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.
Watch for our I-502 draft rules cheat sheet, coming soon!
The wait is officially over, folks. Yesterday, the Washington State Liquor Control Board (WSLCB) met its projected mid-May deadline to issue initial draft rules implementing Initiative 502 (I-502) (PDF), Washington state’s recently enacted marijuana reform law. The 46-page proposed addition to the Washington Administrative Code gives the public a glimpse into how the WSLCB will potentially regulate such areas as from marijuana product testing, growing licenses, advertising, and package labeling.
For instance, the Board is proposing a number of security requirements on licensed marijuana growers, processors, and retailers. According to the draft rules, (1) marijuana production must take place within a fully enclosed secure indoor facility or greenhouse with rigid walls, a roof, and doors, (2) all employees in any licensed premises must display an identification badge at all times while in a licenses premises, (3) each licensed premises must have a security alarm system on all perimeter entry points and perimeter windows, (4) the licensed premises must have a complete video surveillance and recording system for control areas, and (5) all marijuana licensees must have a traceability mechanism to track the marijuana from seed to sale.Continue Reading...
Movie theaters with restaurant-style food service will reach a broader audience with the recent signing into law of a bill passed by the Washington State Legislature allowing service of food and alcoholic beverages to their patrons. The law as currently written allows some service of alcohol in movie theaters, but requires exclusion of minors from the premises. The new law will create a new, more family friendly, beer, wine and spirits license for theaters. The license will allow minors if certain conditions are met and approved by the Washington State Liquor Control Board, such as submission of an alcohol control plan outlining the methods to prevent minors from obtaining alcohol, similar to plans that are required for clubs and show venues that host all‑ages concerts. Theaters will also be required to meet food and service requirements, similar to restaurants, to qualify for the license. (Senate Bill 5607 as Passed by Legislature)Continue Reading...
Stoel Rives LLP offers its congratulations to Rick Garza on his appointment as Director of the Washington State Liquor Control Board. Today the agency issued a press release announcing the appointment will be effective June 1, 2013. Garza will be assuming leadership in a time of unprecedented change – the agency is on the tail end of implementing privatization of liquor sales and at the forefront of developing a comprehensive regulatory system to govern legalized growing, processing and retailing of marijuana for recreational use.
It looks like the Washington State Liquor Control Board (WSLCB) is on track to meet the first of several milestones in the implementation of Initiative 502 (I-502), Washington State’s recently passed marijuana reform law. According to a tweet earlier today from I-502 Implementation (@I502implement), we can expect to see the first draft of I-502 implementing regulations next week.
The draft rules will first be sent to stakeholders for comment in mid-May. Later in mid-June, WSLCB will then file a Proposed Rule-Making Order (CR-102) which is the notice used to publish the text of the proposed rule and also informs the public that they may participate in the rule-making process. Should the draft rules need substantial changes after submitting for comment, the WSLCB is required by law to resubmit the CR 102.
Resubmitting the CR 102 could move the license issuance date to late December 2013. According to WSLCB’s current timeline, the Board intends to begin issuing Producer, Processor and Retail licenses to qualified applicants by December 1, 2013. So far, the agency appears to be on track to meet that deadline.
Check back here next week for further updates on WSLCB’s I-502 draft rules and implementation progress.
Sales Limit Increase Could Give Washington State Craft Distilleries More Momentum in the Retail Market
This week, a bill passed the Washington legislature that will allow a craft distillery to sell more of its product to customers visiting its distillery.
House Bill 1149 has been sent to Governor Inslee to sign in to law, amending RCW 66.24.145 to allow a craft distillery to sell a maximum of three liters of spirits of its own production per person per day for off-premise consumption. The prior limit was two liters per person per day. Importantly, craft distilleries that opt to sell spirits from their premises must be aware that they are required to comply with the applicable laws that relate to retail liquor licensees, such as responsible alcohol sales, as well as the state and federal requirements that apply to distilleries.
Craft distilleries are distinguished from larger distilleries most notably by the amount of spirits produced—a maximum of 60,000 proof gallons per year (WAC 314-28-050)—and the requirement that a minimum of 50% of Washington-grown raw materials be used for production (WAC 314-28-060). The craft distillery industry has experienced steadfast growth since the Washington State Liquor Control Board implemented the license less than three years ago. The passage of 1149 is a clear indication of the need for refinement of the laws that regulate this growing industry. Craft distilleries have the potential to gain a stronger presence in the liquor market as more people look to them directly for unique, local spirits.
Governor Kitzhaber signed the “Growler Bill” into law Thursday. The new law amends ORS chapter 471 and allows wineries, local groceries, and other retail licensees to sell wine to consumers in growlers. Wineries are increasing the use of kegs and the bill is touted by proponents as responding to changing trends and promoting sustainable packaging. This new sales structure opens up a new market for wineries and retailers but before the filling begins, licensees should confirm their new activities meet federal as well as state licensing requirements.
Sign up now to join us this Thursday, April 4 at the Allison Inn & Spa in Newberg, Oregon for the 6th Annual Oregon Wine Law Seminar. Topics will include federal and state requirements applicable to exporting overseas, export-related distribution agreements, employment law for wineries, status of foreign investments in the U.S. wine industry, trademarking your product overseas, and developing your export marketing strategy.
For more information, visit: http://www.stoel.com/showevent.aspx?Show=10183.
As the Utah Legislature wrapped up its session this week, it appears that a battle is brewing between the House and Senate over alcohol reform. Citing a concern with the “culture of alcohol,” the Senate declined to support many of the measures the House approved this session. The House voted to eliminate the so-called “Zion curtain,” which several key House members describe as “irrational” and “weird.” The House also approved changes to the population quotas for club licenses and removed restrictions that prohibit beer wholesalers and producers from selling “heavy” beer directly to restaurants. Each of these reforms, however, failed to receive a hearing in the Senate. Representatives Ryan Wilcox and Curtis Oda have been particularly vocal in expressing dismay about the Senate’s refusal to consider House bills that passed with large majorities. In response, the House defeated a number of the Senate’s alcohol bills, including those introduced by Senator John Valentine who is one of the key Senate sponsors of alcohol legislation. The defeated Senate proposals include increasing penalties for serving minors, restricting multiple licenses for the same location, allowing sampling of beer and spirits and restricting DABC’s discretionary powers.
Importantly, the Legislature will study alcohol reform during the interim session, which runs from April through November. Topics for discussion include whether to repeal the Zion curtain and increase the quotas for club licenses. The Senate has suggested that any increase in dining club licenses, which include restaurants like Ruth’s Chris and Spencer’s, would require limiting these establishments to patrons who are 21 and older. The Legislature also indicated that interim committees will review proposed legislation to address the sale of existing licenses.
Catherine Parris Lake and I will continue working on potential alcohol reforms during the interim session and will report on the issues under consideration by the committees. We welcome your feedback concerning any of the proposed changes.
Only two proposed amendments to Utah’s Alcoholic Beverage Control Act passed during the most recent session of the Utah Legislature, which concluded on March 14th. H.B. 240 passed earlier in the session and addresses the “intent to dine” issue we reported on previously. Under the change, a restaurant licensee must confirm that a patron has an intent to order food prior to selling or furnishing a drink. It is unclear, however, what type of “confirmation” will be sufficient to comply.
The second bill to pass was hammered out during a House and Senate conference committee that met on the last day of the session. The compromise bill was introduced as a substitute to H.B. 228. The House and Senate ultimately approved the substituted H.B. 228 before the session ended. Governor Herbert is expected to sign both Substitute H.B. 228 and H.B. 240.
Most notably, Substitute H.B. 228 authorizes master licenses for full and limited service restaurants. To qualify, restaurants must be commonly owned and the owner must include at least five locations under the master license. Master license fees are $10,000 for full service restaurants and $5,000 for limited service restaurants, plus the initial license fees required for each newly licensed location ($2,200 for full service and $825 for limited service restaurants). As previously reported, enforcement across locations was a concern for the restaurant industry. The bill addresses these concerns somewhat by limiting the scope of enforcement actions. Under the bill, DABC may take disciplinary actions against a single location, individual staff at a single location or a combination of the two. Disciplinary action may be taken against the master licensee or staff of the master licensee if 25% of the locations covered by the master license have committed grave or serious violations or if 50% of the locations have committed any violations. The master license and all locations under it will count as one retail license for quota purposes. While a master licensing scheme may free up additional restaurant licenses, the current availability of restaurant licenses may make it unlikely that chains will adopt the new license format until licenses are no longer available.
Substitute H.B. 228 also makes several other changes, including:
- Allowing DABC to issue a conditional license for any type of retail license;
- Extending the time period for conditional licenses from six months to nine months, with a possible extension of three additional months;
- Allowing existing fraternal clubs to admit and serve guests without a club host if they derive at least 60% of gross sales from food;
- Postponing the effective date of the Transfer of Retail License Act until July 1, 2014; and
- Clarifying certain financial and audit provisions related to the DABC.
If you plan to be in Napa, California, this week, we encourage you to join Stoel Rives partner Chris Hermann and other presenters in their discussion of risks and rewards of winery operations at the 7th Annual Best Practices in Winery Operations this Thursday and Friday.
On Friday, Chris will discuss the pitfalls of relying upon custom and practice, expired/unsigned/incomplete contracts and oral contracts pertaining to winemaking, alternating proprietors, custom crush and vendors during the Contract Winemaking session.
Additional seminar topics will include:
- Social Intelligence and New Technology
- Legal and Regulatory Update
- Insurance Considerations
- Human Resources
- Stewardship for the Land/Vineyard Conversion
- The Do’s and Don’ts of Winery Events
- Brand Management
- Trade Practices
- Tax Issues
- Changes and Improvements to Wineries and Vineyards
The event will be held at:
Napa River Inn
500 Main Street
Napa, CA 94559
For more information visit: http://www.theseminargroup.net/seminar.lasso?seminar=13.WINECA
As we discussed in our December 19, 2012, and January 14, 2013, blog posts here and here, there is inherent tension between I-502’s marijuana legalization policy and federal law. Under the Controlled Substances Act (“Act”), marijuana is classified as a Schedule I drug, making the possession and sale of marijuana illegal under federal law. Since the passage of legalization measures in both Washington State and Colorado, federal authorities have undertaken to review the new laws and issue a response. Although the Obama Administration has been reviewing its options for some time, it has not yet taken a position on the issue.
However, despite the delay in a decision from the federal government, the Washington State Liquor Control Board has not shown any hesitation in moving forward with implementation. The agency is currently progressing along its proposed implementation timeline and expects to begin issuing marijuana producer licenses as early as mid-August of this year.
In remarks before the U.S. Senate Judiciary Committee on Wednesday, March 6, Attorney General Eric Holder confirmed that the Administration was “still considering” the federal government’s reaction to the Washington and Colorado legalization initiatives, though he asserted that it would be completed soon.Continue Reading...
Two other key alcohol bills have passed the House and currently are pending in the Senate. H.B. 218, sponsored by Representative Gage Froerer (R), proposes to create a separate quota for social clubs, or bars. Currently, social clubs are considered in the same category as dining clubs, which are largely fine dining restaurants, equitable clubs (e.g., country clubs) and fraternal clubs, such as an Elk’s Lodge. In addition, the bill would make new club licenses available by shifting quotas and reducing the availability of reception center licenses, which are not in high demand. The change likely will create around 25 new licenses, which are targeted primarily for dining, equitable and fraternal clubs. H.B. 218 also proposes to increase the time that a conditional license can be granted from 6 to 12 months, and addresses the “intent to dine” issue by proposing to allow a restaurant to serve a drink to a patron if the patron indicates an intent to dine. A less business friendly bill (H.B. 240) also addresses the intent to dine issue and has passed the House.
Representative Ryan Wilcox (R) has also proposed new legislation that is receiving a lot of attention. If passed, H.B. 228 will eliminate the so-called “Zion Curtain” that requires some restaurants to mix and pour cocktails and beer behind a wall and out of the view of restaurant patrons.
Both H.B. 218 and H.B. 240 appear to be stuck in the Senate Rules committee. Contact your Senator if you support the changes proposed in these bills. As a reminder, the general session ends March 14, 2013.
Utah State Senator John Valentine (R) (Orem) has introduced a bill (S.B. 261) that may significantly affect alcohol operations if adopted. S.B. 261 would require that all restaurant patrons must be “seated” to be served or consume a drink. Current law allows a patron to be served and consume a drink while standing at a counter, for instance, while waiting for a table or when proposing a toast. The change would require many restaurants to remodel waiting areas to add seats and frustrate patrons who are denied service if they cannot obtain a seat.
The seating requirement, along with other proposed changes in the bill, also would prevent restaurants from hosting private functions where guests remain standing while drinking, such as during a cocktail party, wedding reception or holiday party. Utah restaurants likely would experience a significant loss of sales as a result. Businesses and individuals who look to restaurants for private functions services also would be negatively affected by the loss of such services.
Additionally, S.B. 261 limits the DABC’s powers to waive or vary the requirements imposed under the statute. Unless expressly authorized under the statute, the DABC no longer would be able to grant variances based on long-standing interpretations of various provisions. For example, the bill would prohibit the change the DABC recently adopted to reverse its position on whether a restaurant patron must place an order for food prior to being served a drink as discussed here. If DABC were required to enforce the express provisions of the statute – a “licensee may not sell, offer for sale, or furnish an alcoholic product except in connection with an order for food” – it would not have been able to reverse course to read this provision as requiring that a patron may be served if an “intent to dine” is demonstrated.
S.B.261 also might eliminate other DABC practices that are not expressly articulated in the statute. For example, DABC currently allows a management agreement between a former owner and a new owner to bridge the gap between a change of ownership and the DABC’s review of the new owner’s license application. Such practice prevents a business from going dry for a short period of time while the new owner’s application is pending. If S.B. 261 passes, it is unclear whether the DABC could continue this practice.Continue Reading...