The Green Economy: Shockingly White

The War on Drugs is far from over, and the racist ideologies that inspired it in the first place are alive and well in today's America. According to the Drug Policy Alliance, nearly 600 thousand people were arrested for marijuana possession last year. 46.9% of arrestees for drug violations were black or Latino Americans, a much higher percentage than their representation in the general population. The ACLU cites data that in some states, people of color are up to 8 times as likely to be arrested for marijuana possession than white people. Almost half a million Americans remain behind bars for drug-related charges. The racist nature of drug law enforcement has resounding impacts, even in states where cannabis is legal for adult consumption.

In Washington state, a felony conviction, or even two misdemeanors, immediately disqualifies anyone who would otherwise apply for a legal, marijuana retail license. Because people of color are given harsher criminal convictions than white people across the board, a greater percentage of people of color have no chance at all of entering the market. What’s more, people with real cannabis experience and expertise are denied access to the legal industry, because they fell victim to the war on drugs. Despite the fact that cannabis consumption is roughly equal across racial lines, white business owners in Washington are greatly over-represented. 80 percent of marijuana-related businesses are owned by white people, under 6 percent of owners are Hispanic, and under 5 percent of owners are black. Non-white communities end up severely underrepresented at the highest level of the marijuana industry.

The broken criminal justice system is just one obstacle potential businessmen and women face. Assuming a budding entrepreneur meets all of the LCB’s requirements, applied during the correct period of time, and were awarded a license, they now must face a severe financial challenge. Ever wonder why you can’t use your credit card at your favorite local dispensary? Federal prohibition of marijuana means that banks aren’t allowed to give loans or credit to marijuana businesses. Poorly designed laws that are supposed to prevent money-laundering, require multi-million dollar business to operate solely in cash.

What does this mean for the rapidly growing cannabis industry? That any potential business operator has to be able to independently fund their startup. Even our dear commander in chief received a small loan of a million dollars to begin his empire - no such handouts exist in the green economy. Because cannabis store owners have to be able to pay their own way, this creates a homogenous looking group at the executive level.

Given the obvious reality of racial inequality in the legal cannabis industry, what is being done to combat it? On the part of the state and federal government, basically nothing. Just this past June, the United States Senate panel on appropriations blocked an amendment that would allow cannabis businesses to function financially like any other business; access to loans and other vital services from banks. The WSLCB isn’t helping the matter either. Having reached its arbitrarily decided number of license allotments, it is extremely difficult for new players to enter the market.

Luckily, we are not totally powerless! Until legislative action can be taken, we can all make an effort to support those businesses near us that are managed by diverse communities. And as we arrive at election season - do your research. Support candidates that will allow the legal marijuana industry to be more representative of Washington’s diverse populations, and help business to grow to their fullest potential.


Retail Title Certificate – What is it?

If you are a cannabis retailer in Washington state you may have heard of, or even received a letter, referencing a retail title certificate. But what exactly is this new procedure?

The retail title certificate process is outlined in WAC 314-55-055, which states, “A marijuana retailer's license is subject to forfeiture if the retailer is not fully operational and open to the public after twelve months of issuance of the license or November 1, 2018, whichever is later.”

Fully operational, according to the rule, means the following criteria have been met “for at least twelve consecutive weeks within a twelve-month period after issuance of the license…”

  • Open to the public for a minimum of five hours a day between the hours of 8:00 a.m. and 12:00 midnight, three days a week;

  • Posts business hours outside of the premise in the public view; and

  • Reports monthly sales from the sale of marijuana products and pays applicable taxes.

But what if elements outside of your control prevent your business from meeting these criteria? Your business is only protected if:

  • There is a ban or moratorium prohibiting opening; or

  • “an ordinance or regulation related to zoning, business licensing, land use, or other regulatory measure that has the effect of preventing a licensee from receiving an occupancy permit from the jurisdiction or which otherwise prevents a licensed marijuana retailer from becoming operational.”

The WSLCB will soon be cracking down on licensee’s who do not fall under these protected categories.

While the rule offers some protection, ultimately it comes down to Agency discretion as to whether your business meets these protected classes. Here at C3, we will be watching this process closely to ensure that every licensee gets the fair and impartial treatment guaranteed by law.

If you or your business is struggling with the retail title certificate process, or any cannabis related matter, do not hesitate to reach out to our office today!

Is recently passed cannabis law unconstitutional? It’s possible.

SB 5131  was signed by the governor on May 16, 2017, and it officially went into effect yesterday (July 23). It contains a myriad of different regulations, but perhaps the one that will affect cannabis businesses the most are the heavy restrictions being placed on advertising, or what we lawyers sometimes call commercial speech (being speech made for the profit of a company, which is less protected than regular free speech by an individual).

The new law contains language prohibiting any advertising within 1000 feet of schools and other public property, and prevents advertising likely to be attractive to children through the use of toys, inflatables, cartoon characters, and other mechanisms. Fair enough. Cannabis should be kept away from kids (except when medically necessary) after all, and I doubt a court would elevate a company’s free speech rights over concern for children’s exposure to
cannabis. But the law goes much farther than that.

The law states, “All outdoor advertising signs, including billboards, are limited to text that identifies the retail outlet by the licensee’s business or trade name, states the location of the business, and identifies the type or nature of the business. Such signs may not contain any depictions of marijuana plants, marijuana products, or images that might be appealing to children.” Now that is language that is far more restrictive than merely keeping cannabis ads from kids. So all outdoor advertising is restricted solely to text identifying the retail outlet’s name, location, and “nature of the business,” and no depiction of marijuana plants or products are allowed. This leads to a number of issues:


-  Since the language here states “the retail outlet,” cannabis producers and processors are apparently exempt.  Why would lawmakers make that distinction, and isn’t the intent behind this law easily undercut if growers start throwing up ads of cannabis leaves and products?
- The language states “advertising signs.” Is that meant to distinguish from other kinds of signs? Say a retailer posted a sign entirely unrelated to cannabis that said “Reelect Inslee for Governor.” That’s not identifying the company, but it’s also not exactly advertising the company either. Allowable or not?


- And further on this, one retailer recently had a sign that said, “Smoking marijuana makes you
gay.” Is that an advertisement, a statement of scientific fact, or merely a joke? Would that retailer get a violation notice from the Washington State Liquor and Cannabis Board (LCB)?

- No depiction of marijuana plants or products are allowed, but some kinds of maple leaves look an awful lot like cannabis. Taking the law at its plain meaning, the LCB couldn’t ding a retailer for depicting a Japanese maple leaf, could it?

Those are just a few potential issues and vagaries left with this new law passed. A number of our clients are concerned about it, and for good reason. A first violation on advertising involves a $1000 fine or a 5-day suspension of their license. A third violation would be a 30-day suspension. That would cost Uncle Ike’s nearly $1 million, and a majority of retailers over $100,000. So this is no laughing matter.

Finally, retailers can also arguably further circumvent these laws through unlicensed related businesses, also known as “ancillary” businesses. Recall that Uncle Ike’s has a glassware shop right next to its cannabis shop, so it has a massive “Uncle Ike’s” sign, clearly against LCB rules, but for its glassware shop. That sign has been up for years now, so retailers can be expected to try to find workarounds such as this.

The question of whether these laws are unconstitutionally overbroad or vague requires a more detailed legal analysis, and rest assured many lawyers and businesses are doing just that. This may be just the beginning of this issue.

TO INSURE PROMPT SERVICE

 

Should we tip our budtenders? The Washington State Liquor and Cannabis Board answered the question for us with a resounding “no.” No justifiable policy reason exists, and even if it did, the WSLCB has not made that reason public. Instead, the LCB’s agents have gone into King County I502 stores and demanded that budtenders take down tip jars. If the WSLCB wants to eliminate tip jars for budtenders, there is no one to stop them. It’s up to us (and you) to fight it.

Why do we hate tipping so much? The short answer is that we don’t. While it’s true that more than a hundred years ago our legislators enacted the first anti-tipping law in the US (and five more states followed), it’s clear that the laws were not taken seriously by the people or by the government. Washington State’s 1909 anti-tipping law was so poorly regarded when it passed that Governor Hay himself caused a minor scandal when he broke the new law. “If a waiter gives good service I feel like rewarding him… I do not believe the law prohibiting tipping is being observed at all and I am not afraid of being arrested,” he told a reporter for the San Francisco Call in August of that year. Anti-tipping movements were clearly never taken seriously, but even in 1909 it was the legislators’ call to make, not a decision to be made by an administrative body with little oversight from elected officials.

It was a different time, and public sentiment was that tipping placed the tipper in a position of power. That power made the tippee socially inferior, a concept alien to the core American value of equality. It was considered un-American to tip back when servers were paid living wages. Largely through that logic, tipping had all but disappeared by the time of the Great Depression. By most accounts, everything changed when FDR was elected- somewhere between the New Deal and the end of WWII tipping came roaring back and it’s been a bedrock benefit of service industry jobs ever since.

It’s long been industry custom to tip bartenders, baristas, sommeliers, servers, hotel concierge and bellhops, elevator conductors and doormen, cab drivers, karaoke hosts, and even tattoo artists. What makes a budtender different? It’s easy. Budtenders AREN’T different. The WSLCB wants to argue that we don’t tip liquor store employees, but there are two glaring problems with their analogy. First, since when does the regulating body get to determine industry custom? A famous judge (Learned Hand on Negligence for any policy wonks out there) once said that to find the best way to regulate industry, the law should look to industry custom. We agree! The WSLCB’s approach is backward in policy and counterproductive to Seattle’s goal of raising minimum wages for all employees.

Second, and more important for this discussion, liquor stores have samples! A budtender is more like a sommelier than a clerk at a liquor store. Your budtender is a person steeped in cannabis knowledge, there to guide your personal journey to nirvana. Just like at an I502 shop, you don’t get to sample wine before you buy it at a restaurant. Once that bottle is opened, it’s yours unless it’s spoiled. That sip you get after the bottle is opened isn’t a sample- it’s to make sure your bottle isn’t corked!

Like that sommelier, your budtender plays a game of 20 Questions with each customer, finding just the right strain for his or her needs. Because customers don’t get to sample on premises, or even open jars to smell or touch the product, they’re forced to rely on the budtender’s expertise. Your budtender has to spend unpaid time away from the counter going through samples, making tasting notes, and generally keeping up with each new product that comes through the shop. Morally, we should pay them for that effort because all work deserves fair pay- not just the strictly on-the-clock work behind the counter. These men and women have spent long hours building their knowledge and experience just so they can help us, and to eliminate tip jars is to say that their time is only worth minimum wage. We know that’s not true!

What do you think? Hit us up on twitter @WACannattorney and use the #tipyourbudtender hashtag to comment!

For further reading:

San Francisco Call, Volume 106, Number 75, 14 August 1909

http://cdnc.ucr.edu/cgi-bin/cdnc?a=d&d=SFC19090814.2.5

Introducing The Team! Part 1: Boss, Man

C3's dynamic team has your back, whether you've been wronged by a business partner or by WSLCB. 

Sean Badgley hails from the mountains of Colorado, where he graduated from the University of Colorado with a degree in Business Economics and a minor in Film. Sean moved to Seattle in 2010 and plans to stay here with his partner Jazz and their black lab mix Leelah. Sean earned his Juris Doctor from Seattle University's School of Law. From day one of law school, Sean knew he wanted to work in cannabis. For an attorney, cannabis is an exciting new opportunity not just to practice law, but to make it. Sean's roles as a founding partner in C3 include advising clients in I-502 compliant cannabis businesses, civil and administrative legislation (we're looking at you, WSLCB), mentoring junior attorneys, and managing interns and cases. Sean is no stranger to hard work- prior to his career as a cannabis litigation attorney and managing partner, Sean worked as a banker, bartender, and even as an auto repair technician in his father's shop.

Like us on Facebook (using the button on the bottom of your screen) for updates!

Part 2 coming soon!