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I 502 Marijuana Law Update: Producer Regulations Change

As promised in our previous I-502 Marijuana Law coverage, the recreational marijuana regulations in Washington continue to change.  This time, what’s changed is the limits on the area Producer licensees may grow marijuana.

The producer regulations are broken down into tiers, with Tier One allowing the smallest production area, and Tier Three allowing the largest. Before yesterday’s rule change, the tiers broke down as follows:

  • Tier One licensees may produce in an area under 2000 square feet.
  • Tier Two licensees may produce in an area between 2,000 square feet to 10,000 square feet.
  • Tier Three licensees may produce in an area between 10,000 and 30,000 square feet.

Before, a producer could hold up to three producer licenses, essentially tripling the square foot area it could use to grow marijuana. With yesterday’s change, each of the tiers above is now limited to 70% of the maximum area, and one producer can no longer use multiple Producer licenses to up their production area. So now the tiers look like this:

  • Tier One: Under 1,400 square feet
  • Tier Two: Up to 7,000 square feet
  • Tier Three: Up to 21,000 square feet

Initially, the WSLCB anticipated total marijuana production in Washington of up to two million square feet. What would have resulted had they not made yesterday’s rule change was total marijuana production of nearly 36 million square feet.

At this point, it shouldn’t come as a surprise that the WSLCB reassures these rules are subject to change again. If the outcome of this rule change is a shortage of marijuana relative to demand, it intends to increase the square foot limitations as needed.

Though the rule change seems reasonable given the unexpected amount of producer applications, it will leave many businesses that planned for a larger growing operation with only a fraction of that production space. For example, if you bought a 100,000 square foot warehouse expecting to use three Tier Three licenses to produce marijuana, you are now left with a large area, less than a third of which can be used as intended.

This is yet another example of the risks of entering a new business market. Though there are certainly benefits to being among the first to join, without careful planning it can be hard to anticipate where rules changes may occur. You should contact a local marijuana law attorney to help you plan for the many changes that are sure to come.

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