HOSPITALITY AND LIQUOR LAW

Hospitality and the sale of alcohol and cannabis constitutes a significant portion of the economy. At the front end, there are restaurants, taverns, bars and lounges, retail liquor, beer, and/or wine stores, and retail cannabis dispensaries. All of these operations require licenses. For retail eating and drinking establishments that sell alcohol, the sale of alcohol is often the most financially lucrative aspect of the business, meaning that maintaining its liquor license is crucial to its ability to operate and maintain in profitability.

 

In Washington State, restaurants, taverns, bars and lounges that sell alcohol to patrons are required to obtain and maintain a license with the Washington State Liquor and Cannabis Board (LCB). The licenses vary based on the type of alcohol being sold (e.g. beer, wine, spirits). Similarly, retail stores that sell alcohol to consumers must maintain licenses with the LCB (again with variations based on the type of alcohol being sold). There are hybrid licensing models that allow for onsite consumption as well as the retail sale of alcohol.

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Over the past four decades, Washington State has seen a dramatic increase in the number of businesses that produce wine, beer, and spirits. Pursuant to Washington State law, all of these operations must obtain and maintain a license with the LCB. Following the passage of Initiative 502 in 2012, which legalized the production, distribution and sale recreational cannabis in Washington State, and LCB adopted a similar regulatory structure for doing so as it had utilized for the same in the terms of alcohol after the end of the Prohibition in 1933.

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Businesses that produce, distribute and/or sell alcohol and cannabis in Washington State must obtain and maintain a license with the LCB. And as discussed above, for alcohol, there are variations in terms of the license based on the type of alcohol. For cannabis, Washington State has a “Tied-House Rule”, under which the producer, distributor and retail seller of cannabis are not allowed to have shared direct or indirect financial interests due to concerns about the respective parties exercising undue influence over each other. This is can create confusion for business owners (whose financial interests may be diverse). Because recreational cannabis was only recently legalized in Washington State (but remains illegal under federal law), case law and legal precdents on the industry is still developing.

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It is important for businesses that produce, distribute and/or sell cannabis to understand these restrictions and forms of uncertainity to ensure the business’s ability to maintain its license with the LCB and continue to operate.

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For businesses that produce, distribute and sell alcohol at retail, many of the restrictions under the “Tied-House Rule” have been significantly relaxed. However, businesses that produce, distribute, and/or sell alcohol need to ensure that they comply with applicable Washington State law and regulations to ensure that they are able to maintain their license(s) and operate.

 

Attorney Joel Murray is versed regarding the laws that regulate alcohol production, distribution and sale in Washington State, and similarly knowledgeable regarding the laws regarding cannabis production, distribution, and sale.

 

If you or your business has uncertainty about the status of your liquor or cannabis license with the LCB, is facing an administrative action (e.g. license was revoked), and/or your application for a license was denied by, JFM Law can be of assistance. Schedule a consultation with JFM Law today to discuss your options.