On December 16, 2015, the Washington State Liquor and Cannabis Board (“WSLCB”) released a statement that they will be adding 222 new retail marijuana licenses. This number came as a result of an analysis of the marijuana market throughout Washington State, taking in mind the closure of all medical dispensaries and collective gardens which has been mandated to take place in the summer of 2016.
Prior to this statement, the WSLCB began collecting applications for those looking to receive a retail marijuana license. These applications were, and still are, sorted into three groups called Priority One, Priority Two, and Priority Three. The goal of the priority system was to give those with medical dispensaries and collective gardens an advantage to receive the new licenses. New licenses will be issued first to the Priority One candidates and anything remaining will trickle down to the lower Priority groups. Without going too deep into the specifics, Priority One applicants were asked to demonstrate that they had applied for a license in the initial round of licenses prior to July 1, 2014; that they had owned, or were employed by, a collective garden prior to 2013; that they had held a state or municipal business license prior to 2013; and, finally, that their business was current on all applicable taxes. In the December 16th statement from the WSLCB, they said a total of 1,194 applications had been received with 39 receiving Priority One status. A further 42 were given Priority Two status.
What does this mean for the marijuana market? As demonstrated by those numbers, 81 applicants would be guaranteed a license as they landed in either Priority One or Priority Two. That leaves 141 licenses for 1,113 applicants. However, there is also the consideration that the Priority One and Two applicants may apply for multiple licenses as they are allowed to hold up to three. It is clear that those in Priority Three have a longshot at best to receive a license and their only hope would likely come down to a lottery for any remaining licenses as was the case in 2014. So far, the WSLCB has said they will not hold a lottery.
The WSLCB said that the 222 new licenses increase the statewide number to 556. While this is technically true, it is misleading at best. The WSLCB has administratively closed a number of applications due to a variety of factors and those licenses were not subsequently redistributed. The WSLCB has not released any information about the closed licenses and it remains unclear if they intend to put them back into circulation.
In addition, the WSLCB seems to be having a problem wrapping its head around definitions under the Medical Marijuana market. It appears WSLCB wants to redefine Access Points as Dispensaries. The problem there is that there is nothing that distinguishes an Access Point or Dispensary from a Collective Garden. Or, to put it in WSLCB terms, a Producer and or Processor are also a Retailer under the current Medical Cannabis regime. Which means that every person that is a grower, and also fits into the guidelines above, should qualify. However, our anecdotal experience has shown these applicants are not being correctly classified.
As mentioned above, these new licenses are being released in order to replace the dispensaries that will be closed. The number and allocation of these licenses to specific cities and counties was decided in order to facilitate the medical needs of the State of Washington. However, the closure of collective gardens throughout the state has many people concerned about a seriously diminished supply of medical-grade products. Under the new regulations, collective gardens are only allowed up to four patients and a total of sixty plants (if each patient is given the maximum by their prescribing doctor). This number is barely enough to satisfy the need of the patients and many licensed marijuana producers are electing to grow their crops as recreational marijuana as the requirements are less strenuous. A number of producers are voluntarily pledging a percentage of their production canopy to medical marijuana but those pledges will not take the place of the extensive collective garden network that has been supplying dispensaries for years.
The new licenses will provide retail establishments to better satisfy customers, however, more stores do not mean more product. The WSLCB has not yet decided to increase the number of producer licenses, and there is even talk about instituting new medical producer licenses. The next year will be pivotal for the medical marijuana market. The WSLCB will surely be keeping a close eye on how the medical market withstands the closure of dispensaries and collectives. Safe and affordable access has always been the number one concern for patients and providers. If the medical supply runs out, as many fear it will, the WSLCB will have many questions to answer.