Direct cannabis sales

AN ACT Relating to supporting a sustainable cannabis industry by 1
allowing direct to consumer sales of certain cannabis products; 2
amending RCW 69.50.325 and 69.50.535; adding a new section to chapter 3
69.50 RCW; and creating a new section. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
NEW SECTION. Sec. 1. (1) As of 2024, Washington's cannabis 6
industry generated $3,770,000,000 in excise taxes, providing vital 7
funds for health care, education, human services, and to local 8
governments.9
(2) Due to the federal legal landscape, all cannabis produced 10
within Washington must stay within the state's borders, which can 11
cause downward pressure on prices that threaten the ability for small 12
and independent producers to stay in business. 13
(3) The legislature intends to ensure a sustainable business 14
ecosystem in the cannabis industry by allowing limited opportunities 15
for the suppliers of cannabis retail licensees to better support 16
themselves. The legislature does not intend to supplant or replace 17
cannabis retail licensees by providing these limited opportunities.18
NEW SECTION. Sec. 2. A new section is added to chapter 69.50 19
RCW to read as follows: 20
S-0695.1
SENATE BILL 5403
State of Washington 69th Legislature 2025 Regular Session
By Senators Saldaña, Krishnadasan, and Nobles
Read first time 01/21/25. Referred to Committee on Labor & Commerce.
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(1) Cannabis producers licensed under RCW 69.50.325 may sell 1
cannabis flower directly to consumers only if sales are:2
(a) Limited to cannabis flower produced and processed by the 3
licensee at the licensee's licensed location; and 4
(b) In compliance with the limits of RCW 69.50.360.5
(2) Cannabis processors licensed under RCW 69.50.325 may sell 6
cannabis flower directly to consumers only if sales are:7
(a) Limited to cannabis flower produced within the licensed 8
business entity; and 9
(b) In compliance with the limits of RCW 69.50.360.10
(3) The board may adopt rules on security and operational 11
requirements for direct to consumer sales under this section, but any 12
requirements adopted by rule may not be more stringent than those 13
imposed on a cannabis retailer licensee. 14
(4) The board may adopt rules to implement this section.15
Sec. 3. RCW 69.50.325 and 2022 c 16 s 54 are each amended to 16
read as follows: 17
(1)(a) There shall be a cannabis producer's license regulated by 18
the board and subject to annual renewal. The licensee is authorized 19
to produce: (((a)))20
(i) Cannabis for sale at wholesale to cannabis processors and 21
other cannabis producers; (((b) immature))22
(ii) Immature plants or clones and seeds for sale to cooperatives 23
as described under RCW 69.51A.250; ((and (c) immature))24
(iii) Immature plants or clones and seeds for sale to qualifying 25
patients and designated providers as provided under RCW 69.51A.310; 26
and27
(iv) Cannabis flower for retail sale directly to consumers, 28
subject to section 2 of this act. 29
(b) The production, possession, delivery, distribution, and sale 30
of cannabis in accordance with the provisions of this chapter and the 31
rules adopted to implement and enforce it, by a validly licensed 32
cannabis producer, shall not be a criminal or civil offense under 33
Washington state law. 34
(c) Every cannabis producer's license shall be issued in the name 35
of the applicant, shall specify the location at which the cannabis 36
producer intends to operate, which must be within the state of 37
Washington, and the holder thereof shall not allow any other person 38
to use the license. 39
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(d) The application fee for a cannabis producer's license ((shall 1
be two hundred fifty dollars )) is $250 . The annual fee for issuance 2
and renewal of a cannabis producer's license ((shall be one thousand 3
three hundred eighty-one dollars )) is $1,381 . A separate license 4
shall be required for each location at which a cannabis producer 5
intends to produce cannabis. 6
(2)(a) There shall be a cannabis processor's license ((to 7
process)) regulated by the board and subject to annual renewal. The 8
licensee may:9
(i) Process, package, and label cannabis concentrates, useable 10
cannabis, and cannabis-infused products for sale at wholesale to 11
cannabis processors and cannabis retailers ((, regulated by the board 12
and subject to annual renewal)); and13
(ii) Conduct retail sales directly to a consumer, subject to the 14
provisions of section 2 of this act. 15
(b) The processing, packaging, possession, delivery, 16
distribution, and sale of cannabis, useable cannabis, cannabis-17
infused products, and cannabis concentrates in accordance with the 18
provisions of this chapter and chapter 69.51A RCW and the rules 19
adopted to implement and enforce these chapters, by a validly 20
licensed cannabis processor, shall not be a criminal or civil offense 21
under Washington state law. 22
(c) Every cannabis processor's license shall be issued in the 23
name of the applicant, shall specify the location at which the 24
licensee intends to operate, which must be within the state of 25
Washington, and the holder thereof shall not allow any other person 26
to use the license. 27
(d) The application fee for a cannabis processor's license 28
((shall be two hundred fifty dollars )) is $250 . The annual fee for 29
issuance and renewal of a cannabis processor's license ((shall be one 30
thousand three hundred eighty-one dollars )) is $1,381 . A separate 31
license shall be required for each location at which a cannabis 32
processor intends to process cannabis. 33
(3)(a) There shall be a cannabis retailer's license to sell 34
cannabis concentrates, useable cannabis, and cannabis-infused 35
products at retail in retail outlets, regulated by the board and 36
subject to annual renewal. The possession, delivery, distribution, 37
and sale of cannabis concentrates, useable cannabis, and cannabis-38
infused products in accordance with the provisions of this chapter 39
and the rules adopted to implement and enforce it, by a validly 40
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licensed cannabis retailer, shall not be a criminal or civil offense 1
under Washington state law. Every cannabis retailer's license shall 2
be issued in the name of the applicant, shall specify the location of 3
the retail outlet the licensee intends to operate, which must be 4
within the state of Washington, and the holder thereof shall not 5
allow any other person to use the license. The application fee for a 6
cannabis retailer's license ((shall be two hundred fifty dollars )) is 7
$250. The annual fee for issuance and renewal of a cannabis 8
retailer's license ((shall be one thousand three hundred eighty-one 9
dollars)) is $1,381 . A separate license shall be required for each 10
location at which a cannabis retailer intends to sell cannabis 11
concentrates, useable cannabis, and cannabis-infused products.12
(b) An individual retail licensee and all other persons or 13
entities with a financial or other ownership interest in the business 14
operating under the license are limited, in the aggregate, to holding 15
a collective total of not more than five retail cannabis licenses.16
(c)(i) A cannabis retailer's license is subject to forfeiture in 17
accordance with rules adopted by the board pursuant to this section.18
(ii) The board shall adopt rules to establish a license 19
forfeiture process for a licensed cannabis retailer that is not fully 20
operational and open to the public within a specified period from the 21
date of license issuance, as established by the board, subject to the 22
following restrictions: 23
(A) No cannabis retailer's license may be subject to forfeiture 24
within the first nine months of license issuance; and25
(B) The board must require license forfeiture on or before 26
((twenty-four)) 24 calendar months of license issuance if a cannabis 27
retailer is not fully operational and open to the public, unless the 28
board determines that circumstances out of the licensee's control are 29
preventing the licensee from becoming fully operational and that, in 30
the board's discretion, the circumstances warrant extending the 31
forfeiture period beyond ((twenty-four)) 24 calendar months.32
(iii) The board has discretion in adopting rules under this 33
subsection (3)(c). 34
(iv) This subsection (3)(c) applies to cannabis retailer's 35
licenses issued before and after July 23, 2017. However, no license 36
of a cannabis retailer that otherwise meets the conditions for 37
license forfeiture established pursuant to this subsection (3)(c) may 38
be subject to forfeiture within the first nine calendar months of 39
July 23, 2017. 40
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(v) The board may not require license forfeiture if the licensee 1
has been incapable of opening a fully operational retail cannabis 2
business due to actions by the city, town, or county with 3
jurisdiction over the licensee that include any of the following:4
(A) The adoption of a ban or moratorium that prohibits the 5
opening of a retail cannabis business; or 6
(B) The adoption of an ordinance or regulation related to zoning, 7
business licensing, land use, or other regulatory measure that has 8
the effect of preventing a licensee from receiving an occupancy 9
permit from the jurisdiction or which otherwise prevents a licensed 10
cannabis retailer from becoming operational. 11
(d) The board may issue cannabis retailer licenses pursuant to 12
this chapter and RCW 69.50.335. 13
Sec. 4. RCW 69.50.535 and 2024 c 79 s 1 are each amended to read 14
as follows: 15
(1)(a) There is levied and collected a cannabis excise tax equal 16
to ((thirty-seven)) 37 percent of the selling price on each retail 17
sale in this state of cannabis concentrates, useable cannabis, and 18
cannabis-infused products. This tax is separate and in addition to 19
general state and local sales and use taxes that apply to retail 20
sales of tangible personal property, and is not part of the total 21
retail price to which general state and local sales and use taxes 22
apply. The tax must be separately itemized from the state and local 23
retail sales tax on the sales receipt provided to the buyer.24
(b) The tax levied in this section must be reflected in the price 25
list or quoted shelf price in the licensed cannabis retail store and 26
in any advertising that includes prices for all useable cannabis, 27
cannabis concentrates, or cannabis-infused products.28
(c) The tax levied in this section must be reflected in the price 29
list, quoted shelf price, or in any advertising that includes prices 30
for all cannabis flower sold directly to consumers under section 2 of 31
this act.32
(2)(a) Until June 30, 2029, the tax levied by subsection (1) of 33
this section does not apply to sales by a cannabis retailer with a 34
medical cannabis endorsement to qualifying patients or designated 35
providers who have been issued a recognition card, of cannabis 36
concentrates, useable cannabis, or cannabis-infused products, 37
identified by the department as a compliant cannabis product in 38
chapter 246-70 WAC and tested to the standards in WAC 246-70-040.39
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(b) Each seller making exempt sales under this subsection (2) 1
must maintain information establishing eligibility for the exemption 2
in the form and manner required by the board. 3
(c) The board must provide a separate tax reporting line on the 4
excise tax form for exemption amounts claimed under this subsection 5
(2). 6
(3) All revenues collected from the cannabis excise tax imposed 7
under this section must be deposited each day in the dedicated 8
cannabis account. 9
(4) The tax imposed in this section must be paid by the buyer to 10
the seller. Each seller must collect from the buyer the full amount 11
of the tax payable on each taxable sale. The tax collected as 12
required by this section is deemed to be held in trust by the seller 13
until paid to the board. If any seller fails to collect the tax 14
imposed in this section or, having collected the tax, fails to pay it 15
as prescribed by the board, whether such failure is the result of the 16
seller's own acts or the result of acts or conditions beyond the 17
seller's control, the seller is, nevertheless, personally liable to 18
the state for the amount of the tax. 19
(5) The definitions in this subsection apply throughout this 20
section unless the context clearly requires otherwise.21
(a) "Retail sale" has the same meaning as in RCW 82.08.010.22
(b) "Selling price" has the same meaning as in RCW 82.08.010, 23
except that when product is sold under circumstances where the total 24
amount of consideration paid for the product is not indicative of its 25
true value, "selling price" means the true value of the product sold.26
(c) "Product" means cannabis, cannabis concentrates, useable 27
cannabis, and cannabis-infused products. 28
(d) "True value" means market value based on sales at comparable 29
locations in this state of the same or similar product of like 30
quality and character sold under comparable conditions of sale to 31
comparable purchasers. However, in the absence of such sales of the 32
same or similar product, true value means the value of the product 33
sold as determined by all of the seller's direct and indirect costs 34
attributable to the product. 35
(6)(a) The board must regularly review the tax level established 36
under this section and make recommendations, in consultation with the 37
department of revenue, to the legislature as appropriate regarding 38
adjustments that would further the goal of discouraging use while 39
undercutting illegal market prices. 40
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(b) The board must report, in compliance with RCW 43.01.036, to 1
the appropriate committees of the legislature every two years. The 2
report at a minimum must include the following: 3
(i) The specific recommendations required under (a) of this 4
subsection; 5
(ii) A comparison of gross sales and tax collections prior to and 6
after any cannabis tax change; 7
(iii) The increase or decrease in the volume of legal cannabis 8
sold prior to and after any cannabis tax change; 9
(iv) Increases or decreases in the number of licensed cannabis 10
producers, processors, and retailers; 11
(v) The number of illegal and noncompliant cannabis outlets the 12
board requires to be closed; 13
(vi) Gross cannabis sales and tax collections in Oregon; and14
(vii) The total amount of reported sales and use taxes exempted 15
for qualifying patients. The department of revenue must provide the 16
data of exempt amounts to the board. 17
(c) The board is not required to report to the legislature as 18
required in (b) of this subsection after January 1, 2025.19
(7) The legislature does not intend and does not authorize any 20
person or entity to engage in activities or to conspire to engage in 21
activities that would constitute per se violations of state and 22
federal antitrust laws including, but not limited to, agreements 23
among retailers as to the selling price of any goods sold.24
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