Prohibited Practices in Cannabis
Prohibited
Practices in Cannabis
Enforcement Education Program
1
Relevant Laws and Rules
•
RCW 69.50.328
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Cannabis producers, processors—No direct or indirect financial interest in licensed
cannabis retailers.
•
Neither a licensed cannabis producer nor a licensed cannabis processor shall have
a direct or indirect financial interest in a licensed cannabis retailer.
•
WAC 314-55-018
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Prohibited practices—Money advances—Contracts—Gifts—Rebates, discounts, and
exceptions, etc.
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.05.96
•
No cannabis producer or processor shall advance, and no cannabis licensee shall
receive money or moneys' worth under an agreement written or unwritten or by means of
any other business practice or arrangement such as:
•
Gifts
•
Discounts
•
Loans of money
•
Premiums
•
Rebates
•
Free product of any kind except as specified in RCW 69.50.585
•
Treats or services except as specified in RCW 69.50.585
2
3
Prohibited Practices NTCs
How Do Complaints Come In?
•
Reports from the Finance Audit team
•
Complaints from licensees
•
Licensees checking with Enforcement about
proposals from other licensees
•
Former employees of retail licensees
4
Examples of Prohibited Activities
•
Examples of prohibited activities include, but are not limited
to:
•
Producer or processor lending or giving money to a retailer
•
Gifts beyond nominal value
•
Extension of credit
•
Volume discounts
•
Discount of product to one retailer over another
•
Licensees creating a second company to give away items or sell
items below true market value to a retailer
•
Producer or processor having or sponsoring events for licensees
or employees of a retailer
•
Incentive programs (swag, prizes, or cash for selling a
producer/processor’s items)
•
Negotiating any discount for customers of a producer/processor’s
product (rebates, split discounts, custom products, etc.)
•
Retailers requiring bulk discounts, rebates, custom products, or
services outside of what is allowed in RCW 69.50.369
5
What is allowed?
•
Producers and processors can provide some items and services
to cannabis retail licensees, but they are limited to items of
nominal value, and those items cannot be passed on to retail
customers. Producers and processors may also participate in
specific retail events, if they follow the parameters outlined in
RCW 69.50.585.
•
Items of nominal value such as branded promotional items (lighters, pencils,
apparel, and similar items valued $30 or less singularly or in the aggregate)
•
Educational participation in “vendor day” type events at retail locations
•
Listing the locations that carry product on the producer / processor licensee’s
website
Note: None of these types of allowed activities can be required
by either licensee as a condition of business.
6
Education
•
Cannabis_Bulletin_No_23-01_MW_Final.pdf (wa.gov)
•
Newsletter coming this fall to remind licensees again of the bulletin and the RCWs and WACs
•
In person education and/or NTC given with in person, on-site, visit (Note: whenever Education staff do on-site visits they
try to also do a full annual inspection if one has not been done in over 6 months – 1 year.
7
External Complaints
•
Assigned to Education staff
•
Determine if complaint has enough information to
write an NTC or not
•
Visit licensees in person and discuss the complaint
•
Ask the licensee if they are engaged in the alleged
activity
•
If they say yes or the original complaint has enough
information to prove a violation, education is given
through NTC
•
If they say no and there is not enough information to
prove a violation, the same education that is in the NTC
is given it is just not done through a formal NTC.
8
Internal Complaints
9
•
Education Manager reviews audit reports
•
Complaints are assigned to Education staff
•
Visit licensees in person and discuss the complaint
•
Education is provided through an NTC
Note: If either scenario continues to have complaints on
the same issue it may be escalated to commissioned staff to
address
Questions?
10
Program focusing on prohibited practices in cannabis enforcement. It provides insights and guidelines on effective enforcement strategies to combat illegal activities in the cannabis industry.
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Presentation Transcript
Prohibited Practices in Cannabis Enforcement Education Program 1
Relevant Laws and Rules RCW 69.50.328 Cannabis producers, processors No direct or indirect financial interest in licensed cannabis retailers. Neither a licensed cannabis producer nor a licensed cannabis processor shall have a direct or indirect financial interest in a licensed cannabis retailer. WAC 314-55-018 Prohibited practices Money advances Contracts Gifts Rebates, discounts, and exceptions, etc. No industry member or licensee shall enter into any agreement which causes undue influence over another licensee or industry member. This rule shall not be construed as prohibiting the placing and accepting of orders for the purchase and delivery of cannabis that are made in accordance with usual and common business practice and that are otherwise in compliance with chapter 69.50 RCW and this chapter. No cannabis producer or processor shall advance, and no cannabis licensee shall receive money or moneys' worth under an agreement written or unwritten or by means of any other business practice or arrangement such as: Gifts Discounts Loans of money Premiums Rebates Free product of any kind except as specified in RCW 69.50.585 Treats or services except as specified in RCW 69.50.585 2
Prohibited Practices NTCs 2023 2024 Grand Total 1 2 3 (CB) Engaging in conditional sales. 13 50 63 (CB) Engaging in nonretail conditional sales, prohibited practices, or both. 3 49 52 (CB) Selling or purchasing Cannabis on credit. 17 101 118 Grand Total 3
How Do Complaints Come In? Reports from the Finance Audit team Complaints from licensees Licensees checking with Enforcement about proposals from other licensees Former employees of retail licensees 4
Examples of Prohibited Activities Examples of prohibited activities include, but are not limited to: Producer or processor lending or giving money to a retailer Gifts beyond nominal value Extension of credit Volume discounts Discount of product to one retailer over another Licensees creating a second company to give away items or sell items below true market value to a retailer Producer or processor having or sponsoring events for licensees or employees of a retailer Incentive programs (swag, prizes, or cash for selling a producer/processor s items) Negotiating any discount for customers of a producer/processor s product (rebates, split discounts, custom products, etc.) Retailers requiring bulk discounts, rebates, custom products, or services outside of what is allowed in RCW 69.50.369 5
What is allowed? Producers and processors can provide some items and services to cannabis retail licensees, but they are limited to items of nominal value, and those items cannot be passed on to retail customers. Producers and processors may also participate in specific retail events, if they follow the parameters outlined in RCW 69.50.585. Items of nominal value such as branded promotional items (lighters, pencils, apparel, and similar items valued $30 or less singularly or in the aggregate) Educational participation in vendor day type events at retail locations Listing the locations that carry product on the producer / processor licensee s website Note: None of these types of allowed activities can be required by either licensee as a condition of business. 6
Education Cannabis_Bulletin_No_23-01_MW_Final.pdf (wa.gov) Newsletter coming this fall to remind licensees again of the bulletin and the RCWs and WACs In person education and/or NTC given with in person, on-site, visit (Note: whenever Education staff do on-site visits they try to also do a full annual inspection if one has not been done in over 6 months 1 year. 7
External Complaints Assigned to Education staff Determine if complaint has enough information to write an NTC or not Visit licensees in person and discuss the complaint Ask the licensee if they are engaged in the alleged activity If they say yes or the original complaint has enough information to prove a violation, education is given through NTC If they say no and there is not enough information to prove a violation, the same education that is in the NTC is given it is just not done through a formal NTC. 8
Internal Complaints Education Manager reviews audit reports Complaints are assigned to Education staff Visit licensees in person and discuss the complaint Education is provided through an NTC Note: If either scenario continues to have complaints on the same issue it may be escalated to commissioned staff to address 9
Questions? 10
