Cannabis

AN ACT Relating to modernizing adult use cannabis laws; amending 1
RCW 69.50.325, 69.50.331, 19.86.070, and 24.34.010; adding new 2
sections to chapter 82.04 RCW; creating new sections; and providing 3
expiration dates. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
NEW SECTION. Sec. 1. (1) The legislature finds that Washington 6
state, being one of the first two states in the nation to legalize 7
cannabis for adult use, has a mature cannabis industry that has 8
earned its position as a national leader in industry efficiencies, 9
product and brand development, and longevity of active operations.10
(2) The legislature recognizes that Washington's licensed 11
cannabis industry's tax revenues now provide over two percent of the 12
state's operating budget. 13
(3) The legislature also recognizes that when the United States 14
federal government deschedules or reschedules cannabis, interstate 15
commerce for cannabis sales will become inevitable under federal law 16
and Washington's licensed cannabis industry will be forced to compete 17
in national markets. 18
(4) The legislature finds that social equity applicants seeking 19
licensure under the cannabis social equity program have discovered 20
that it is desperately difficult or even impossible to find funding 21
H-1937.1
HOUSE BILL 2037
State of Washington 69th Legislature 2025 Regular Session
By Representative Morgan
p. 1 HB 2037
to open licensed cannabis operations. Restrictions against out-of-1
state investors have effectively blocked these applicants from 2
attracting sufficient investors and have been highlighted as major 3
barriers to the success of the program. 4
(5) The legislature recognizes that Washington's licensed 5
cannabis industry has been restricted by a state residency 6
requirement for licensees, blocking access to investors from other 7
states, thus putting Washington cannabis licensees at a disadvantage 8
compared to licensees in other states, almost none of which have such 9
barriers to investment capital from other states. 10
(6) The legislature finds that people from many low-income and 11
minority areas do not have the same access to investment capital to 12
start businesses, thus denying certain demographics from achieving 13
generational wealth. 14
(7) The legislature acknowledges that residency requirements for 15
licensing do not exist in any other industry and is in direct 16
conflict with the dormant commerce clause of the United States 17
Constitution. 18
(8) The legislature finds that it is urgent and critical to 19
eliminate the state's residency requirement while also providing tax 20
incentives to investors to attract investments for social equity 21
applicants. 22
(9) The legislature further finds that granting a time-limited 23
tax exemption from the business and occupation tax for cannabis 24
producers, processors, and retailers licensed through the cannabis 25
social equity program, while these licensees start their businesses 26
in the established market, will reduce the unique barriers these 27
businesses are facing relative to other businesses outside and within 28
the licensed cannabis industry. Additionally, also granting a time-29
limited tax exemption from the business and occupation tax for 30
cannabis producers, processors, and retailers who obtain their 31
license by transfer or assumption of a licensee in the cannabis 32
social equity program, or from a licensee who was transferred or 33
assumed a license from such a licensee, when the new owner or group 34
of owners also meets the social equity applicant criteria, will 35
similarly reduce the unique barriers these businesses will face 36
relative to other businesses outside and within the licensed cannabis 37
industry and will support the goals of the cannabis social equity 38
program. 39
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Sec. 2. RCW 69.50.325 and 2022 c 16 s 54 are each amended to 1
read as follows: 2
(1) There shall be a cannabis producer's license regulated by the 3
board and subject to annual renewal. The licensee is authorized to 4
produce: (a) Cannabis for sale at wholesale to cannabis processors 5
and other cannabis producers; (b) immature plants or clones and seeds 6
for sale to cooperatives as described under RCW 69.51A.250; and (c) 7
immature plants or clones and seeds for sale to qualifying patients 8
and designated providers as provided under RCW 69.51A.310. The 9
production, possession, delivery, distribution, and sale of cannabis 10
in accordance with the provisions of this chapter and the rules 11
adopted to implement and enforce it, by a validly licensed cannabis 12
producer, shall not be a criminal or civil offense under Washington 13
state law. Every cannabis producer's license shall be issued in the 14
name of the applicant, shall specify the location at which the 15
cannabis producer intends to operate, which must be within the state 16
of Washington, and the holder thereof shall not allow any other 17
person to use the license. The application fee for a cannabis 18
producer's license shall be ((two hundred fifty dollars )) $250. The 19
annual fee for issuance and renewal of a cannabis producer's license 20
shall be ((one thousand three hundred eighty-one dollars )) $1,381, 21
except the annual renewal fee is $1,657 for a cannabis producer's 22
license at the next renewal after the licensee submits a change of 23
ownership to the board for an owner who does not lawfully reside in 24
Washington and the board approves of the ownership change, and the 25
annual fee for issuance of a new cannabis producer's license after 26
the effective date of this section is $1,657 if an owner does not 27
lawfully reside in Washington . A separate license shall be required 28
for each location at which a cannabis producer intends to produce 29
cannabis. Licensed cannabis producers may form agricultural 30
organizations and associations and engage in activities as provided 31
in RCW 19.86.070 and 24.34.010.32
(2) There shall be a cannabis processor's license to process, 33
package, and label cannabis concentrates, useable cannabis, and 34
cannabis-infused products for sale at wholesale to cannabis 35
processors and cannabis retailers, regulated by the board and subject 36
to annual renewal. The processing, packaging, possession, delivery, 37
distribution, and sale of cannabis, useable cannabis, cannabis-38
infused products, and cannabis concentrates in accordance with the 39
provisions of this chapter and chapter 69.51A RCW and the rules 40
p. 3 HB 2037
adopted to implement and enforce these chapters, by a validly 1
licensed cannabis processor, shall not be a criminal or civil offense 2
under Washington state law. Every cannabis processor's license shall 3
be issued in the name of the applicant, shall specify the location at 4
which the licensee intends to operate, which must be within the state 5
of Washington, and the holder thereof shall not allow any other 6
person to use the license. The application fee for a cannabis 7
processor's license shall be ((two hundred fifty dollars )) $250. The 8
annual fee for issuance and renewal of a cannabis processor's license 9
shall be ((one thousand three hundred eighty-one dollars )) $1,381, 10
except the annual renewal fee is $1,657 for a cannabis processor's 11
license at the next renewal after the licensee submits a change of 12
ownership to the board for an owner who does not lawfully reside in 13
Washington and the board approves of the ownership change, and the 14
annual fee for issuance of a new cannabis processor's license after 15
the effective date of this section is $1,657 if an owner does not 16
lawfully reside in Washington . A separate license shall be required 17
for each location at which a cannabis processor intends to process 18
cannabis. 19
(3)(a) There shall be a cannabis retailer's license to sell 20
cannabis concentrates, useable cannabis, and cannabis-infused 21
products at retail in retail outlets, regulated by the board and 22
subject to annual renewal. The possession, delivery, distribution, 23
and sale of cannabis concentrates, useable cannabis, and cannabis-24
infused products in accordance with the provisions of this chapter 25
and the rules adopted to implement and enforce it, by a validly 26
licensed cannabis retailer, shall not be a criminal or civil offense 27
under Washington state law. Every cannabis retailer's license shall 28
be issued in the name of the applicant, shall specify the location of 29
the retail outlet the licensee intends to operate, which must be 30
within the state of Washington, and the holder thereof shall not 31
allow any other person to use the license. The application fee for a 32
cannabis retailer's license shall be ((two hundred fifty dollars )) 33
$250. The annual fee for issuance and renewal of a cannabis 34
retailer's license shall be ((one thousand three hundred eighty-one 35
dollars)) $1,381, except the annual renewal fee is $1,657 for a 36
cannabis retailer's licensee at the next renewal after the licensee 37
submits a change of ownership to the board for an owner who does not 38
lawfully reside in Washington and the board approves of the ownership 39
change, and the annual fee for issuance of a new cannabis retailer's 40
p. 4 HB 2037
license after the effective date of this section is $1,657 if an 1
owner does not lawfully reside in Washington . A separate license 2
shall be required for each location at which a cannabis retailer 3
intends to sell cannabis concentrates, useable cannabis, and 4
cannabis-infused products. 5
(b)(i) An individual retail licensee and all other persons or 6
entities with a financial or other ownership interest in the business 7
operating under the license are limited, in the aggregate, to holding 8
a collective total of not more than five retail cannabis licenses.9
(ii) A retail licensee and all other persons or entities with a 10
financial or other ownership interest may not enter into any 11
agreement as referenced in RCW 69.50.395 that confers a financial 12
interest across more than five retail cannabis licenses. For the 13
purposes of this subsection, "financial interest" means negotiating 14
or coordinating purchases of cannabis products, any operational 15
control over the business, sharing profits or revenue, sharing 16
marketing and advertising costs, or sharing employment and hiring 17
decisions.18
(c)(i) A cannabis retailer's license is subject to forfeiture in 19
accordance with rules adopted by the board pursuant to this section.20
(ii) The board shall adopt rules to establish a license 21
forfeiture process for a licensed cannabis retailer that is not fully 22
operational and open to the public within a specified period from the 23
date of license issuance, as established by the board, subject to the 24
following restrictions: 25
(A) No cannabis retailer's license may be subject to forfeiture 26
within the first nine months of license issuance; and27
(B) The board must require license forfeiture on or before 28
twenty-four calendar months of license issuance if a cannabis 29
retailer is not fully operational and open to the public, unless the 30
board determines that circumstances out of the licensee's control are 31
preventing the licensee from becoming fully operational and that, in 32
the board's discretion, the circumstances warrant extending the 33
forfeiture period beyond twenty-four calendar months.34
(iii) The board has discretion in adopting rules under this 35
subsection (3)(c). 36
(iv) ((This subsection (3)(c) applies to cannabis retailer's 37
licenses issued before and after July 23, 2017. However, no license 38
of a cannabis retailer that otherwise meets the conditions for 39
license forfeiture established pursuant to this subsection (3)(c) may 40
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be subject to forfeiture within the first nine calendar months of 1
July 23, 2017. 2
(v))) The board may not require license forfeiture if the 3
licensee has been incapable of opening a fully operational retail 4
cannabis business due to actions by the city, town, or county with 5
jurisdiction over the licensee that include any of the following:6
(A) The adoption of a ban or moratorium that prohibits the 7
opening of a retail cannabis business; or 8
(B) The adoption of an ordinance or regulation related to zoning, 9
business licensing, land use, or other regulatory measure that has 10
the effect of preventing a licensee from receiving an occupancy 11
permit from the jurisdiction or which otherwise prevents a licensed 12
cannabis retailer from becoming operational. 13
(d) The board may issue cannabis retailer licenses pursuant to 14
this chapter and RCW 69.50.335. 15
Sec. 3. RCW 69.50.331 and 2023 c 220 s 2 are each amended to 16
read as follows: 17
(1) For the purpose of considering any application for a license 18
to produce, process, research, transport, or deliver cannabis, 19
useable cannabis, cannabis concentrates, or cannabis-infused products 20
subject to the regulations established under RCW 69.50.385, or sell 21
cannabis, or for the renewal of a license to produce, process, 22
research, transport, or deliver cannabis, useable cannabis, cannabis 23
concentrates, or cannabis-infused products subject to the regulations 24
established under RCW 69.50.385, or sell cannabis, the board must 25
conduct a comprehensive, fair, and impartial evaluation of the 26
applications timely received. 27
(a) The board may cause an inspection of the premises to be made, 28
and may inquire into all matters in connection with the construction 29
and operation of the premises. For the purpose of reviewing any 30
application for a license and for considering the denial, suspension, 31
revocation, cancellation, or renewal or denial thereof, of any 32
license, the board may consider any prior criminal arrests or 33
convictions of the applicant, any public safety administrative 34
violation history record with the board, and a criminal history 35
record information check. The board may submit the criminal history 36
record information check to the Washington state patrol and to the 37
identification division of the federal bureau of investigation in 38
order that these agencies may search their records for prior arrests 39
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and convictions of the individual or individuals who filled out the 1
forms. The board must require fingerprinting of any applicant whose 2
criminal history record information check is submitted to the federal 3
bureau of investigation. The provisions of RCW 9.95.240 and of 4
chapter 9.96A RCW do not apply to these cases. Subject to the 5
provisions of this section, the board may, in its discretion, grant 6
or deny the renewal or license applied for. Denial may be based on, 7
without limitation, the existence of chronic illegal activity 8
documented in objections submitted pursuant to subsections (7)(c) and 9
(10) of this section. Authority to approve an uncontested or 10
unopposed license may be granted by the board to any staff member the 11
board designates in writing. Conditions for granting this authority 12
must be adopted by rule. 13
(b) No license of any kind may be issued to: 14
(i) A person under the age of 21 years; 15
(ii) ((A person doing business as a sole proprietor who has not 16
lawfully resided in the state for at least six months prior to 17
applying to receive a license;18
(iii) A partnership, employee cooperative, association, nonprofit 19
corporation, or corporation )) An entity unless formed under the laws 20
of this state ((, and unless all of the members thereof are qualified 21
to obtain a license as provided in this section)); or22
(((iv))) (iii) A person whose place of business is conducted by a 23
manager or agent, unless the manager or agent possesses the same 24
qualifications required of the licensee. 25
(c) If, after reasonable efforts, the board is unable to 26
investigate a nonresident required to be investigated under this 27
section, in accordance with the investigatory standards applicable to 28
the investigation of a state resident, the board may deny a license 29
or license renewal to an entity.30
(2)(a) The board may, in its discretion, subject to RCW 31
43.05.160, 69.50.563, 69.50.562, 69.50.334, and 69.50.342(3) suspend 32
or cancel any license; and all protections of the licensee from 33
criminal or civil sanctions under state law for producing, 34
processing, researching, or selling cannabis, cannabis concentrates, 35
useable cannabis, or cannabis-infused products thereunder must be 36
suspended or terminated, as the case may be. 37
(b) The board must immediately suspend the license of a person 38
who has been certified pursuant to RCW 74.20A.320 by the department 39
of social and health services as a person who is not in compliance 40
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with a support order. If the person has continued to meet all other 1
requirements for reinstatement during the suspension, reissuance of 2
the license is automatic upon the board's receipt of a release issued 3
by the department of social and health services stating that the 4
licensee is in compliance with the order. 5
(c) The board may request the appointment of administrative law 6
judges under chapter 34.12 RCW who shall have power to administer 7
oaths, issue subpoenas for the attendance of witnesses and the 8
production of papers, books, accounts, documents, and testimony, 9
examine witnesses, receive testimony in any inquiry, investigation, 10
hearing, or proceeding in any part of the state, and consider 11
mitigating and aggravating circumstances in any case and deviate from 12
any prescribed penalty, under rules the board may adopt.13
(d) Witnesses must be allowed fees and mileage each way to and 14
from any inquiry, investigation, hearing, or proceeding at the rate 15
authorized by RCW 34.05.446. Fees need not be paid in advance of 16
appearance of witnesses to testify or to produce books, records, or 17
other legal evidence. 18
(e) In case of ((disobedience of )) noncompliance by any person 19
((to comply)) with the order of the board or a subpoena issued by the 20
board, or any of its members, or administrative law judges, or on the 21
refusal of a witness to testify to any matter regarding which he or 22
she may be lawfully interrogated, the judge of the superior court of 23
the county in which the person resides, on application of any member 24
of the board or administrative law judge, compels ((obedience)) 25
compliance by contempt proceedings, as in the case of ((disobedience 26
of)) noncompliance with the requirements of a subpoena issued from 27
said court or a refusal to testify therein. 28
(3) Upon receipt of notice of the suspension or cancellation of a 29
license, the licensee must forthwith deliver up the license to the 30
board. Where the license has been suspended only, the board must 31
return the license to the licensee at the expiration or termination 32
of the period of suspension. The board must notify all other 33
licensees in the county where the subject licensee has its premises 34
of the suspension or cancellation of the license; and no other 35
licensee or employee of another licensee may allow or cause any 36
cannabis, cannabis concentrates, useable cannabis, or cannabis-37
infused products to be delivered to or for any person at the premises 38
of the subject licensee. 39
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(4) Every license issued under this chapter is subject to all 1
conditions and restrictions imposed by this chapter or by rules 2
adopted by the board to implement and enforce this chapter. All 3
conditions and restrictions imposed by the board in the issuance of 4
an individual license must be listed on the face of the individual 5
license along with the trade name, address, and expiration date.6
(5) Every licensee must post and keep posted its license, or 7
licenses, in a conspicuous place on the premises. 8
(6) No licensee may employ any person under the age of 21 years.9
(7)(a) Before the board issues a new or renewed license to an 10
applicant it must give notice of the application to the chief 11
executive officer of the incorporated city or town, if the 12
application is for a license within an incorporated city or town, or 13
to the county legislative authority, if the application is for a 14
license outside the boundaries of incorporated cities or towns, or to 15
the tribal government if the application is for a license within 16
Indian country, or to the port authority if the application for a 17
license is located on property owned by a port authority.18
(b) The incorporated city or town through the official or 19
employee selected by it, the county legislative authority or the 20
official or employee selected by it, the tribal government, or port 21
authority has the right to file with the board within twenty days 22
after the date of transmittal of the notice for applications, or at 23
least thirty days prior to the expiration date for renewals, written 24
objections against the applicant or against the premises for which 25
the new or renewed license is asked. The board may extend the time 26
period for submitting written objections upon request from the 27
authority notified by the board. 28
(c) The written objections must include a statement of all facts 29
upon which the objections are based, and in case written objections 30
are filed, the city or town or county legislative authority may 31
request, and the board may in its discretion hold, a hearing subject 32
to the applicable provisions of Title 34 RCW. If the board makes an 33
initial decision to deny a license or renewal based on the written 34
objections of an incorporated city or town or county legislative 35
authority, the applicant may request a hearing subject to the 36
applicable provisions of Title 34 RCW. If a hearing is held at the 37
request of the applicant, board representatives must present and 38
defend the board's initial decision to deny a license or renewal.39
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(d) Upon the granting of a license under this title the board 1
must send written notification to the chief executive officer of the 2
incorporated city or town in which the license is granted, or to the 3
county legislative authority if the license is granted outside the 4
boundaries of incorporated cities or towns. 5
(8)(a) Except as provided in (b) through (e) of this subsection, 6
the board may not issue a license for any premises within 1,000 feet 7
of the perimeter of the grounds of any elementary or secondary 8
school, playground, recreation center or facility, child care center, 9
public park, public transit center, or library, or any game arcade 10
admission to which is not restricted to persons aged 21 years or 11
older. 12
(b) A city, county, or town may permit the licensing of premises 13
within 1,000 feet but not less than 100 feet of the facilities 14
described in (a) of this subsection, except elementary schools, 15
secondary schools, and playgrounds, by enacting an ordinance 16
authorizing such distance reduction, provided that such distance 17
reduction will not negatively impact the jurisdiction's civil 18
regulatory enforcement, criminal law enforcement interests, public 19
safety, or public health. 20
(c) A city, county, or town may permit the licensing of research 21
premises allowed under RCW 69.50.372 within 1,000 feet but not less 22
than 100 feet of the facilities described in (a) of this subsection 23
by enacting an ordinance authorizing such distance reduction, 24
provided that the ordinance will not negatively impact the 25
jurisdiction's civil regulatory enforcement, criminal law 26
enforcement, public safety, or public health. 27
(d) The board may license premises located in compliance with the 28
distance requirements set in an ordinance adopted under (b) or (c) of 29
this subsection. Before issuing or renewing a research license for 30
premises within 1,000 feet but not less than 100 feet of an 31
elementary school, secondary school, or playground in compliance with 32
an ordinance passed pursuant to (c) of this subsection, the board 33
must ensure that the facility: 34
(i) Meets a security standard exceeding that which applies to 35
cannabis producer, processor, or retailer licensees;36
(ii) Is inaccessible to the public and no part of the operation 37
of the facility is in view of the general public; and38
(iii) Bears no advertising or signage indicating that it is a 39
cannabis research facility. 40
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(e) The board must issue a certificate of compliance if the 1
premises met the requirements under (a), (b), (c), or (d) of this 2
subsection on the date of the application. The certificate allows the 3
licensee to operate the business at the proposed location 4
notwithstanding a later occurring, otherwise disqualifying factor.5
(f) The board may not issue a license for any premises within 6
Indian country, as defined in 18 U.S.C. Sec. 1151, including any fee 7
patent lands within the exterior boundaries of a reservation, without 8
the consent of the federally recognized tribe associated with the 9
reservation or Indian country. 10
(9) A city, town, or county may adopt an ordinance prohibiting a 11
cannabis producer or cannabis processor from operating or locating a 12
business within areas zoned primarily for residential use or rural 13
use with a minimum lot size of five acres or smaller.14
(10) In determining whether to grant or deny a license or renewal 15
of any license, the board must give substantial weight to objections 16
from an incorporated city or town or county legislative authority 17
based upon chronic illegal activity associated with the applicant's 18
operations of the premises proposed to be licensed or the applicant's 19
operation of any other licensed premises, or the conduct of the 20
applicant's patrons inside or outside the licensed premises. "Chronic 21
illegal activity" means (a) a pervasive pattern of activity that 22
threatens the public health, safety, and welfare of the city, town, 23
or county including, but not limited to, open container violations, 24
assaults, disturbances, disorderly conduct, or other criminal law 25
violations, or as documented in crime statistics, police reports, 26
emergency medical response data, calls for service, field data, or 27
similar records of a law enforcement agency for the city, town, 28
county, or any other municipal corporation or any state agency; or 29
(b) an unreasonably high number of citations for violations of RCW 30
46.61.502 associated with the applicant's or licensee's operation of 31
any licensed premises as indicated by the reported statements given 32
to law enforcement upon arrest. 33
(11) The board may not issue a cannabis retail license for any 34
premises not currently licensed if: 35
(a) The board receives a written objection from the legislative 36
authority of an incorporated city or town, or county legislative 37
authority, relating to the physical location of the proposed 38
premises; 39
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(b) The objection to the location from the incorporated city or 1
town, or county legislative authority, is received by the board 2
within 20 days of the board notifying the incorporated city or town, 3
or county legislative authority, of the proposed cannabis retail 4
location; and 5
(c) The objection to the issuance of a cannabis retail license at 6
the specified location is based on a preexisting local ordinance 7
limiting outlet density in a specific geographic area. For purposes 8
of this subsection (11), a preexisting local ordinance is an 9
ordinance enacted and in effect before the date the applicant submits 10
an application for a cannabis retail license to the board identifying 11
the premises proposed to be licensed. No objection related to the 12
physical location of a proposed premises may be made by a local 13
government under this subsection (11) based on a local ordinance 14
enacted after the date the applicant submits an application for a 15
cannabis retail license to the board identifying the premises 16
proposed to be licensed. 17
(12) After January 1, 2024, all cannabis licensees are encouraged 18
but are not required to submit a social equity plan to the board. 19
Upon confirmation by the board that a cannabis licensee who is not a 20
social equity applicant, and who does not hold a social equity 21
license issued under RCW 69.50.335, has submitted a social equity 22
plan, the board must within 30 days reimburse such a licensee an 23
amount equal to the cost of the licensee's annual cannabis license 24
renewal fee. The license renewal fee reimbursement authorized under 25
this subsection is subject to the following limitations:26
(a) The board may provide reimbursement one time only to any 27
licensed entity; and 28
(b) Any licensed entity holding more than one cannabis license is 29
eligible for reimbursement of the license renewal fee on only one 30
license. 31
Sec. 4. RCW 19.86.070 and 1961 c 216 s 7 are each amended to 32
read as follows: 33
The labor of a human being is not a commodity or article of 34
commerce. Nothing contained in this chapter shall be construed to 35
forbid the existence and operation of labor, agricultural, or 36
horticultural organizations, instituted for the purposes of mutual 37
help, and not having capital stock or conducted for profit, or to 38
forbid or restrain individual members of such organizations from 39
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lawfully carrying out the legitimate objects thereof. For purposes of 1
this section and RCW 24.34.010, and only with respect to licensed 2
cannabis producers, cannabis is considered an agricultural product 3
like other covered agricultural products, and nothing prohibits 4
licensed cannabis producers from forming and operating agricultural 5
organizations authorized under this section or agricultural 6
associations authorized under RCW 24.34.010.7
Sec. 5. RCW 24.34.010 and 2013 c 23 s 40 are each amended to 8
read as follows: 9
Persons engaged in the production of agricultural products as 10
farmers, licensed cannabis producers, planters, ranchers, dairy 11
farmers, nut growers, or fruit growers may act together in 12
associations, corporate or otherwise, with or without capital stock, 13
in collectively processing, preparing for market, handling, and 14
marketing in intrastate commerce, such products of persons so 15
engaged. Such associations may have marketing agencies in common; and 16
such associations and their members may make the necessary contracts 17
and agreements to effect such purposes ((: PROVIDED, That such )). For 18
purposes of RCW 19.86.070 and this section only, and only with 19
respect to licensed cannabis producers, cannabis is considered an 20
agricultural product like other covered agricultural products. Such 21
associations ((are)) must be operated for the mutual benefit of the 22
members thereof, as such producers, and conform to one or both of the 23
following requirements: 24
First. That no member of the association is allowed more than one 25
vote because of the amount of stock or membership capital he or she 26
may own therein, or, 27
Second. That the association does not pay dividends on stock or 28
membership capital in excess of eight percent per annum.29
And in any case to the following: 30
Third. That the association shall not deal in the products of 31
nonmembers to an amount greater in value than such as are handled by 32
it for members. 33
NEW SECTION. Sec. 6. A new section is added to chapter 82.04 34
RCW to read as follows: 35
(1) This chapter does not apply to a cannabis producer, 36
processor, or retailer, licensed by the liquor and cannabis board 37
under the cannabis social equity program under RCW 69.50.335, for the 38
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five years beginning after the licensee exceeds $5,000 in sales 1
revenues. 2
(2) This section expires July 1, 2039. 3
NEW SECTION. Sec. 7. A new section is added to chapter 82.04 4
RCW to read as follows: 5
(1) This chapter does not apply to a cannabis producer, 6
processor, or retailer who: 7
(a) Obtains the license by transfer or assumption from a licensee 8
in the cannabis social equity program, if the cannabis producer, 9
processor, or retailer who obtains the license also meets social 10
equity applicant criteria in RCW 69.50.335; or 11
(b) Obtains the license by transfer or assumption from a licensee 12
who meets social equity applicant criteria in RCW 69.50.335 and 13
previously received the license by transfer or assumption as provided 14
in this subsection or (a) of this subsection, if the cannabis 15
producer, processor, or retailer who obtains the license also meets 16
social equity applicant criteria in RCW 69.50.335.17
(2)(a) The tax exemption in this section applies only for five 18
years after the date each eligible cannabis producer, processor, or 19
retailer obtains or assumes the license. 20
(b) Nothing in this section prevents a subsequent eligible owner 21
or group of owners from qualifying for the tax exemption in this 22
section for five years, even if the original or a previous subsequent 23
owner or group of owners operated for more than five years under the 24
license and had a tax exemption for five of those years under this 25
section or section 6 of this act. 26
(3) This section expires June 30, 2052. 27
NEW SECTION. Sec. 8. (1) This section is the tax preference 28
performance statement for the tax preferences contained in sections 6 29
and 7 of this act. This performance statement is only intended to be 30
used for subsequent evaluation of the tax preference. It is not 31
intended to create a private right of action by any party or be used 32
to determine eligibility for preferential tax treatment.33
(2) The legislature categorizes these tax preferences as intended 34
to provide tax relief for certain businesses or individuals, as 35
indicated in RCW 82.32.808(2)(e). 36
(3)(a) It is the legislature's specific public policy objective 37
to provide these tax preferences to a designated class of taxpayers 38
p. 14 HB 2037
who are cannabis producers, processors, and retailers licensed under 1
the cannabis social equity program in RCW 69.50.335, or who are 2
cannabis producers, processors, or retailers who obtain a license by 3
transfer or assumption from a licensee in the cannabis social equity 4
program or from a licensee who previously obtained a license by 5
transfer or assumption from such a licensee, and who also meet the 6
social equity applicant criteria. 7
(b) The legislature finds that this designated class of taxpayers 8
faces unique barriers in their business relative to other producers, 9
manufacturers, processors, and retailers in general, as well as 10
relative to cannabis producers, cannabis processors, and cannabis 11
retailers licensed outside of the cannabis social equity program, the 12
majority of which have years of operating experience and growth after 13
selecting prime locations within a market with a limited number of 14
licenses and locations. 15
(c) The legislature further finds that eligibility for licensure 16
through the cannabis social equity program is connected to documented 17
evidence of disproportionate impacts of historical enforcement of 18
criminal laws related to cannabis or other social disadvantages, and 19
serves to remedy past discrimination against, or disproportionate 20
impacts on, persons who are members of legally protected classes 21
under state and federal antidiscrimination laws, and prevent future 22
discrimination. 23
(d) The legislature finds that providing time-limited business 24
and occupation tax exemptions for licensees in the cannabis social 25
equity program, and certain licensees who obtain a license by 26
transfer or assumption from licensees in the cannabis social equity 27
program, or from licensees who were transferred or assumed such 28
licenses, and who also meet the social equity applicant criteria, 29
will reduce the historical barriers and tax and financial burdens 30
facing these businesses as they enter the lucrative market and start 31
to build generational wealth through growing a sustainable business.32
(e) Black lives matter. 33
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