Based on preliminary results from Tuesday’s election, it appears that Washington State’s hotly debated Initiative 522 (I-522) concerning the labeling of genetically-engineered foods has gone the way of California’s Proposition 37. Washington officials reported on Wednesday, November 6, 2013 that voters had rejected the measure, 54% to 46%. California’s similar labeling measure, Proposition 37, was rejected by California voters in November 2012.
County by county results show that certain counties in Washington including, King, Whatcom, and Jefferson, were largely in favor of passing I-522. However, the measure lost heavily in the southwest, central and eastern regions of the state.
If it had passed, I-522 would have required that any food offered for retail sale in Washington that was or may have been entirely or partly produced with genetic engineering to be labeled as follows:
- In the case of a raw agricultural commodity, the package offered for retail sale must clearly and conspicuously display the words “genetically engineered” on the front of the package, or where such a commodity is not separately packaged or labeled, the label appearing on the retail store shelf or bin where such a commodity is displayed for sale must display the words “genetically engineered;”
- In the case of any processed food, the front of the package of such food must clearly and conspicuously bear the words “partially produced with genetic engineering” or “may be partially produced with genetic engineering;” and
- In the case of any seed or seed stock, the seed or seed stock container, sales receipt or any other reference to identification, ownership, or possession, must state clearly and conspicuously that the seed is “genetically engineered” or “produced with genetic engineering.”
Importantly, I-522 would have exempted certain foods from the genetically engineered labeling requirements. In particular, the measure carved out an exemption for alcoholic beverages as well as other food products such as certified organic products, medical foods, food sold for immediate consumption such as in a restaurant, products unintentionally produced with genetically engineered material, food made from animals fed or injected with genetically engineered material but not genetically engineered themselves, food processed with or containing only small amounts of genetically engineered ingredients, and any processed food that would be subject to the labeling requirement solely because one or more processing aids or enzymes were produced or derived with genetic engineering.
Several other states currently have pending GMO labeling legislation that will be addressed during the next legislative session for those respective states. Stoel Rives attorneys will continue to track these state GMO labeling measure as developments occur. Check back here for updates.
The Oregon Liquor Control Commission (“OLCC”) is initiating rulemaking that would amend licensing requirements for outdoor areas and distilled liquor tasting.
The OLCC has proposed two new rules to address the licensing qualifications and operating requirements for “exclusively outdoor areas,” or areas that do not abut a licensed building. The rule would apply to the areas around food carts, for example. The proposed measures, for the most part, implement best management practices the OLCC currently requires of food cart licensees. The rule would require an applicant to demonstrate that the outdoor area (1) allows the OLCC to legally access it, (2) qualifies for a Number III minor posting, (3) has defined physical boundaries, and (4) has a designated area for alcohol consumption. With respect to operations, the rule would prohibit a patron from having more than two containers at a time or bringing alcohol into, or removing alcohol from, the designated alcohol consumption area. Alcohol service and amplified entertainment would also not be allowed after 10 pm.
Food cart licensees (and prospective licensees) most likely will want to ensure that the hours of service meet business needs and, notwithstanding the prohibition of removing alcohol from designated consumption areas, that a patron can remove beer or wine from the premises if it is in a packaged container or growler. The OLCC advisory committee meeting is scheduled for December 10, 2013 and a rulemaking hearing likely will be scheduled in February 2014. More information to follow.
Distilled Liquor Tastings
Effective January 1, 2014, Oregon House Bill 3435 amends ORS 471.230 to allow a distillery licensee to conduct tastings at its annually licensed premises as well as up to five other premises it owns or leases. The OLCC is in the process of amending OAR 845-005-0431 to reflect this new privilege. A licensee will need to provide the OLCC with written proof of its “exclusive use and possession” of the other locations.
UPDATE: Although the RPC proposal mentioned below is still under consideration by the Washington State Supreme Court, the KCBA Board of Trustees has adopted an ethics advisory opinion to assist the bar in the interim as attorneys consider practice issues under the existing RPCs. The full text of the KCBA Ethics Advisory Opinion on I-502 & Rules of Professional Conduct can be found here.
An interesting question that has arisen in the wake of the passage of Initiative 502 (I-502) — Washington’s marijuana legalization measure — is whether attorneys run the risk of disciplinary action under the state’s Rules of Professional Conduct (RPCs) for advising clients on their marijuana business or for personally participating in the recreational use of marijuana.
Under Initiative 502, both activities are technically legal under state law, however, they remain illegal under federal law, creating a catch-22 situation. When trying to solve this dilemma, the RPCs unfortunately offer no guidance, and there are no ethics advisory opinions that address the issue.
Due to this lack of guidance, Washington lawyers have been left to wonder what the potential consequences might be. Indeed, earlier this month, King County Bar Association (KCBA) President Anne Daly asked in an article on the subject, “where does this leave…the more than 14,000 lawyers in King County who could easily find themselves in [this] predicament?”Continue Reading...
Over the next few weeks, the Washington State Liquor Control Board (WSLCB) Marijuana Licensing staff will be conducting a series of educational seminars across Washington State. During the seminars, WSLCB staff will be advising potential licensees of the license application process under Initiative 502 and will be available to answer any additional questions.
Those interested in attending can register online. The following is a list of all upcoming licensing seminars:Continue Reading...
With several states now moving forward with legalized medical or recreational marijuana regulatory schemes, how to obtain business financing remains a hurdle legal marijuana growers and distributers have yet to solve. As noted in a recent New York Times article, “financial institutions, security providers and landlords that serve marijuana businesses can be prosecuted for racketeering, money laundering and trafficking” under federal law. Marijuana continues to be a prohibited substance under federal drug laws, and as a result, federally insured financial institutions are highly unlikely to lend to marijuana businesses, even if those businesses are legitimate.
To determine how differences between state and federal marijuana laws can be resolved, the U.S. Senate Judiciary Committee held an unprecedented hearing this past Tuesday in Washington, D.C. The hearing came hot on the heels of the release of a DOJ memo that announced that federal authorities will not challenge state laws legalizing medicinal or recreational marijuana use, and set out the agency’s anticipated enforcement strategy.
At the Senate hearing, King County Sheriff John Urquhart urged that a solution be found for banks and other financial institutions that wish to do business with a state-sanctioned marijuana industry. He stated, “I am simply asking the federal government to allow banks to work with legitimate marijuana businesses that are licensed under state law.”
It is hard to say how this conflict will be resolved. Should marijuana businesses be shut out of commercial finance options, they will be forced to operate on a cash basis. Such business operations have historically been associated with tax evasion and other criminal activity. As Deputy Attorney General James Cole pointed out in the hearing, “there are no perfect solutions here. We’re at the point where we’re trying to find the best of the imperfect solutions before us.”
The DABC unexpectedly decided to forgo adopting an administrative rule interpreting Utah’s “intent to dine” law. As we discussed previously, the Commission was considering three draft rules that were intended to clarify the steps a restaurant licensee must take to confirm a patron’s intent to order food before a server can furnish an alcoholic drink. The Commission decided, however, that each of the proposed rules may result in more confusion for restaurant licensees and patrons alike. Instead, the Commission will leave compliance to the discretion of each licensee. Although no new rule was adopted, a recent article noted that the DABC may issue informal guidelines on how to comply with the “intent to dine” requirement.
On Thursday, the U.S. Department of Justice finally addressed its enforcement strategy as it relates to the recent Washington and Colorado initiatives legalizing marijuana in those jurisdictions. In a memo issued to U.S. Attorneys (PDF), Deputy Attorney General James M. Cole announced that the United States would not sue the states to overturn the voter-endorsed initiatives.
The DOJ instead expects to focus on preventing marijuana sales to minors, illegal cartel and gang activity, interstate trafficking of marijuana, and violence and accidents involving the drug. See generally the New York Times report for complete background.
The announcement was welcomed by the Washington State Liquor Control Board, which endorsed Governor Jay Inslee’s view that the U.S. DOJ “helped lay a path forward for Washington and Colorado to implement its systems of producing, processing and retailing recreational marijuana.” The Board explained that, “[our] primary rule-making focus has been to create a tightly regulated market with emphasis on public safety and restricting youth access. In his letter, AG Holder shared the same concerns. . . . The Board is confident that Washington’s recreational marijuana system will meet most, if not all, of the federal government’s stated concerns.”
What does this mean for Washington businesses? They may go forward, at least on a small scale, without the threat that the federal government will immediately sue to suspend I-502 on supremacy cause grounds. They should be careful, however, not to engage in activities that would trigger federal inquiry -- that is, those activities outlined by the DOJ on Thursday. There is no question that the DOJ will scrutinize Washington’s implementation of I-502 to make certain it reinforces federal law enforcement priorities.
For example, a business selling recreational marijuana that complies with state laws nevertheless could trigger federal wrath if it were involved in selling pot to Oregon distributors from someone connected to the supply of marijuana from illegal sources, including gangs or cartels. Moreover, the fact remains that marijuana will remain classified as illegal for recreational use by the federal government. Although the new policy is certainly friendly toward I-502 and Washington’s thoughtful implementation of a working pot market, a new administration could revoke the policy and choose to enforce federal law. At the end of the day, the policy removes some uncertainty for the time being. It may be a first step toward legalization under federal law, but it is by no means a permanent green light for Washington marijuana businesses.
The controversy continues over Utah’s so-called “intent to dine” requirement for restaurants licensed to serve alcohol. As we previously discussed, the Utah Legislature amended the law to require restaurants to confirm that a patron has the intent to order food before serving an alcoholic drink. In response to the change, the DABC has proposed three draft rules, which are intended to clarify the steps a restaurant must take to comply with the statute. As noted on the DABC’s website, the “statutory language requires affirmative action on the part of the server (handing a patron a menu or having a sign or menu available is not enough).”
Draft Rule #1 allows a restaurant to provide a single alcoholic beverage once the server has verbally confirmed that the patron will be ordering food at the establishment. Verbal confirmation can be that the patron is waiting for a table or reviewing the menu so long as it is not intended as subterfuge to get around the “intent to dine” requirement. The rule also provides that food provided gratuitously or ordered for takeout does not qualify. Draft Rule #2 is similar, but eliminates the wait-list and menu reviewing clarification.
Draft Rule #3, however, takes a slightly different approach. It would allow a server to confirm an intent to dine by verbally establishing that “the patron is on a wait list for a table or waiting for the rest of his or her party.” In addition, reviewing a food menu would also be sufficient confirmation.
Importantly, under each of the DABC’s draft rules, the server is the person who is required to confirm a patron’s intent to order food. The statute, however, places this burden on the restaurant licensee without singling out specific employees. This shift could create potential issues with enforcement. If, for example, a hostess or manager confirms that a patron intends to dine, and a server then serves the patron a drink, the restaurant licensee still could be subject to a DABC enforcement action under any of these three rules.
Several recent articles highlight the current tension between the restaurant industry and some legislators over the “intent to dine” requirement. In fact, two members of DABC’s newly-formed Advisory Committee recently testified before the Legislature’s Interim Labor Committee and expressed concerns that both the statutory requirement and the proposed rules are awkward, inhospitable and unnecessary in light of the mandatory food-to-beverage ratios for restaurant licensees. Additional legislative changes, however, would be necessary to address fully those concerns.
The best that the industry can hope for under the current statute is for a rule that does not unduly burden restaurants and annoy patrons. Out of the current draft rules, the third comes closest to achieving that balance, but perhaps with additional feedback the DABC will allow confirmation by any employee as opposed to putting the onus solely on servers.
The DABC is accepting feedback on the draft rules until August 20, 2013. Comments can be submitted by email to Nina McDermott at email@example.com. If you wish to further discuss this issue, please contact us.
The Alcohol and Tobacco Tax and Trade Bureau (“TTB”) has accepted for formal review a petition to create another American Viticultural Area in Idaho. The proposed new Willow Creek Idaho AVA would be subdivided from Idaho’s existing Snake River Valley AVA. The petition was prepared by Martha Cunningham of 3 Horse Ranch Vineyards.
Several news sources reported on Wednesday, July 24, 2013, that U.S. Drug Enforcement Administration (DEA) agents raided a number of medical marijuana dispensaries in the Puget Sound area. However, DEA Spokesperson Jodie Underwood did not provide details about how many dispensaries were being targeted or how many search warrants were being executed.
These raids come just months after Washington voters passed Initiative 502 (I-502), the marijuana reform measure that legalizes the possession and use of marijuana for recreational purposes within the state. Although the raids are a surprise to many, it is important to remember that marijuana is a Schedule I drug subject to the federal Controlled Substances Act and possession and sale of marijuana remains illegal under federal law. I-502 does not change this basic fact.
The federal government has not yet explained how it plans to react to I-502. Jenny Durkan, the U.S. Attorney for the Western District of Washington (the most senior federal law enforcement official in the federal district encompassing Seattle) issued a statement on December 5, 2012, noting that the U.S. Department of Justice (“DOJ”) “is reviewing the legalization initiatives recently passed in Colorado and Washington State” and that the DOJ’s “responsibility to enforce the Controlled Substances Act remains unchanged.” She warned that regardless of I-502, “growing, selling or possessing any amount of marijuana remains illegal under federal law.”
The ball is still in the federal government’s court to decide how it will react to I-502. However, based on Wednesday’s raids, those who hope to produce, distribute, or sell marijuana under the licensing regime that is currently being drafted by the Washington State Liquor Control Board (WSLCB) should be sure to proceed with caution.
Alcohol and Tobacco Tax and Trade Bureau (TTB) official Susan Evans, the Executive Liaison for State and Industry Matters, talked about ways to streamline the federal label approval process at the June 2013 National Conference of State Liquor Administrators (NCSLA) that I attended in Honolulu. Speaking on a panel, she said that the TTB has experienced reduced staffing and declining budgets, which have slowed down two of its major functions: permitting and approving labels.
According to Ms. Evans, nearly 25,000 permittees submit certificate of label approvals (COLAs) to TTB . Last year TTB received over 145,000 COLA applications. In the last two years, TTB has imposed fewer restrictions and qualifications, updated the COLA form to allow changes that may be made to labels without TTB approval, and established a virtual file room for processing paper applications electronically.
In addition, TTB recently reviewed the label approval program and concluded the following:Continue Reading...
Oregon Senate Bill 841 brings finality to the ongoing debate about the appropriate intensity of agri-tourism and other commercial events held at wineries on agricultural land.
Looking forward, wineries permitted under ORS 215.452 are allowed to engage in activities that are directly related to the sale and marketing of wine without local review. These types of activities include wine tastings, wine club activities, winery and vineyard tours, meetings or business activities with wine industry members or vendors, open houses, and similar activities (which appears to be a catch-all allowing for some flexibility). The legislation confronts the debate about on-site kitchens at wineries, making clear that kitchens are allowed under specified conditions.Continue Reading...
About a month ago, the Washington State Liquor Control Board (WSLCB) issued initial draft rules implementing Initiative 502 (I-502)(PDF), Washington state’s recently enacted marijuana reform law. You can read more about those draft rules here in one of our previous blog posts on the subject.
Since mid-May, WSLCB has been accepting public comment regarding the draft rules. In doing so, the Board sought to first vet the rules with stakeholders allowing it to adapt and refine the draft rules based on the input received. The Board recently concluded its public input period on the initial draft rules on June 10, 2013.
Today at the WSLCB Headquarters, the Board is conducting a work session during which WSLCB staff will summarize and present the public comments received regarding the I-502 initial draft rules to the Board. The work session is scheduled to take place at 1:30PM this afternoon.
For those interested in tuning in, TVW, the Washington State Public Affairs Network, is tentatively scheduled to live stream the work session on its website at www.tvw.org. It is also scheduled to be filmed for TV to be aired at a later date. In addition, audio of the work session will be posted to both the agency website and YouTube channel as soon as possible.
Stoel Rives attorneys Susan Johnson and Jim Shore will be part of the faculty for a one-day Law Seminars International conference on June 11 regarding Washington's Initiative 502 that legalized the recreational use of marijuana. Susan will serve as co-chair of the conference, while Jim will present on I502 implications for employer policies and procedures.
The seminar will examine the challenging legal, regulatory and business issues arising from the creation of Washington's new commercial cannabis industry. Panelists will discuss the Washington State Liquor Control Board's efforts to develop a "first in the Nation" regulatory scheme for the commercial cannabis marketplace, the effect those regulations may have on prospective business interests (including land use, commercial real estate, and employment law issues), the state and federal dichotomy regarding the legalization of marijuana, and other legal challenges that may result from the passage of Washington's I-502.
The seminar will conclude with an engaging discussion of ethical issues facing attorneys who provide advice to clients despite the clear conflict of state and federal laws.
For more information, visit http://www.lawseminars.com/detail.php?SeminarCode=13POTREWA.
With the initial draft rules implementing Initiative 502 (I-502) (PDF) issued just last week and still fresh on the public’s mind, Seattle Times reporter Bob Young and three I-502 experts held a live chat today to answer specific questions about the new rules. State Liquor Control Board Deputy Director Rick Garza, ACLU of Washington drug-policy director Alison Holcomb, and dispensary owner John Davis joined Bob Young, a reporter on marijuana and I-502 issues, to offer their views on how the marijuana legalization regulations are shaping up.
Questions ranged from how the State intends to address enforcement issues to whether the Federal government will be issuing a position statement in the near future to how licensed marijuana retailers will compete with an existing black market for the sale of marijuana to the producer licensing process. You can read the full transcript from the live chat HERE.