Washington State Regulator May License Site-Specific Cannabis Business despite Conflicting Zoning, Appeals Court Finds

The Washington State Liquor and Cannabis Board, which is charged with licensing cannabis businesses, does not need to consider whether municipal or county land use codes would permit a proposed facility in a particular location, according to a Court of Appeals decision published April 11, 2019. See Matter of Kittitas Cty. for a Declaratory Order, 438 P.3d 1199 (Wash. Ct. App. 2019). Instead, the cannabis business licensee is ultimately responsible for ensuring compliance with the local land use code, and enforcement is the municipality's responsibility.

In 2015, Kittitas County (the "County") objected to a proposed site-specific production and processing facility license under consideration by the Washington State Liquor and Cannabis Board (the "Board"). In its objection, the County notified the Board that local zoning law prohibited cannabis processing and production in the location where the business proposed to establish operations.

The Board responded that it would not evaluate objections to cannabis licenses based on local land use codes, because "the Board is not in a position to evaluate the validity of the ordinance, or its applicability to the application in question." Matter of Kittitas Cty. for a Declaratory Order, Washington Liquor and Cannabis Bd. No. 01-2017 (May 23, 2017). The Board reasoned that if it denied a license based on local instead of state law, it could find itself in the burdensome position of defending and interpreting the local ordinance. The Board posited that it was not well suited to evaluate such questions and probably had no jurisdiction to do so.

The County successfully appealed the Board's administrative order to superior court, which ruled that the Board could approve only those licenses that complied with local zoning. The Board, however, triumphed at the state court of appeals. The court of appeals held that Washington's Growth Management Act did not require the Board to consider local zoning or similar laws when making its licensing decisions. Noting that the "Board's decision to license a business in a zoning-restricted area may mean the license will have little utility," it found that "nothing in the statute suggests state agencies must be concerned with local zoning restrictions when engaged in . . . determining the appropriateness of a state license."

The Court further reasoned that the terms of the Board's license makes it the applicant's responsibility to comply with both state-level licensing regulations and local ordinances. Both the County and the Washington State Association of Municipal Attorneys argued that such an approach had more burdens than benefits. Writing as amicus curiae, the Association asserted that the Board's "practice of ignoring local zoning . . . causes needless expense to cities and counties, and it creates confusion and distrust on the part of licensees . . . undermin[ing] the predictability and timeliness of state and local permitting."

Nonetheless, the Court found that state Growth Management Act merely implies that regulators should take into account local growth management programs and ordinances – it does not require the regulator to follow those local programs or laws.

Kittitas County filed a Petition for Review by the Washington State Supreme Court on May 10, 2019.

Should you need assistance with Washington State's maze of municipal, county and state-level land use ordinances, or with Washington's cannabis regulations, please do not hesitate to contact Jim Greenfield or any other member of Davis Wright Tremaine's Real Estate and Environmental practice groups.

This advisory is a publication of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations. Manufacturing, cultivation, distribution and possession of cannabis remains illegal under federal law and under certain state laws, and is strictly regulated in those states which have legalized medical or recreational cannabis.