Cannabis Business in Washington

Washington State has seen substantial growth in its cannabis market since legalizing adult-use marijuana through Initiative 502 (I-502) in 2012. The initiative paved the way for the regulation, manufacture, distribution, and possession of cannabis for recreational use. In 2023, Washington generated $1.2 billion in cannabis sales, that led to $464.5 million in tax revenue, making the industry a significant contributor to the state’s economy. The Washington State Liquor and Cannabis Board (WSLCB) is responsible for licensing and regulating cannabis activities in the state, ensuring compliance across the supply chain.

Medical Cannabis Program in Washington

The introduction of medical marijuana in Washington began earlier than its recreational counterpart, with the passage of Initiative 692 (I-692) in 1998, which allowed the use of marijuana for medicinal purposes. The Department of Health oversees this program, setting guidelines for product standards, certification, and patient access. The passage of SB 5052 further established regulations for cannabis producers, processors, and retailers catering to patients. The Department of Health is also responsible for maintaining a Medical Cannabis Authorization Database and implementing compliance standards that benefit medical users.

Regulations and Compliance

Washington has strict regulations in place for both recreational and medical cannabis, ensuring safety and quality. SB 5052 mandates product compliance standards for items beneficial to medical patients, the administration of a medical cannabis database, and the training and certification of medical cannabis consultants. These measures aim to balance access to cannabis with public health considerations.

The Role of the WSLCB

The Washington State Liquor and Cannabis Board plays a crucial role in the state's cannabis landscape, not only regulating recreational activities but also managing licensing for medical marijuana businesses. Its authority ensures that all cannabis products sold in Washington meet strict safety and quality standards, making the state a leader in regulated cannabis.

Plant-Touching Businesses and Licensing in Washington

Washington State's cannabis industry encompasses various plant-touching businesses involved in cultivation, processing, retail, and research. The WSLCB oversees these operations, issuing specific licenses to ensure compliance with state regulations. As of October 2024, new applications for certain licenses are not being accepted. Below are the main license types currently in use:

Cannabis Producer License

The cannabis producer license authorizes the licensee to produce, harvest, trim, dry, cure, and package cannabis into lots for wholesale sale to cannabis processors and other cannabis producers. However, the WSLCB is not accepting new applications for this license as of October 2024.

Cannabis Processor License

This license permits the processing, drying, curing, packaging, and labeling of usable cannabis, cannabis concentrates, and cannabis-infused products. Processors can sell their products at wholesale to other cannabis processors and retail establishments. Similar to the producer license, new applications are not being accepted as of October 2024.

Cannabis Retailer License

Cannabis retailer licenses allow for the sale of usable cannabis, cannabis concentrates, cannabis-infused products, paraphernalia, and lockable storage boxes to individuals aged 21 and older in cannabis dispensaries in Washington. The sale to persons under 21 is restricted, following specific regulations outlined in RCW 69.50.357 and WAC 314-55-080. New retailer license applications are also closed as of October 2024.

Cannabis Retailer with Medical Endorsement

Retailers with a medical endorsement can sell cannabis for medical use to qualifying patients and designated providers. These licensees may also provide cannabis at no charge to patients and providers at their discretion, ensuring access to medical cannabis within the state.

Cannabis Transportation License

The transportation license allows businesses to transport or deliver cannabis, cannabis concentrates, and cannabis-infused products between licensed cannabis businesses throughout Washington State, facilitating distribution across the supply chain.

Cannabis Research License

Research licenses permit the production, processing, and possession of cannabis for research purposes, focusing on studies defined under RCW 69.50.372. These licenses support the advancement of cannabis-related knowledge and product development.

Cannabis Cooperative Registration

The cooperative registration allows qualifying patients and designated providers to form a cooperative for the purpose of growing and processing cannabis solely for the medical use of cooperative members. There is no fee for registering a cannabis cooperative in Washington.

CBD in Washington

The legality of CBD in Washington is multifaceted and influenced by federal and state regulations.

Legal Status of CBD Products

• CBD oil is legal in Washington, regardless of whether it is derived from marijuana or hemp.
• Marijuana-derived CBD oil requires a medical marijuana card.
• Hemp-derived CBD oil is available for purchase and use without restrictions.
• The sale and consumption of CBD-infused edibles are prohibited until the Food and Drug Administration deems CBD a safe food ingredient.
• CBD products, excluding edibles, can be sold by licensed marijuana retailers if they meet the criteria for Cannabis Health and Beauty Aid products.
• Hemp-derived CBD can be added to marijuana products by licensed processors, making it accessible to consumers over 21 at marijuana retailers.

Age Restrictions and Possession Limits

• The minimum age to purchase CBD in Washington is 18 years old, except in dispensaries where the age requirement is 21 years old.
• Individuals over 21 can possess up to 72 ounces of marijuana-derived CBD liquids and 16 ounces of marijuana-infused CBD edibles.
• There are no possession limits for hemp-derived CBD in Washington.

Hemp in Washington

Hemp cultivation and processing in Washington are governed by the Washington State Department of Agriculture (WSDA).

Hemp Cultivation

• Hemp cultivation is legal in Washington for individuals and businesses who obtain a hemp producer license from the WSDA.
• Licensed producers can grow hemp indoors or outdoors in registered areas approved by the WSDA.
• The WSDA does not impose specific security requirements for hemp cultivation.
• Interstate commerce of hemp is allowed for licensed producers who have obtained THC certification from the WSDA.
• Municipalities in Washington cannot prohibit hemp cultivation or processing, but they may have specific regulations regarding the location of such activities.

Hemp Processing

• While the WSDA does not license hemp processors, they can register with the department.
• Registration allows processors to be listed on the WSDA's list of registrants and may be required by some states for interstate commerce.
• Food processors who want to use hemp products in their products must obtain a license from the WSDA Food Safety Division.
• The Commission Merchants Act Licensing Program regulates individuals and businesses that handle unprocessed agricultural products, including hemp.

Hemp Business Opportunities

• The hemp industry presents various cannabis business opportunities in Washington, including cultivation, processing, and retail.
• Entrepreneurs interested in entering the hemp market can explore options to purchase a cannabis business for sale from existing operators.