Washington’s Draft Cannabis Social Equity Licensing Rule

Following Washington’s creation of the Social Fairness in Hashish Activity Pressure through the 2020 legislative session, the Washington State Liquor and Hashish Board (“LCB”) permitted draft social fairness licensing guidelines for hashish licensees on August 3. The proposed guidelines would add part “570 Social Equity in Cannabis Program” to Washington Annotated Code (“WAC”) Title 314-55. The rule is aimed toward granting retail hashish licensing alternatives to individuals who have been disproportionately affected by the Struggle on Medicine, and will go into impact as early as September 28.

The rule accommodates eligibility standards and utility scoring standards, every trying to determine probably the most disproportionately affected and guarantee they obtain the very best likelihood of being permitted. Sadly, sure components of the rule create trigger for concern, or a minimum of confusion. As mentioned under, my concern is that if unchanged, components of the rule are prone to hurt the very individuals it’s supposed to learn.

Social fairness eligibility standards

To qualify, a WA resident should maintain a minimum of 51% of every social fairness retail license applicant and the individual or individuals making up the applicant should meet a minimum of two of the next {qualifications}:

• the applicant has lived in a Disproportionately Affect Space (“DIA”) in WA for at least 5 years between 1980 and 2010;
• the applicant or a member of the family of the applicant has been arrested or convicted of a hashish offense; or
• the applicant’s family revenue within the 12 months previous to submitting the appliance was lower than the median family revenue throughout the state of Washington.

DIA’s are outlined as “areas of excessive unemployment, low revenue, and demographic indicators per populations most impacted by the warfare on medicine, together with areas with larger charges of arrest for drug fees.” Curiously, whereas the scoring system under identifies people convicted of a “drug offense” and allocates factors to the appliance respectively, the preliminary eligibility standards above don’t. It seems then {that a} potential applicant with a non-cannabis drug conviction should meet the DIA and family revenue necessities, whereas hashish particular convictions might qualify with one or the opposite.

Part 570 creates a scoring system to rank Social Fairness Candidates (“SEA’s”) based mostly on 12 elements, and the place relevant give an applicant a sure variety of factors.

The scoring standards are a bit odd. Serving jail or jail time for a drug offense offers a social fairness applicant probably the most factors, and that appears utterly affordable, so “properly accomplished” to the rule makers on this criterion. Nevertheless, shedding a house or potential to work on account of a conviction or arrest is value solely 5 factors; whereas having a family revenue decrease than the Washington median is value 40. This makes a lot much less sense to me. I’ve to confess that is removed from a straightforward process, however features of the purpose system appear oddly calibrated.

Utility course of

The appliance course of will open for an preliminary interval of 30 calendar days, however the LCB might reopen the appliance window at its discretion of licenses stay accessible. The appliance should be submitted electronically and should submit all the required data throughout the 30-day window, which might be discovered within the proposed rules. An applicant might solely apply as soon as throughout every window. The licenses can be restricted to particular counties and third-party contractors referred to as “social fairness contractor(s)” will carry out the preliminary overview and scoring of those purposes. The LCB will then course of purposes with the very best scores. Ties can be damaged with a “double blind lottery” performed by an impartial third celebration.

Candidates should additionally submit a social fairness plan detailing how the licensee will meet social fairness objectives, and a “marketing strategy involving partnerships or help to organizations or residents with connections or contributions to populations with a historical past of excessive charges of enforcement of hashish prohibition.”

It’s unclear whether or not these social fairness plans can be considered by the Board when figuring out which candidates can be issued licenses. Sadly, requiring these plans as a part of the appliance course of is unlikely to end in probably the most disaffected individuals getting the licenses. What’s prone to occur, is that candidates who pays consultants and attorneys to draft these social fairness plans will get extra of the licenses. This component of the rule feels counterproductive to its mandate, to say nothing of its standards being extremely subjective and due to this fact troublesome to use equally to every utility.

License restrictions

The LCB will not be creating new licenses for the social fairness allowances. It’s taking licenses which have been cancelled or revoked and repurposing them to be used on this program. That is within the spirit of the LCB’s present moratorium on issuing new hashish licenses. Unsurprisingly, there can be extra restrictions on social fairness licenses than on grownup use hashish licenses, which in WA is saying one thing certainly. Among the many restrictions are:

• No possession adjustments to the appliance are allowed after it has been reviewed;
• No change of location outdoors of the county wherein the license is initially issued;
• No license switch or assumption is allowed throughout the first 12 months of issuance and all social fairness licenses might solely be transferred or assumed by an individual or individuals who meet the definition of a social fairness program applicant for five years from the date the license is permitted.

The transferability restrictions specifically, like lots of Washington’s hashish legal guidelines, are prone to trigger heartburn down the highway. Preliminary, short-term restrictions and reservations might make some sense for functions of making certain the individuals supposed to learn from the rule do certainly profit from it. Nevertheless, limiting a social fairness licensee’s potential to promote their license sooner or later to anybody however an individual who additionally qualifies for the license is mindless.

If unchanged, social fairness license holders would be the ones who lose as a consequence of the transferability restrictions. The restrictions on license switch severely restrict licensees’ potential to promote their companies. Many licensees will construct their companies into affluent enterprises and this rule knee-caps their potential to promote them within the already extremely (and unnecessarily) restricted WA market. Licensees can be compelled to supply their companies on the market to candidates who by definition seemingly have low family revenue, and due to this fact might have problem with affording the sale value and securing or qualifying for financing. Social fairness licensees ought to be free to promote their enterprise to whomever they selected. Requiring them to do in any other case is counterproductive, serves no legit objective that I can see, and is prone to be challenged in a lawsuit.

There are nonetheless a couple of Board conferences with stakeholders that can happen earlier than the top of the month (the earliest the principles might turn into efficient). We’ll be monitoring developments and if one thing adjustments, we’ll be writing about it right here.