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Marijuana Producers, Processors, and Retailers - Where Will They Be Setting Up Shop?

March 5, 2013  by  Jim Doherty
Category:  Marijuana

Marijuana Producers, Processors, and Retailers - Where Will They Be Setting Up Shop?

It’s been almost four months since Washington voters passed Initiative 502 and directed our state to take a “new approach” to adult marijuana use: regulate and tax instead of prohibit. Are you, and your community, still in shock? Have some residents been telling you that they “certainly don’t want any such businesses locating anywhere in _____!!” – while at the same time potential marijuana entrepreneurs are contacting the planning department and searching for prospective locations?

The state Liquor Control Board is working hard at coming up with the basic regulations, but nothing has been issued for public comment yet. We encourage you to visit its I-502 Implementation page to stay current on the rule development process. But do not expect the board to issue regulations that will resolve many of the city and county planning issues presented by I-502.

Have you thought about the distinctions between marijuana producers, processors, and retailers? Initiative 502 delineates three levels for this regulated business. The growers are restricted to growing the plant; the processors are the ones who incorporate the plant product into edibles, liquids, or packaged bud ready for retail; and the retailers are, as expected, the people who run the shops where marijuana products and related paraphernalia are sold.

There is, fortunately, one clear land use provision in initiative 502, found in subsection 8 of section 6:

The state liquor control board shall not issue a license for any premises within one thousand feet of the perimeter of the grounds of any elementary or secondary school, playground, recreation center or facility, child care center, public park, public transit center, or library, or any game arcade admission to which is not restricted to persons aged twenty-one years or older.

That provision applies to marijuana producers, processors, and retailers. So we suggest that each jurisdiction start by having its planning department do a careful job mapping out areas that are specifically excluded from having any marijuana-related businesses. You might be surprised. We talked to one smaller town in eastern Washington that concluded there is no place in town where any marijuana business can legally locate. We suspect that in many jurisdictions there will be limited or even no locations where such businesses can locate.

You really cannot assess your situation until you know, after consideration of the locational restrictions imposed by the initiative, the potential locations for these marijuana-related businesses. Once your city or county has done that mapping and determined where these businesses could potentially locate, there are some obvious questions that need to be addressed, such as: what is the applicable zoning for these areas; in which of these areas might you want to allow these marijuana-related businesses to locate; and will they be allowed as a permitted or as a conditional use? 

Marijuana growers. Here’s a thorny question: if someone is growing marijuana in an enclosed building (not a greenhouse), is that an agricultural use? At this point we don’t know whether the Liquor Control Board will be issuing licenses to many small growers, or to just a few larger growers, or to a mix of both. A state-licensed grower may want to locate in small warehouse in your jurisdiction’s commercial or industrially zoned areas – is that agricultural type use currently allowed? To take the lingering “moral” issue out of the question, consider where your jurisdiction would allow someone to construct greenhouses for flower cultivation. Should outdoor growing or greenhouse cultivation be allowed in all agriculturally zoned areas?

Marijuana processors. What zones in your jurisdiction might be appropriate for marijuana processors? Remember that marijuana will be sold for consumption not only in the raw, smokeable form but also through "marijuana-infused" products, such as baked goods and liquids. For an equivalent business, consider someone who has a business making baked goods or a small chocolates factory. Where in your jurisdiction would you normally allow such a business to locate? People in the food processing business need to meet various state and county health and safety codes. Is there any basis for treating marijuana processing differently than food processing businesses?

Marijuana retailers. (Note that retailers may sell only marijuana, marijuana-infused products, and paraphernalia, and that they may display only a single sign no larger than 1600 square inches, displaying the business name.) Should a jurisdiction allow marijuana retailers to set up shop in any area zoned for retail use (so long as it meets the 1,000-foot exclusion zone requirement)? Might there be different safety concerns for marijuana retailers than for other types of retail businesses? Will the likely clientele be different? How will your community feel about such businesses? These are but a few of the questions you will end up asking.

The Liquor Control Board now estimates that it will have draft regulations for the marijuana producer licenses released for public comment around mid-April. The draft regulations for processors and retailers will come later. It will be a few months between the issuance of draft regulations and when the final regulations will go into effect. This is going to take a while. In the meantime, we suggest that you spend some time thinking about the many zoning issues raised by this new class of business. Will your jurisdiction have sufficient time to adopt local land use regulations? Should your jurisdiction consider interim regulations or a moratorium on accepting applications for such uses?

Before the Liquor Control Board issues a license for a marijuana business, the local jurisdiction - city or county - has an opportunity to file written objections against the applicant or against the proposed location, and the local jurisdiction can request that a hearing be held by the board. See subsection 7 of section 6 of Initiative 502 for details regarding this process.

Local licensing. When a marijuana entrepreneur shows up with a state-issued license for growing, processing, or retailing marijuana, is the city or county required to issue a local business license (assuming that zoning requirements are met)? We think so (though see below). To forestall people applying for business licenses before they obtain a state license, you may want to consider expressly requiring a state license as a condition of issuing a business license.

If marijuana businesses are not prohibited based on the initiative's locational restrictions, can a jurisdiction prohibit in its zoning code all marijuana businesses, either because of local public sentiment or based on concerns involving the ongoing federal prohibition? This is an issue the initiative does not address and it remains an open question. Your legal counsel should be consulted should your jurisdiction be considering such a course of action.

Be patient with all the uncertainty regarding these issues. This topic will be studied diligently by county prosecutors and city/town attorneys over the coming months. We expect that there will be a wide range of approaches taken to these questions. Nobody has any clear answers – we aren’t in Kansas any more!

[MRSC recently posted a new webpage on “Recreational Marijuana - Initiative 502 Implementation.” Additional materials will be posted there as regulations are adopted by the Liquor Control Board, and as jurisdictions start to adopt local ordinances dealing with the above issues.]

MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.

About Jim Doherty

Jim had over 24 years of experience researching and responding to varied legal questions at MRSC. He had special expertise in transmission pipeline planning issues, as well as the issues surrounding medical and recreational marijuana. He is now retired.



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