Washington Social Equity Cannabis License Application

Soon a Washington Social Equity Cannabis License Application will be released to the public. The Washington State Legislature passed E2SHB 2870, which established a cannabis social equity program. The Social Equity in Cannabis Task Force will develop policies and recommendations to improve social equity in the cannabis industry licensing process as part of the program. This bill creates a new status of “social equity applicant” for marijuana retailer licenses. The Liquor and Cannabis Board (LCB) gives priority to social equity applicants who have “social equity plans” for available marijuana retailer licenses, including up to 34 licenses that are subject to forfeiture, revocation, or cancellation or were available but not previously issued by the LCB. The Marijuana Social Equity Technical Assistance Competitive Grant Program has also been established and funded.

The proposed social equity rule would provide retail cannabis licensing opportunities in Seattle and beyond to people who have been disproportionately impacted by the War on Drugs. 

Although the Washington State Liquor and Cannabis Board (“LCB”) is not currently accepting applications for the social equity program, there are a number of things you can do and ways to learn more about the program in order to prepare to apply.

The rule includes eligibility criteria as well as application scoring criteria, with the purpose of determining those who are disproportionately affected and guaranteeing they have the better chance of being approved.

QUALIFICATIONS FOR SOCIAL EQUITY ELIGIBILITY

To qualify, a WA resident must hold at least 51% of each social equity retail license applicant and the person or persons making up the applicant must meet at least two of the following qualifications:

  • the applicant has lived in a Disproportionately Impact Area (“DIA”) in WA for a minimum of 5 years between 1980 and 2010;
  • the applicant or a family member of the applicant has been arrested or convicted of a cannabis offense; or
  • the applicant’s household income in the year prior to submitting the application was less than the median household income within the state of Washington.

Disproportionately Impact Area (“DIA”) is defined as “areas of high unemployment, low income, and demographic indicators consistent with populations most impacted by the war on drugs, including areas with higher rates of arrest for drug charges.”

WA SOCIAL EQUITY RETAIL LICENSE

To be considered for a retail license, an applicant must be a social equity applicant and submit a social equity plan to the board, in addition to other marijuana retailer license application requirements. Technical assistance grants, priority licensing, regulatory compliance training, financial management training, and assistance in obtaining financing are among the social equity provisions in Washington State. Assistance with the marijuana retailer licensing process, marijuana business education and business plan development, regulatory compliance training, and connecting the social equity applicant with established industry members are all activities eligible for funding under the program.

SCORING SYSTEM 

Section 570 creates a scoring system to rank Social Equity Applicants (“SEA’s”) based on 12 factors and, where applicable, give an applicant a certain number of points.

Social Equity Application Scoring Rubric

Eligibility requirements Point Scale
1. Lived in a disproportionately impacted area (DIA) 40
1a. How long have you lived in a DIA?

5y-10y = 10 points

10+ years = 20 points

40
2. Convicted of a drug offense? (Self) 10
2a. Convicted of a cannabis offense? (Self) 40
3. Convicted of a drug offense? (Family) 5
3a. Convicted of a cannabis offense? (Family) 5
4. If you were convicted of a cannabis offense, what type of sentence did you receive:

Fine = 10 points

Served probation = 20 points

Confined to home = 40 points

Served time in jail or prison = 80 points

80
5. Did you or your family member’s incarceration keep you from getting employment? 5
6. Did you lose your home or ability to purchase a home or rent a home as a result of your convictions or arrests? 5
7. Is your household income less than the median household income within the state of Washington as calculated by the United States Census Bureau? 40
8. Did you own or operate a medical cannabis dispensary or collective garden, licensed as a business, prior to July 1, 2016 (10 points)?

or

Did you own and operate a medical cannabis dispensary or collective garden licensed as a business in a DIA (30 points)?

10

30 in DIA

9. Have you held or do you currently hold 51 percent majority/controlling interest of a state cannabis (marijuana) retailer license?

No = 10 points

Yes = 0 points

10
Total Points

WA SOCIAL EQUITY PLAN

The application process will be open for 30 calendar days initially, but the LCB may reopen the application window if licenses become available. The application must be submitted electronically and all required information must be submitted within the 30-day window specified in the proposed rules. Applicants may only apply once per window.

Applicants must also submit a social equity plan outlining how the licensee intends to meet social equity goals, as well as a business plan involving partnerships or assistance to organizations or residents with connections or contributions to populations with a history of high rates of cannabis prohibition enforcement.

RESTRICTION ON LICENSE

The LCB does not issue new licenses for social equity allowances. It is repurposing licenses that have been cancelled or revoked for use in this program. This is consistent with the LCB’s current moratorium on new Washington cannabis licenses. Unsurprisingly, social equity licenses will have more restrictions than adult use cannabis licenses, which is significant in WA. 

Among the limitations are:

  1. After the application has been reviewed, no changes to its ownership are permitted.
  2. No change of address outside of the county in which the license was issued;
  3. Within the first year of issuance, no license transfer or assumption is permitted, and all social equity licenses may only be transferred or assumed by a person or persons who meet the definition of a social equity program applicant for a period of five years from the date the license is approved.

Social equity licensees will benefit from some advantages, giving them a better chance of success in a difficult and competitive environment. Licensees, for example, would have an unlimited amount of time to select and secure a location. Other licensees must keep a licensed premise in order to receive a license. Furthermore, social equity licenses can transfer licenses from one city to another within the same county. Other licensees are unable to transfer from one city to another in the county.

There are also restrictions that are unique to social license equity licenses. These licensees are unable to change ownership once the application has been reviewed, scored, and prioritized. Within the first year of licensure, social equity licenses cannot be transferred or assumed. A social equity licensee cannot transfer a license for five years unless the recipient (whether a company or a person) qualifies as a social equity applicant. These transfer restrictions are included to help ensure that the benefits of the social equity designation stay within the communities and families most affected by the War on Drugs.

This program should improve equity and inclusion in the cannabis industry. 

NEED ASSISTANCE WITH WASHINGTON CANNABIS LICENSE APPLICATIONS?

Contact us at tom@collateralbase.com / 309-306-1095.

tom

tom

Licensed to practice since 2008, Thomas Howard has represented numerous financial institutions in litigation to enforce their security interests.
Homegrown Cannabis Co's Cannabis Seeds
tom

tom

Licensed to practice since 2008, Thomas Howard has represented numerous financial institutions in litigation to enforce their security interests.

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