Appeals court hears challenge to Liquor and Cannabis Board’s handling of cannabis license forfeiture

An appellate panel of Division II of the Washington State Court of Appeals heard oral argument in RK Vandeley LLC v. Washington State Liquor and Cannabis Board over whether the board properly applied a forfeiture statute and implementing regulation to a cannabis retail license that went long periods without sales.

Appellant counsel Mr. Hagen told the panel that the trial court erred by granting summary judgment for the board and urged reversal and remand for trial. "The trial court got it wrong when it granted summary judgment in this case in favor of the Liquor and Cannabis Board," he said, arguing that the statute—cited in briefs as RCW 69.50.325(3)(c)—and the agency forfeiture rule require enforcement when a licensed retailer is not "fully operational and open to the public." He told the court the record shows "there were no sales at all from March 2019 through January 2021," and that $0 sales continued until April 2022, creating disputed issues of material fact about operational status.

The appellant emphasized investigatory records and site observations the LCB itself compiled, saying officer visits recorded locked doors, absence of visible product and other signs inconsistent with a functioning retail outlet. "You go there, there's a locked door with a hand-scrawled piece of paper taped to the outside," Hagen said, arguing those records show the license should have been forfeited earlier.

Responding, Joshua Rodriguez, counsel for the Liquor and Cannabis Board, asked the court to affirm the trial court’s grant of summary judgment. "This court should affirm the trial court's grant of summary judgment for three reasons," Rodriguez said, outlining defenses that the appellant failed to prove tortious-interference elements, that the public-duty doctrine precludes a negligence claim, and that the LCB’s declarations were properly considered. Rodriguez argued the statute and WAC set minimal operational criteria—such as posting hours, being open at least three days a week and submitting monthly sales reports—and that reporting "zero" in a month satisfies the reporting requirement even if there were no sales.

The panel pressed both sides on the meaning of the rule’s timing provisions and exceptions. Judges asked whether the governing rule requires 12 consecutive months of nonoperation or merely three months of operation within a 12‑month period, and whether exceptions apply when a local jurisdiction’s zoning or occupancy decisions impede opening. Rodriguez told the court the LCB relied on a subsection that exempts licensees where adoption of a local ordinance or regulation prevents opening and on supervisory determinations made during the COVID period to take a more educational (less punitive) approach.

Both sides pointed to record evidence: the appellant cited LCB investigation notes and site visits as raising factual disputes; the board pointed to certificate-of-location-compliance letters, data-tracking by an LCB consultant and subsequent findings that the site met operational criteria at times. The judges questioned the parties about specific time windows—July 2020 through January 2021 and January 2021 through April 2022—and whether any continuous 12‑month nonoperation without an exception existed in the record.

The argument concluded without a decision from the panel; the court moved on to the next case on the calendar. The panel did not announce whether it would take the case under submission, issue a written opinion immediately, or schedule supplemental briefing.