How to Open a Marijuana Dispensary in Washington

Medical marijuana has been legal in Washington state since 1998. In 2012, Washington became the first state to legalize the recreational use of marijuana. The legalization of recreational cannabis caused the cannabis market to boom. As a result, entrepreneurs have opened successful startup businesses and cannabis sales have skyrocketed.

While most businesses come with risks, the cannabis industry is particularly risky because of numerous regulations and requirements. The Washington State Liquor and Cannabis Board (WSLCB) is the regulatory authority in the state and enforces Washington's cannabis laws and regulations.

If you want to start your own cannabis business, you should take the time to understand Washington's rules and regulations. The table below outlines the relevant laws that you need to be aware of before opening a cannabis dispensary in Washington.

Relevant Laws

  • Chapter 314-55 of the Washington Administrative Code: General laws on marijuana licenses, the application period and process, requirements, and reporting
  • Initiative measure No. 502 legalized adult-use recreational marijuana and outlines cannabis licensing fees and requirements
  • Senate Bill 5080 in July 2023 formed the Social Equity In Cannabis program to allow those in socio-economic minority groups to apply for licensure

Are There Different Types of Licenses Available?

There are six types of recreational cannabis business licenses available in Washington:

Each application has a unique set of requirements and license fees. Cannabis retailers can also apply for a medical marijuana endorsement to sell medical cannabis products.

Criminal History That Might Prevent You From Getting a License

The Washington State Liquor and Cannabis Board will do background checks, so applicants should disclose any criminal history. The WSLCB uses a point-based system to determine which crimes bar a person from obtaining a cannabis license. The board will not issue licenses to people who are assigned eight points or higher, though there are some exceptions in the Social Equity Program. For instance, a person with a felony conviction (12 points) will not qualify for a dispensary license.

You can find a list of crimes that might bar an applicant from obtaining a license on the Washington State Legislature's website. The list includes:

  • Class A and B felony convictions within the last 10 years
  • 2 or more Class C felony convictions within the last 7 years
  • 3 misdemeanors within the last 3 years
If approved, you must submit any criminal conviction to the Washington Liquor and Cannabis Board within 30 days of your license.

How Old Do You Need To Be To Open a Dispensary?

You must be over 21 years old to apply for a cannabis license.

Is There a Residency Requirement To Open a Dispensary?

You must reside in the state of Washington for at least six months prior to filing a license application.

Where Can Your Dispensary Be?

Revised Code of Washington (RCW) section 69.50.331(8) outlines zoning requirements and prohibits cannabis businesses from being within one thousand feet of the following facilities:

  • Primary and secondary schools
  • Playgrounds
  • Recreational facilities
  • Public parks
  • Public transit centers
  • Child care centers
  • Libraries
  • Game arcades not restricted to 21 years of age or older

Exceptions may apply should cities and counties reduce the distance to a minimum of 100 feet by enacting ordinances.

Taxation Requirements

  • Cannabis excise tax in Washington is 37%.
  • The cannabis excise tax is separate from state and local sales tax on marijuana sales.
  • Consumers pay the tax when they purchase cannabis.
  • Per RCW 82.08.9998, cannabis purchased for medical purposes is exempt from the state's cannabis taxes so long as the individual purchasing it either has a medical cannabis card or is an authorized caregiver of someone with one.

How Much Are the Application Costs To Open a Dispensary?

You need to pay a nonrefundable $250 application fee. If approved, you pay a $1,381 license fee.

You should also keep in mind indirect startup costs that come up when starting a business. The simple act of setting up a POS system (point of sale system) to handle marijuana sales can be very costly. Cannabis startup costs can range from $43,900 to $300,000 depending on what type of layout you choose.

Hours of Operation

Washington state law permits cannabis businesses to operate between 8 a.m.–12 a.m.

Who Is Responsible for Issuing Licenses?

The Washington Liquor and Cannabis Board is responsible for licensing and regulating Washington's cannabis industry. You will need to check with the board to determine whether it is currently accepting new applications for licenses.

Who Qualifies for a Marijuana License?

A license must be issued in the name of the true party of interest. Sole proprietorships, general partnerships, and corporations are among the parties that would qualify as parties of interest. Look at WAC 314-55-035 to see who qualifies.

Application Process

Once you submit your marijuana license application, a marijuana investigator from WSLCB will contact you to ensure you have presented the required documents. Before the board processes the application, it needs the following information:

  • Information about your business location and structure
  • Forms on your proposed business plan
  • Information on your criminal history
  • Information verifying your identity, including a copy of approved identification and fingerprint cards
  • Information about your finances, including a source of funds statement, a copy of your tax returns, and previous bank statements
  • Sworn statements and affidavits

Was Your Marijuana License Application Denied?

The board might deny your application for a number of reasons such as insufficient documentation, hidden ownership, or questionable financing. If that happens, you have two options:

Is There a Limit on How Much I Can Sell in a Dispensary?

There is a limit on how much cannabis a dispensary owner can sell to a customer at one time. Section 15 of the Initiative measure No. 502 states that in one day, a licensed retailer can only sell a customer one of the following:

  • 1 ounce of cannabis flower
  • 72 ounces of liquid cannabis
  • 7 grams of concentrates
  • 16 ounces of edibles (marijuana-infused products in solid form)

Are the Laws Similar Throughout the State?

Washington law gives cities and counties broad powers to regulate the cannabis industry in their respective areas. For instance, a city may reduce the licensing of dispensaries located less than 1,000 feet from the facilities listed above. Note, however, that the distance cannot be less than 100 feet.

City ordinances may also limit the number of dispensaries allowed in a state. For instance, the Renton Ordinance No. 5816 limits marijuana shops in the city of Renton to five retail stores.

Additional Resources

Do You Need an Attorney to Assist With Opening a Dispensary?

Getting the appropriate documents ready and complying with all the regulatory requirements may prove to be difficult. This is because the cannabis industry is heavily regulated in Washington. You may want to find a Washington cannabis business and commercial attorney to assist with the process.

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Restrictive federal laws and ever-changing state laws make the marijuana industry a dynamic environment for cannabis business owners. Before you open a cannabis business, make sure it is legal in your state, and follow your state laws. Once you decide on an LLC, S-corp, or C-corp business, you can register your business entity online using DIY business formation forms.

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