Washington Social Equity In Cannabis Licensing Window Opens March 1

20 Jan Washington Social Equity In Cannabis Licensing Window Opens March 1

The Washington State Liquor and Cannabis Board (“WSLCB”) announced this Wednesday, January 18, that the 30 day window to apply for a Washington Social Equity In Cannabis Retail License will open March 1, 2023.

The WSLCB will reissue 44 retail licenses to qualified applicants that rank the highest on a points scale to “prioritize” applicants. The licenses will be anchored to specific counties. As a refresher, we’ve been following the developments in Washington’s efforts to add Section 570 to Washington Annotated Code (“WAC”) Title 314-55 from the draft rules and their issues, the final (and unchanged) rule, and the recently released, rather unhelpful Disproportionately Impacted Area (“DIA”) mapping tool.

The license application process will be completed electronically on the WA Department of Revenue’s business licensing system, though it is not currently available on the DOR’s website.

Washington social equity cannabis license eligibility criteria

To qualify for a license and before being ranked according to the point system, an applicant must be a Washington resident, must own at least 51% of each social equity retail business, and the person or persons owning the business must meet at least two of the following qualifications:

• the applicant has lived in a DIA in WA for a minimum of 5 years between 1980 and 2010;
• the applicant or a family member of the applicant has been arrested or convicted of a cannabis offense; or
• the applicant’s household income in the year prior to submitting the application was less than the median household income within the state of Washington.

While it is not listed specifically as a qualification, applicants must also submit a “social equity plan” describing how they will meet social equity goals, “applicant’s personal or family history with the criminal justice system, including any offenses involving cannabis” and a “business plan involving partnerships or assistance to organizations or residents with connections or contributions to populations with a history of high rates of enforcement of cannabis prohibition.” WAC 314-55-570(h)((i).

RCW 69.50.335 defines Social equity goals as “(i) increasing the number of marijuana retailer licenses held by social equity applicants from disproportionately impacted areas; and (ii) reducing accumulated harm suffered by individuals, families, and local areas subject to severe impacts from the historical application and enforcement of marijuana prohibition laws.” Having a social equity plan will impact eligibility and ranking so it is important for applicants to put the time in to create one.

Washington social equity cannabis license scoring rubric

Once found eligible according to the criteria above, applicants are ranked in order of priority based on a scoring system.

Washington social equity license restrictions

If a license is be granted, there are license restrictions Washington social equity cannabis applicants should know about. The more heavy-handed (and unnecessary) restrictions are:

• No ownership changes to the application are allowed after it has been reviewed;
• No change of location outside of the county in which the license is initially issued;
• No license transfer or assumption is allowed within the first year of issuance and all social equity licenses may only be transferred or assumed by a person or persons who meet the definition of a social equity program applicant for 5 years from the date the license is approved.

These restrictions dramatically reduce the transferability of a social equity license, which are hard to transfer as it is. As we wrote on this issue last year “Many licensees will build their businesses into prosperous enterprises and this rule knee-caps their ability to sell them in the already highly (and unnecessarily) restricted WA market.” The eligibility and ranking criteria have their own issues, but the license restrictions are only going to hurt licensees–the very people the rule is intended to serve.

Still interested?

Applicants who are interested in applying for these licenses can find certain informational materials on the WSLCB website and attend a few upcoming webinars. This process may be made more complex by the possibly of lawsuits being filed to challenge certain aspects of the rule. If that happens, it could freeze or complicate the application process so staying up to date with developments from the WSLCB will be important. As usual, we will also be writing about them here.