Washington Cannabis Producers & Processors Amend RCW 69.50.325 Sell Direct to the Public

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Issue Paper: Legislation for Marijuana Producers and Processors

Date: 12-21-2015 

Description of Issue:

The purpose of this paper is to recommend the Washington State Liquor and Marijuana Control Board co-sponsor the legislative amendment of RCW 69.50.325 (1) and (2) to allow:

Any domestic marijuana producer [and or processor] licensed under this section may act as a retailer for its own products at its licensed location so long as the location meets all of the requirements of a licensed retailer.

Why is this Necessary?

The current market is largely skewed in favor of the marijuana retailers. Some have described the market as an “oligopsony” (from Ancient Greek ὀλίγοι (oligoi) "few" + ὀψωνία (opsōnia) "purchase") which is a market form in which the number of buyers is small while the number of sellers is large by comparison.  The passage of Initiative 502 by the people of the State of Washington anticipated a regulated but balanced market where the retail price of marijuana could compete with the Black Market.  After 17 months of legalization the data shows that one average licensed retailers are making an average of 66 times the profit of licensed producers, as one would expect in a classic oligopsony.  The retail prices are largely still not competitive with the Black Market.

Allowing licensed producers and processors to sell “its own products at its licensed location so long as the location meets all of the requirements of a licensed retailer” will create additional outlets and create more competition and alleviate the oligopsony market conditions.  Additional price competition will help to restore balance to the regulated system and lower prices to help compete with the Black Market.

Background:

The same or similar language was passed in 2006 for craft distilleries.  Before that time craft distilleries where similarly situated to today’s marijuana producers and processors.  The similar craft distillery legal revision has been well received and has helped the Washington State Distillery business and tourism of the same.  Copies of those legislative bills are attached as Appendix B.

What changes are proposed?

Amend RCW 69.50.325 (1) and (2) to add the following language:

(1) Any domestic marijuana producer licensed under this section may act as a retailer for its own products at its licensed location so long as the location meets all of the requirements of a licensed retailer.

(2) Any domestic marijuana processor licensed under this section may act as a retailer for its own products at its licensed location so long as the location meets all of the requirements of a licensed retailer.

A redlined version of RCW 69.50.325 is attached as Appendix A

Appendix A

(Redlined Version of Proposed Changes)

RCW 69.50.325

Marijuana producer's license.

(1) There shall be a marijuana producer's license to produce marijuana for sale at wholesale to marijuana processors and other marijuana producers, regulated by the state liquor and cannabis board and subject to annual renewal. The production, possession, delivery, distribution, and sale of marijuana in accordance with the provisions of this chapter and the rules adopted to implement and enforce it, by a validly licensed marijuana producer, shall not be a criminal or civil offense under Washington state law. Every marijuana producer's license shall be issued in the name of the applicant, shall specify the location at which the marijuana producer intends to operate, which must be within the state of Washington, and the holder thereof shall not allow any other person to use the license. The application fee for a marijuana producer's license shall be two hundred fifty dollars. The annual fee for issuance and renewal of a marijuana producer's license shall be one thousand dollars. A separate license shall be required for each location at which a marijuana producer intends to produce marijuana. Any domestic marijuana producer licensed under this section may act as a retailer for its own products at its licensed location so long as the location meets all of the requirements of a licensed retailer.

(2) There shall be a marijuana processor's license to process, package, and label marijuana concentrates, useable marijuana, and marijuana-infused products for sale at wholesale to marijuana processors and marijuana retailers, regulated by the state liquor and cannabis board and subject to annual renewal. The processing, packaging, possession, delivery, distribution, and sale of marijuana, useable marijuana, marijuana-infused products, and marijuana concentrates in accordance with the provisions of this chapter and chapter 69.51A RCW and the rules adopted to implement and enforce these chapters, by a validly licensed marijuana processor, shall not be a criminal or civil offense under Washington state law. Every marijuana processor's license shall be issued in the name of the applicant, shall specify the location at which the licensee intends to operate, which must be within the state of Washington, and the holder thereof shall not allow any other person to use the license. The application fee for a marijuana processor's license shall be two hundred fifty dollars. The annual fee for issuance and renewal of a marijuana processor's license shall be one thousand dollars. A separate license shall be required for each location at which a marijuana processor intends to process marijuana. Any domestic marijuana processor licensed under this section may act as a retailer for its own products at its licensed location so long as the location meets all of the requirements of a licensed retailer.

(3) There shall be a marijuana retailer's license to sell marijuana concentrates, useable marijuana, and marijuana-infused products at retail in retail outlets, regulated by the state liquor and cannabis board and subject to annual renewal. The possession, delivery, distribution, and sale of marijuana concentrates, useable marijuana, and marijuana-infused products in accordance with the provisions of this chapter and the rules adopted to implement and enforce it, by a validly licensed marijuana retailer, shall not be a criminal or civil offense under Washington state law. Every marijuana retailer's license shall be issued in the name of the applicant, shall specify the location of the retail outlet the licensee intends to operate, which must be within the state of Washington, and the holder thereof shall not allow any other person to use the license. The application fee for a marijuana retailer's license shall be two hundred fifty dollars. The annual fee for issuance and renewal of a marijuana retailer's license shall be one thousand dollars. A separate license shall be required for each location at which a marijuana retailer intends to sell marijuana concentrates, useable marijuana, and marijuana-infused products.



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