of this section, for an employee stock ownership 37
plan.38
(2)(a) The board may, in its discretion, subject to RCW 39
43.05.160, 69.50.563, 69.50.562, 69.50.334, and 69.50.342(3) suspend 40
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or cancel any license; and all protections of the licensee from 1
criminal or civil sanctions under state law for producing, 2
processing, researching, or selling cannabis, cannabis concentrates, 3
useable cannabis, or cannabis-infused products thereunder must be 4
suspended or terminated, as the case may be. 5
(b) The board must immediately suspend the license of a person 6
who has been certified pursuant to RCW 74.20A.320 by the department 7
of social and health services as a person who is not in compliance 8
with a support order. If the person has continued to meet all other 9
requirements for reinstatement during the suspension, reissuance of 10
the license is automatic upon the board's receipt of a release issued 11
by the department of social and health services stating that the 12
licensee is in compliance with the order. 13
(c) The board may request the appointment of administrative law 14
judges under chapter 34.12 RCW who shall have power to administer 15
oaths, issue subpoenas for the attendance of witnesses and the 16
production of papers, books, accounts, documents, and testimony, 17
examine witnesses, receive testimony in any inquiry, investigation, 18
hearing, or proceeding in any part of the state, and consider 19
mitigating and aggravating circumstances in any case and deviate from 20
any prescribed penalty, under rules the board may adopt.21
(d) Witnesses must be allowed fees and mileage each way to and 22
from any inquiry, investigation, hearing, or proceeding at the rate 23
authorized by RCW 34.05.446. Fees need not be paid in advance of 24
appearance of witnesses to testify or to produce books, records, or 25
other legal evidence. 26
(e) In case of disobedience of any person to comply with the 27
order of the board or a subpoena issued by the board, or any of its 28
members, or administrative law judges, or on the refusal of a witness 29
to testify to any matter regarding which he or she may be lawfully 30
interrogated, the judge of the superior court of the county in which 31
the person resides, on application of any member of the board or 32
administrative law judge, compels obedience by contempt proceedings, 33
as in the case of disobedience of the requirements of a subpoena 34
issued from said court or a refusal to testify therein.35
(3) Upon receipt of notice of the suspension or cancellation of a 36
license, the licensee must forthwith deliver up the license to the 37
board. Where the license has been suspended only, the board must 38
return the license to the licensee at the expiration or termination 39
of the period of suspension. The board must notify all other 40
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licensees in the county where the subject licensee has its premises 1
of the suspension or cancellation of the license; and no other 2
licensee or employee of another licensee may allow or cause any 3
cannabis, cannabis concentrates, useable cannabis, or cannabis-4
infused products to be delivered to or for any person at the premises 5
of the subject licensee. 6
(4) Every license issued under this chapter is subject to all 7
conditions and restrictions imposed by this chapter or by rules 8
adopted by the board to implement and enforce this chapter. All 9
conditions and restrictions imposed by the board in the issuance of 10
an individual license must be listed on the face of the individual 11
license along with the trade name, address, and expiration date.12
(5) Every licensee must post and keep posted its license, or 13
licenses, in a conspicuous place on the premises. 14
(6) No licensee may employ any person under the age of 21 years.15
(7)(a) Before the board issues a new or renewed license to an 16
applicant it must give notice of the application to the chief 17
executive officer of the incorporated city or town, if the 18
application is for a license within an incorporated city or town, or 19
to the county legislative authority, if the application is for a 20
license outside the boundaries of incorporated cities or towns, or to 21
the tribal government if the application is for a license within 22
Indian country, or to the port authority if the application for a 23
license is located on property owned by a port authority.24
(b) The incorporated city or town through the official or 25
employee selected by it, the county legislative authority or the 26
official or employee selected by it, the tribal government, or port 27
authority has the right to file with the board within twenty days 28
after the date of transmittal of the notice for applications, or at 29
least thirty days prior to the expiration date for renewals, written 30
objections against the applicant or against the premises for which 31
the new or renewed license is asked. The board may extend the time 32
period for submitting written objections upon request from the 33
authority notified by the board. 34
(c) The written objections must include a statement of all facts 35
upon which the objections are based, and in case written objections 36
are filed, the city or town or county legislative authority may 37
request, and the board may in its discretion hold, a hearing subject 38
to the applicable provisions of Title 34 RCW. If the board makes an 39
initial decision to deny a license or renewal based on the written 40
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objections of an incorporated city or town or county legislative 1
authority, the applicant may request a hearing subject to the 2
applicable provisions of Title 34 RCW. If a hearing is held at the 3
request of the applicant, board representatives must present and 4
defend the board's initial decision to deny a license or renewal.5
(d) Upon the granting of a license under this title the board 6
must send written notification to the chief executive officer of the 7
incorporated city or town in which the license is granted, or to the 8
county legislative authority if the license is granted outside the 9
boundaries of incorporated cities or towns. 10
(8)(a) Except as provided in (b) through (e) of this subsection, 11
the board may not issue a license for any premises within 1,000 feet 12
of the perimeter of the grounds of any elementary or secondary 13
school, playground, recreation center or facility, child care center, 14
public park, public transit center, or library, or any game arcade 15
admission to which is not restricted to persons aged 21 years or 16
older. 17
(b) A city, county, or town may permit the licensing of premises 18
within 1,000 feet but not less than 100 feet of the facilities 19
described in (a) of this subsection, except elementary schools, 20
secondary schools, and playgrounds, by enacting an ordinance 21
authorizing such distance reduction, provided that such distance 22
reduction will not negatively impact the jurisdiction's civil 23
regulatory enforcement, criminal law enforcement interests, public 24
safety, or public health. 25
(c) A city, county, or town may permit the licensing of research 26
premises allowed under RCW 69.50.372 within 1,000 feet but not less 27
than 100 feet of the facilities described in (a) of this subsection 28
by enacting an ordinance authorizing such distance reduction, 29
provided that the ordinance will not negatively impact the 30
jurisdiction's civil regulatory enforcement, criminal law 31
enforcement, public safety, or public health. 32
(d) The board may license premises located in compliance with the 33
distance requirements set in an ordinance adopted under (b) or (c) of 34
this subsection. Before issuing or renewing a research license for 35
premises within 1,000 feet but not less than 100 feet of an 36
elementary school, secondary school, or playground in compliance with 37
an ordinance passed pursuant to (c) of this subsection, the board 38
must ensure that the facility: 39
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(i) Meets a security standard exceeding that which applies to 1
cannabis producer, processor, or retailer licensees;2
(ii) Is inaccessible to the public and no part of the operation 3
of the facility is in view of the general public; and4
(iii) Bears no advertising or signage indicating that it is a 5
cannabis research facility. 6
(e) The board must issue a certificate of compliance if the 7
premises met the requirements under (a), (b), (c), or (d) of this 8
subsection on the date of the application. The certificate allows the 9
licensee to operate the business at the proposed location 10
notwithstanding a later occurring, otherwise disqualifying factor.11
(f) The board may not issue a license for any premises within 12
Indian country, as defined in 18 U.S.C. Sec. 1151, including any fee 13
patent lands within the exterior boundaries of a reservation, without 14
the consent of the federally recognized tribe associated with the 15
reservation or Indian country. 16
(9) A city, town, or county may adopt an ordinance prohibiting a 17
cannabis producer or cannabis processor from operating or locating a 18
business within areas zoned primarily for residential use or rural 19
use with a minimum lot size of five acres or smaller.20
(10) In determining whether to grant or deny a license or renewal 21
of any license, the board must give substantial weight to objections 22
from an incorporated city or town or county legislative authority 23
based upon chronic illegal activity associated with the applicant's 24
operations of the premises proposed to be licensed or the applicant's 25
operation of any other licensed premises, or the conduct of the 26
applicant's patrons inside or outside the licensed premises. "Chronic 27
illegal activity" means (a) a pervasive pattern of activity that 28
threatens the public health, safety, and welfare of the city, town, 29
or county including, but not limited to, open container violations, 30
assaults, disturbances, disorderly conduct, or other criminal law 31
violations, or as documented in crime statistics, police reports, 32
emergency medical response data, calls for service, field data, or 33
similar records of a law enforcement agency for the city, town, 34
county, or any other municipal corporation or any state agency; or 35
(b) an unreasonably high number of citations for violations of RCW 36
46.61.502 associated with the applicant's or licensee's operation of 37
any licensed premises as indicated by the reported statements given 38
to law enforcement upon arrest. 39
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(11) The board may not issue a cannabis retail license for any 1
premises not currently licensed if: 2
(a) The board receives a written objection from the legislative 3
authority of an incorporated city or town, or county legislative 4
authority, relating to the physical location of the proposed 5
premises; 6
(b) The objection to the location from the incorporated city or 7
town, or county legislative authority, is received by the board 8
within 20 days of the board notifying the incorporated city or town, 9
or county legislative authority, of the proposed cannabis retail 10
location; and 11
(c) The objection to the issuance of a cannabis retail license at 12
the specified location is based on a preexisting local ordinance 13
limiting outlet density in a specific geographic area. For purposes 14
of this subsection (11), a preexisting local ordinance is an 15
ordinance enacted and in effect before the date the applicant submits 16
an application for a cannabis retail license to the board identifying 17
the premises proposed to be licensed. No objection related to the 18
physical location of a proposed premises may be made by a local 19
government under this subsection (11) based on a local ordinance 20
enacted after the date the applicant submits an application for a 21
cannabis retail license to the board identifying the premises 22
proposed to be licensed. 23
(12) After January 1, 2024, all cannabis licensees are encouraged 24
but are not required to submit a social equity plan to the board. 25
Upon confirmation by the board that a cannabis licensee who is not a 26
social equity applicant, and who does not hold a social equity 27
license issued under RCW 69.50.335, has submitted a social equity 28
plan, the board must within 30 days reimburse such a licensee an 29
amount equal to the cost of the licensee's annual cannabis license 30
renewal fee. The license renewal fee reimbursement authorized under 31
this subsection is subject to the following limitations:32
(a) The board may provide reimbursement one time only to any 33
licensed entity; and 34
(b) Any licensed entity holding more than one cannabis license is 35
eligible for reimbursement of the license renewal fee on only one 36
license. 37
Sec. 3. RCW 69.50.325 and 2022 c 16 s 54 are each amended to 38
read as follows: 39
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(1) There shall be a cannabis producer's license regulated by the 1
board and subject to annual renewal. The licensee is authorized to 2
produce: (a) Cannabis for sale at wholesale to cannabis processors 3
and other cannabis producers; (b) immature plants or clones and seeds 4
for sale to cooperatives as described under RCW 69.51A.250; and (c) 5
immature plants or clones and seeds for sale to qualifying patients 6
and designated providers as provided under RCW 69.51A.310. The 7
production, possession, delivery, distribution, and sale of cannabis 8
in accordance with the provisions of this chapter and the rules 9
adopted to implement and enforce it, by a validly licensed cannabis 10
producer, shall not be a criminal or civil offense under Washington 11
state law. Every cannabis producer's license shall be issued in the 12
name of the applicant ((,)) in accordance with RCW 69.50.331 and shall 13
specify the location at which the cannabis producer intends to 14
operate, which must be within the state of Washington ((, and the )). 15
The holder ((thereof)) of the cannabis producer's license shall not 16
allow any other person to use the license. The application fee for a 17
cannabis producer's license ((shall be two hundred fifty dollars )) is 18
$250. The annual fee for issuance and renewal of a cannabis 19
producer's license ((shall be one thousand three hundred eighty-one 20
dollars)) is $1,381 . A separate license shall be required for each 21
location at which a cannabis producer intends to produce cannabis.22
(2) There shall be a cannabis processor's license to process, 23
package, and label cannabis concentrates, useable cannabis, and 24
cannabis-infused products for sale at wholesale to cannabis 25
processors and cannabis retailers, regulated by the board and subject 26
to annual renewal. The processing, packaging, possession, delivery, 27
distribution, and sale of cannabis, useable cannabis, cannabis-28
infused products, and cannabis concentrates in accordance with the 29
provisions of this chapter and chapter 69.51A RCW and the rules 30
adopted to implement and enforce these chapters, by a validly 31
licensed cannabis processor, shall not be a criminal or civil offense 32
under Washington state law. Every cannabis processor's license shall 33
be issued in the name of the applicant ((,)) in accordance with RCW 34
69.50.331 and shall specify the location at which the licensee 35
intends to operate, which must be within the state of Washington ((, 36
and the)). The holder ((thereof)) of the cannabis processor's license 37
shall not allow any other person to use the license. The application 38
fee for a cannabis processor's license ((shall be two hundred fifty 39
dollars)) is $250 . The annual fee for issuance and renewal of a 40
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cannabis processor's license ((shall be one thousand three hundred 1
eighty-one dollars)) is $1,381. A separate license shall be required 2
for each location at which a cannabis processor intends to process 3
cannabis. 4
(3)(a) There shall be a cannabis retailer's license to sell 5
cannabis concentrates, useable cannabis, and cannabis-infused 6
products at retail in retail outlets, regulated by the board and 7
subject to annual renewal. The possession, delivery, distribution, 8
and sale of cannabis concentrates, useable cannabis, and cannabis-9
infused products in accordance with the provisions of this chapter 10
and the rules adopted to implement and enforce it, by a validly 11
licensed cannabis retailer, shall not be a criminal or civil offense 12
under Washington state law. Every cannabis retailer's license shall 13
be issued in the name of the applicant ((,)) in accordance with RCW 14
69.50.331 and shall specify the location of the retail outlet the 15
licensee intends to operate, which must be within the state of 16
Washington((, and the )). The holder of the cannabis retailer's 17
license thereof shall not allow any other person to use the license. 18
The application fee for a cannabis retailer's license ((shall be two 19
hundred fifty dollars )) is $250 . The annual fee for issuance and 20
renewal of a cannabis retailer's license ((shall be one thousand 21
three hundred eighty-one dollars )) is $1,381 . A separate license 22
shall be required for each location at which a cannabis retailer 23
intends to sell cannabis concentrates, useable cannabis, and 24
cannabis-infused products. 25
(b) An individual retail licensee and all other persons or 26
entities with a financial or other ownership interest in the business 27
operating under the license are limited, in the aggregate, to holding 28
a collective total of not more than five retail cannabis licenses.29
(c)(i) A cannabis retailer's license is subject to forfeiture in 30
accordance with rules adopted by the board pursuant to this section.31
(ii) The board shall adopt rules to establish a license 32
forfeiture process for a licensed cannabis retailer that is not fully 33
operational and open to the public within a specified period from the 34
date of license issuance, as established by the board, subject to the 35
following restrictions: 36
(A) No cannabis retailer's license may be subject to forfeiture 37
within the first nine months of license issuance; and38
(B) The board must require license forfeiture on or before 39
twenty-four calendar months of license issuance if a cannabis 40
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retailer is not fully operational and open to the public, unless the 1
board determines that circumstances out of the licensee's control are 2
preventing the licensee from becoming fully operational and that, in 3
the board's discretion, the circumstances warrant extending the 4
forfeiture period beyond twenty-four calendar months.5
(iii) The board has discretion in adopting rules under this 6
subsection (3)(c). 7
(iv) This subsection (3)(c) applies to cannabis retailer's 8
licenses issued before and after July 23, 2017. However, no license 9
of a cannabis retailer that otherwise meets the conditions for 10
license forfeiture established pursuant to this subsection (3)(c) may 11
be subject to forfeiture within the first nine calendar months of 12
July 23, 2017. 13
(v) The board may not require license forfeiture if the licensee 14
has been incapable of opening a fully operational retail cannabis 15
business due to actions by the city, town, or county with 16
jurisdiction over the licensee that include any of the following:17
(A) The adoption of a ban or moratorium that prohibits the 18
opening of a retail cannabis business; or 19
(B) The adoption of an ordinance or regulation related to zoning, 20
business licensing, land use, or other regulatory measure that has 21
the effect of preventing a licensee from receiving an occupancy 22
permit from the jurisdiction or which otherwise prevents a licensed 23
cannabis retailer from becoming operational. 24
(d) The board may issue cannabis retailer licenses pursuant to 25
this chapter and RCW 69.50.335. 26
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