Several Washington regulations limit the growth of the state’s marijuana industry. Those limitations have kept nonresident investors at bay. For the second year in a row, however, the Washington legislature has considered allowing out-of-state investors to maintain an ownership status in Washington marijuana businesses. While some marijuana retail owners have complained that residency requirements unnecessarily limit investment and growth in the businesses, others have warned that the introduction of out-of-state investors could turn the industry into “big pharma,” or subject owners to prosecution under various federal criminal laws. The debate over residency even appears to have provoked the $50 million sale price of one of Washington’s most prominent marijuana shops.
As it currently stands, Washington law requires all investors in the marijuana business to have established residency in Washington for at least six months. HB 1127 seeks to remove the residency requirement and permit minority ownership status for non-resident investors in marijuana businesses. HB 1127, however, would not be without safeguards, as it would simultaneously grant discretionary authority to the Washington Liquor Control Board to deny commercial marijuana licenses to non-resident interest holders who are difficult to adequately investigate because of their non-resident status.
Though HB 1127 received bipartisan support, it appears out-of-state investors may still have awhile to wait. The House Committee on Commerce & Gaming held a public hearing on HB 1127 on January 17, 2017. Since January, HB 1127 has sat dormant — a clear sign HB 1127 is all but dead. And HB 1127 isn’t the only marijuana legislation without traction. HB 1098, concerning establishing a process for adults with a medical marijuana endorsement to purchase plants and seeds, and HB 1124, concerning packaging and labeling requirements of edibles, suffered the same fate. These stagnant marijuana-related bills signal the legislature’s reluctance to move bills without federal guidance and assurances.
Still, some marijuana-related bills — especially those limiting market ownership or related to state criminal penalties — have moved forward. Out-of-state investors should not lose hope yet. Though HB 1127 is effectively dead this year, lawmakers have the opportunity to revive it in the 2018 session.