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Washington Marijuana Business Guide

by / Monday, 16 September 2013 / Published in Business, Washington

Filed on July 8, 2011 and approved in the fall of 2012, Initiative Measure 502 officially legalized the use of recreational marijuana in Washington state.  Although it is still a federal crime to possess or sell pot, thousands of potential entrepreneurs are hoping to cash in on state laws instituted by IM 502 that will give them the ability to pursue the ultimate dream job for pot aficionados.

The Washington State Liquor Control Board

Regulations concerning the sale of recreational marijuana in Washington have been established primarily by the state’s Liquor Control Board. Similar to the guidelines set by Colorado, rules governing the application process and the actual selling recreational marijuana by owners of a Washington state pot shop include the following:

Three different licenses will be available to individuals wishing to participate in the business of retail recreational marijuana—processor, producer an retailer—but one person cannot legally possess all three licenses.  One licensee can have a processor license and a producer license simultaneously but a producer cannot be a seller nor can a retailer be a processor.

The Washington State Liquor Control Board has stated that it will begin accepting license applications starting November 18 2013. To receive updates on the process of licensing, go to and register to start getting email notifications.

Applicants and entities providing funds to start a marijuana retail shop must pass comprehensive criminal background checks before a license is issued. If an applicant has a felony conviction that is less than 10 years old or is on probation or parole, they will be automatically denied. In addition, if the Liquor Control Board suspects start-up funds are coming from questionable sources or the Board cannot verify a legitimate source of the funds, the Board can deny licensing on those grounds.

City approval is also necessary if you want to open a pot shop in places other than Seattle, Spokane or Tacoma. Smaller jurisdictions will be permitted to legally prohibit a pot store from opening in an area if residents vote “no” on an emergency ballot.

Retailers, processors and cultivators of recreational marijuana must pay $250 to apply for a license and a yearly fee of $1000 to maintain a valid license. Additionally, the Washington Department of Taxation  plans to collect 25 percent of all revenue generated at the growing and selling stage. Store owners will also have to pay any applicable local and city taxes as well. Washington has established an entity called the “Dedicated Marijuana Fund” in which all funds from excise taxes will be deposited.

Retailers selling recreational pot will be ordered to pay a fine of $2500 and have their license suspended for 10 days if they are caught selling pot products to individuals under 21. A third charge of illegal sales may initiate court procedures resulting in a business owner being stripped of his or her license to sell, cultivate or product marijuana products.

Regulations Regarding Shops, Shop Locations and Product Identification

  • Initiative Measure 502 prohibits shops from operating within 1000 feet of parks, schools,daycare center, library and any venues where children commonly frequent.
  • Washington plans to allocate retail stores according to accessibility and population. This system closely resembles the one that Washington used to regulate their now defunct state liquor stores, which sought to strategically establish stores allowing 95 percent of residents living in that municipality to reach a store within 15 minutes. Rural counties in Washington such as Garfield, Columbia and Ferry with populations of less than 10,000 have been allotted one recreational marijuana shop. Alternately, King County will be allowed to establish 60 stores, Pierce County 30 stores and Snohomish County 35 stores.
  • Business will be required to file detailed reports concerning the shipping and receiving of all marijuana products. This includes times, amounts and type of product.
  •  Employees working at a retail pot shop must wear clearly visible identification badges at all times. Also, surveillance cameras and alarms systems must be installed and operating properly in all retail shops to provide law enforcement with video of all transactions completed by store employees.
  • Shop owners are not allowed to permit customers to consume or smoke marijuana in their store.
Advertising is even regulated under Initiative 502. For example, retailers cannot have a sign larger than 1600 square inches that bears the name of their business. Products associated with marijuana or containing marijuana are not permitted to be advertised through glass-paned window fronts. In addition, it is illegal for shop owners to advertise their business on public property such as transit vehicles, city benches or any other property considered to be public property.  Agents from the State Liquor Board will be checking advertisements to ensure they are not “misleading” or promote the “overconsumption” of recreational marijuana, as well as for statements that may contain words like “therapeutic” or “curative”.

If you open a recreational marijuana shop in Washington, you can open your shop every day of the week for as long as 20 hours each day. Shop owners are limited to selling no more than one ounce of pot per resident or non-resident of Washington. However, prospective “ganja-preneurs” should be aware that the primary writer of Initiative 502 Alison Holcomb has said that although the regulations enacted so far have been fair and reasonable, the “final program may differ from the initial regulations” expected to be implemented during the latter half of 2013 and into 2014.

Check these resources periodically for any changes that may occur regarding Washington’s Initiative 502:

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