Pubdate: Sat, 30 Jan 2016
Source: Seattle Times (WA)
Copyright: 2016 The Seattle Times Company
Contact:  http://seattletimes.nwsource.com/
Details: http://www.mapinc.org/media/409
Author: Bob Young

POT SHOPS SUE STATE, CALL LICENSING PROCESS 'A MESS'

Several longtime Seattle medical-marijuana businesses filed a lawsuit 
Friday against the state Liquor and Cannabis Board (LCB) alleging 
that regulators are not following their own rules in issuing a new 
round of licenses for retail stores.

At issue is the process of bringing medical businesses into the 
state's licensed recreational-retail system. The Legislature last 
year gave the LCB authority to license new stores, with priority 
given to longtime medical players seen as good actors, in following 
rules and paying taxes.

The lawsuit filed in Thurston County Superior Court by 
medical-marijuana activists John Davis, Philip Dawdy, Ken Adams and 
others contends that the LCB has not used a merit-based system to 
award new licenses.

Instead of licensing longtime operators, the lawsuit says the LCB is 
giving licenses to businesses that did not exist months ago. "The 
entire process is a mess," Davis said in a statement. "I am watching 
phantom entities gobble up scarce licenses that will put real people 
out of business."

An LCB spokesman said agency officials don't comment on lawsuits.

One underlying problem, according to Friday's complaint, is the 
priority system the LCB created to license new applicants and meet 
the Legislature's mandate to shut down unlicensed medicalmarijuana 
operations by July.

State law gives top priority to applicants who applied for state 
recreational licenses before July 2014, who were operating or 
employed by collectives before 2013, had a business license and 
history of paying applicable state taxes and fees.

The lawsuit says applicants have "cobbled" together teams that 
combine former collective employees with nonmedical entrepreneurs. 
Called "Frankenstein" applicants by some, these cobbled groups should 
not get licensing priority over longtime collectives, the lawsuit 
says, but apparently are.

While many cobbled groups have merit, it is contrary to the 
Legislature's intent to license them to the detriment of existing 
collectives, the lawsuit says.

Other complaints in the suit allege that the state's method for 
capping the number of retail licenses is flawed, and that the LCB's 
requirement that applicants have a zero tax balance, instead of a 
"history of paying all applicable state taxes and fees," is unfair. 
Applicants on a payment plan with the state or appealing state 
charges should not be penalized, the lawsuit argues.

The lawsuit by the Spencer Palace Law firm of Everett seeks an order 
for the LCB to remedy the problem.

A similar lawsuit was filed Thursday by attorney Elizabeth Hallock on 
behalf of Seattle's Choice Wellness.

The upshot of the state's licensing plan is that Seattle's total 
number of retail stores will double from an initial 2014 allotment of 
21 to 42. But 48 medical storefronts met the city's regulatory 
standards as good players in a culling process last year. It appears 
some will not receive retail licenses in Seattle.
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MAP posted-by: Jay Bergstrom