Washington Releases Draft Rules for Cannabis Producer Cooperatives
- The Washington State Liquor and Cannabis Board (LCB) released draft rules to allow licensed marijuana producers to form agricultural cooperatives for collectively processing, handling, and marketing their products, following the passage of Engrossed House Bill 1941.
- Under the rules, cooperatives can include up to three producer or producer/processor licenses, require mutual agreements submitted to LCB, and mandate maintaining records such as lab test results and transportation manifests.
- Members would share joint responsibility for regulatory violations, though enforcement may be limited to individual licensees if specific conduct causes violations.
- The LCB held two public feedback sessions on the draft rules, with additional changes expected before formal adoption, aiming to improve operational efficiency and market access for cannabis producers.
The Washington State Liquor and Cannabis Board (LCB) has released draft rules establishing how licensed marijuana producers could form agricultural cooperatives, with regulators holding the first of two public feedback sessions on the proposal today.
The rules would implement Engrossed House Bill 1941, a law approved by the Legislature earlier this year that allows licensed cannabis producers to form agricultural associations or cooperatives to collectively process, handle and market their products. The law took effect June 11.
Under the draft rules, a producer cooperative could consist of up to three cannabis producer or producer/processor licenses. A standalone processor would not be eligible to join unless it also holds or obtains a producer license.
Members would be allowed to collectively produce marijuana and, importantly, process marijuana in the same manner allowed for licensed processors. Producers seeking to establish a cooperative would be required to sign a mutual agreement and submit a copy to the LCB before conducting cooperative activities.
The agreement would also have to be kept at any licensed premises where cooperative activity occurs. Membership changes, including adding a new licensee or dissolving the cooperative, would need to be reported to regulators, with an updated agreement submitted before a new member begins participating.
The proposal would require members to maintain laboratory testing records for marijuana or concentrates produced or processed by the cooperative, as well as transportation manifests for marijuana moved between participating licensed facilities.
Participating licensees would generally be jointly responsible for violations or enforcement issues involving the cooperative. However, if regulators determine that a violation resulted from the specific conduct of one or more licensees, enforcement could be limited to those licensees.
EHB 1941 passed the House 66 to 27 in February before being amended and approved by the Senate 30 to 18. The House concurred with the changes in a 69 to 26 vote, and the measure was signed into law March 25.
The law also classifies marijuana as an agricultural product specifically for the purpose of allowing licensed producers to form agricultural associations and cooperatives. The LCB has said such arrangements are intended to give cannabis producers access to a business structure long used by other agricultural producers to improve efficiency and market products collectively.
The first virtual feedback session on the draft rules took place today at 1 p.m. A second session is scheduled for Friday, August 28 at 10 a.m. The current language is marked as a draft and “not for filing,” meaning additional changes may be made before formal rules are proposed.