By Becky Olson
The Washington State Liquor and Cannabis Board (LCB) engaged in over 4,500 enforcement actions involving licensed recreational marijuana producers, processors and retailers from September 2014 to early July 2015, according to reports from the agency.
The most common types of enforcement efforts were phone calls and premises checks, which together accounted for 65% of all actions during that time period. An additional 13% were for final license inspections, while 12% were related to investigations involving complaints against a business.
All other types of actions each represented 3% or less of the total number of actions.
An enforcement action isn’t necessarily tied to concerns that a company might have violated rules. In some cases it’s simply part of regular businesses outreach conducted by the LCB, such as when the agency conducts a licensing-related inspection.
In other cases, however, an action can stem from a complaint, involve regulatory violations and/or result in penalties.
Based on its enforcement actions, the LCB levied 274 penalties on 143 licensed recreational cannabis businesses in the 10-month period. The most common type of violation – by a wide margin – was a failure to establish and/or maintain traceability of inventory, which accounted for 27% of all violations.
The LCB levied fines in 57% of all cases involving penalties, with dollar amounts ranging anywhere from $500 to $5,000. It issued written warnings in 40% of such cases.
More severe measures such as cancellation/suspension of licenses and destruction of plants were only assessed for 3% of all violations.
“The vast majority of these [cases] are not willful disobedience; people are just trying to figure things out,” said Ryan Agnew, a Seattle-based cannabis attorney. He mentioned that the inventory-tracking software in particular is not exactly intuitive or user-friendly.
In other cases, businesses unknowingly found themselves in violation of laws or rules only after a visit from the LCB. For example, producers and processors discovered they were not only required to test the product once it had been extracted, but again upon infusion into edibles/topicals or conversion to pre-packaged cartridges, Agnew said.
“That particular requirement wasn’t discovered [or understood] until businesses started receiving violations for not testing twice”, he said.
Certainly in some cases, businesses knowingly circumvented the law.
Regardless, the takeaway for law-abiding businesses in Washington State should be that the LCB is taking a very active role in the industry, and while businesses are experiencing challenges with new regulations, the volume of violations caused by confusion or misunderstanding of them will start to decrease.
Additionally, the nature of these violations show it’s also important for businesses to fully understand applicable regulations prior to commencing operations.
“Figuring [things] out as you go in this industry isn’t really healthy to do”, says Jon Hofer, principal at RMMC Consulting, which works with cannabis companies.
He noted that cannabis businesses will not only save themselves headaches down the road by fully complying with regulations from the get-go, but they will also help ongoing efforts to build marijuana up as a professional industry.
Becky Olson can be reached at [email protected]