Committee approves limits on cross-license financial agreements for cannabis retailers

The Consumer Protection & Business Committee on April 1 adopted an amendment and voted to report Engrossed Substitute Senate Bill 5403, which would prohibit cannabis retail licensees from entering into agreements that confer a financial interest across more than five retail licenses.

Peter Clodfelter briefed the committee that the bill builds on RCW 69.53.95 and would define “financial interest” to include coordination of purchases, operational control, profit- or revenue-sharing, shared marketing or hiring decisions, and shared use of intellectual property such as trade names or branding. The adopted amendment (Claud 357) added language making the prohibition apply whether or not payment is exchanged and tightened several definitions to cover coordinated pricing or discounts, sharing of intellectual property, and coordinated employment decisions.

Industry groups told the committee they were engaged in negotiations with proponents and that the primary remaining dispute was the bill’s fee-shifting or “loser pays” mechanism. Supporters argued the measure would promote market diversity and prevent a small number of firms from controlling many retail licenses; opponents warned the language could be overly prescriptive and raised concerns about retrospective impacts on existing commercial arrangements.

Representative Reeves moved adoption of amendment Claud 357 and then moved the bill as amended; the committee reported the bill out with a “do pass as amended” recommendation. Staff announced the committee vote as 11 ayes, 3 nays and 1 excused.