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Marijuana Retail License Rules Clarified, Confirms LLC’s Owner’s Spouse’s Homicide Conviction Precludes Marijuana License

Posted Wednesday, December 27, 2017 by McKean J. Evans

The Washington Supreme Court recently clarified the rules governing who may obtain a marijuana retail license. In Libby Haines-Marchel, et al. v. Washington State Liquor & Cannabis Board, the Supreme Court ruled that the Washington State Liquor and Cannabis Board (“WSLCB”) correctly denied a marijuana retail license requested by an LLC because one member’s spouse had prior criminal history. This case underscores the importance of careful compliance with the detailed WSLCB rules for marijuana retailers.

The WSLCB has discretion to grant or deny applications for marijuana licenses. When an entity applies for a marijuana license, all members of the entity must be qualified to obtain a license. The WSLCB may consider an applicant’s criminal history in deciding whether to grant the license. An applicant’s criminal convictions contribute “points,” and eight or more points disqualify an applicant from obtaining a marijuana license. Among other things, a felony conviction is 12 points.
In 2013, Rock Island Chronics LLC (“Rock Island”) applied with the WSLCB for a retail marijuana license. Rock Island’s application identified Libby Haines-Marchel as the sole owner of the company. The application also identified Haines-Marchel’s spouse as Brock Marchel.

Months after Rock Island submitted its application, Rock Island disclosed to the WSLCB that Brock Marchel was currently incarcerated on a 44 ½ year sentence for homicide. Libby Haines-Marchel provided WSLCB with Brock Marchel’s affidavit in which he gave up his ownership rights in Rock Island.

WSLCB denied Rock Island’s license, and Rock Island appealed. In court, Rock Island argued WSLCB’s denial of the license based on Rock Island’s owner’s spouse’s homicide conviction violated Libby Haines-Marchel’s fundamental right to marry and unconstitutionally deprived her of property.

After thoroughly reviewing Washington’s marijuana laws and retail license requirements, the Supreme Court sided with WSLCB and upheld the denial of Rock Island’s license. The court noted that not every state regulation incidentally relating to marriage impacts the fundamental right to marry, and found that denial of Rock Island’s license did not infringe on Libby Haines-Marchel’s right to marry because Washington has a legitimate interest in making sure that owners of marijuana retail companies are not disqualified by criminal history. The Court also found that Brock Marchel’s affidavit purportedly giving up his interest in Rock Island was legally ineffective because it was not a binding contract. Finally, the court ruled the denial of the license did not unconstitutionally deprive Libby Haines-Marchel of property because she had no property interest in the license – WSLCB had discretion whether to grant the license or not.

If you have questions regarding compliance with Washington’s marijuana retail laws, contact Pivotal Law Group attorney McKean J. Evans for a free consultation.

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