Retail Cannabis Licenses: Changes Coming to Management and Other Agreements

Recently the state passed a law (ESSB 5403) that clarifies what is considered a “financial or other ownership interest” that counts toward limits in the rules (RCW 69.50.325) that prevent any individual person from ownership in more than five cannabis retail licenses. The law goes into effect on Jan. 1, 2026.

ESSB 5403 states that a financial interest includes, but is not limited to:

• Any sharing of profits or revenue;
• Any assistance, coordination, or recommendation for the purchase of cannabis products if pricing is coordinated or discounted;
• The common use of intellectual property such as branding, trade names, logos, social media accounts, or websites;
• Any operational control over the business or operational support for typical day-to-day business operations, including core business or executive functions (business decisions or oversight) of the retail cannabis license;
• Any sharing or coordination of marketing and/or advertising efforts or expenses; and
• Any coordinated sharing of employment or hiring decisions, including the shared employment of individuals.
  
  

The Liquor and Cannabis Board (LCB) wants to make sure that all retail cannabis licensees are following the laws and rules preventing any person from having an interest in more than five retail licenses when the law takes effect on Jan. 1 2026.

The law does not allow any existing agreements to continue past Jan. 1, 2026, if they violate the   clarified requirements. This includes consulting services agreements, intellectual property agreements that include use of certain retail cannabis trade names, and/or other management services agreements which were previously reviewed by the LCB. Beginning Jan. 1, 2025, all agreements must meet the clarified legal requirements.

After Jan. 1, 2026, licensees who do not comply with the laws and rules described above may get written/verbal warnings, administrative violations, fines, and/or license suspension or forfeiture (license taken away).

The LCB started rulemaking for ESSB 5403. To follow or provide feedback during the rule-making process, you can find more information the Cannabis Rulemaking Activity webpage.

If you have questions or would like more information, please contact us at [email protected].