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Washington State Rolls Out New Marijuana Social Equity Program

by Sarah Cawthon March 19, 2020

Washington lawmakers have successfully passed a bill to bring a social equity program to the state’s cannabis industry. This comes nearly eight years after residents voted to legalize recreational cannabis in the state in 2012.

The bill cleared the Washington House of Representatives on February 16, 2020, with a vote of 57 to 40, and then passed the state Senate on March 9 by a vote of 28 to 20. The House voted to approve the Senate amendments the following day, on March 10.  House Bill 2870 has now been sent to Gov. Jay Inslee to be signed into law.

The creation of this social equity program is an unprecedented move in the cannabis industry. According to the bill, the social equity program should offer, among other things, financial and technical assistance and license application benefits to individuals most directly and adversely impacted by the enforcement of cannabis-related laws who are interested in starting cannabis business enterprises.

If Gov. Inslee signs HB 2870 into law, the bill would require the creation of a task force to form the state’s Marijuana Social Equity Program. The program would allow regulators from the Liquor and Cannabis Board, or LCB, to award canceled, revoked and forfeited licenses for cannabis businesses to social equity applicants.

The first meeting of the proposed task force will be held on July 1, 2020. A report on how to develop the state’s social equity program is expected to be placed on Inslee’s desk by December 2020.

Rick Garza, director of the LCB, has stated that HB 2870 is meant to establish social goals that were not addressed in Initiative 502, the 2012 bill that legalized recreational marijuana in Washington, such as addressing the residual effects of the war on drugs that are seen in the cannabis industry.

“Initiative 502 missed an opportunity to incorporate a focus on social equity,” said Garza. “The history of cannabis prohibition shows abundant evidence there was disproportionate harm in communities of color, and that those harmful effects remain with us today.”

Despite Washington’s status as a legalization pioneer, the state’s industry has long been behind when it comes to diversity. According to the Washington State Commission on African American Affairs, fewer than 1% of the state’s 556 recreational cannabis licenses in existence were issued to businesses owned by African Americans.

The bill states that the total number of licenses issued will be determined based on the total number of licenses that have been forfeited, revoked, or canceled as of the effective date of this bill. The licenses will be available from December 1, 2020, until July 1, 2028. 

In issuing licenses, the board would consider factors including the applicant’s race and gender, history of marijuana convictions during prohibition, plans to employ people of color and the impact the war on drugs had on their neighborhood.

Applicants will pay a $250 application fee for all processor, producer and retailer licenses, with the issuance and annual renewal fee set at $1,381. A separate license will be required for each location at which a marijuana business intends to operate.  

Additionally, the legislation would also create a grant program to assist new licensees with navigating the licensing process, developing business plans, networking and other skills. Currently, there is $1.1 million set aside annually to help with such issues as the application process, business plan development and assistance for micro loans. The original amount was set at $100,000.

“We will now have the most progressive social equity program in the country,” said Paula Sardinas, a commissioner and lobbyist for the state’s Commission on African American Affairs. “In order for that work to be successful, we must address the lack of trust that exists between the community and the LCB.”

Prepare for Washington Marijuana Business OpportunitiesDT Dispensary Application Guide & Checklist-1

If you’re interested in preparing for the future marijuana business opportunities in Washington, order a Custom Application Guide & Checklist to learn all you'll need to have ready to establish your marijuana business.

The guide will include information specific to the social equity program's application process and a step-by-step checklist of all action items you'll need to complete.