Lane Powell PC

If cannabis licensees needed any reminder, Division Three of the Washington Court of Appeals has confirmed that the Washington Liquor & Cannabis Board (LCB) is not required to defer to local zoning laws when deciding whether to issue cannabis licenses. The issue arose from a petition to LCB by Kittitas County that argued the LCB’s licensing decisions are subject to local zoning regulations because LCB issues site-specific cannabis licenses. The LCB denied the petition, but the Kittitas County Superior Court had reversed and ordered the agency to only approve licenses that comply with local zoning. Division Three’s decision reversing the superior court’s ruling should clear up any uncertainty about LCB not making licensing decisions based on local zoning.

The appeal focused on the meaning and scope of the directive in the Growth Management Act (GMA) that state agencies are required to comply with local comprehensive plans and development regulations. Kittitas County argued the LCB is a state agency and, therefore, the GMA requires the LCB to adhere to local zoning restrictions. Several cities and counties joined in the petition because their experience indicated some cannabis license applicants do not understand that an LCB license does not override local zoning. At least one city said it spent more than $35,000 in legal fees to enforce a local zoning code against a cannabis business that received licenses in conflict with local zoning.

The LCB argued that the GMA restriction applies only to actions by a state agency in its proprietary capacity as a developer or operator of a public facility. The LCB argued its licensing decisions, including site-specific cannabis licenses, do not involve a state agency acting in its proprietary capacity. The LCB also argued that complying with the superior court order would result in an unprecedented involvement of the LCB in local land use regulations.

Division Three agreed with the LCB. The court said issuing cannabis licenses is not a siting activity because the licenses do not confer final authority to open a cannabis site. LCB regulations specify a license holder must comply with local laws, including zoning requirements before opening their doors. The court said, “Zoning restrictions remain in full force regardless of whether a license is issued. The [LCB]’s decision to issue a license in a zoning-restricted area may mean the license will have little utility. But nothing in the limited nature of the [LCB]’s license changes local development plans or undermines the GMA’s policy of coordinated development.”

Kittitas County also argued that LCB had to consider local zoning because the cannabis statute requires LCB to notify local governments of cannabis license applications and renewals, to allow an opportunity for input, and to give substantial weight to objections from local government authorities based on concerns regarding chronic illegal activity. The court said the statute requires only communication with local governments, but not compliance with local zoning laws. The court noted that while there is no statutory requirement to issue a cannabis license in conformance with local zoning restrictions, there also is no prohibition on the LCB doing so. Nevertheless, the court said that discretion is up to the LCB or the legislature, and is not for the courts.

This is not likely to be the last word on this issue. Although the LCB does not appear inclined to revise its regulations, the counties and cities probably are motivated to press the legislature for changes in either the GMA or the cannabis statute. In the meantime, cannabis licensees need to be aware that an LCB license does not override any local zoning restrictions.

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