The Washington State Liquor and Cannabis Board (“WSLCB”) published an industry update on October 25 detailing a recent increase in complaints by cannabis producers and processors of “pay to play” terms.
Apparently, some cannabis producers and processors have been paying retailers to acquire shelf space for their cannabis products. These arrangements have become prominent enough that some retailers are asking processors to pay for shelf space as if it is common practice.
Paying a retailer for shelf space is unlawful
Like many other cannabis business activities that Washington prohibits, this is the kind of thing that an ordinary businessperson might not think twice about. Nonetheless, pay to play arrangements are unlawful under the state’s cannabis laws. Washington law prohibits producers and processors from having a direct or indirect financial interest in a licensed cannabis retailer.
The WSLCB’s position is that a pay to play arrangement between a producer or processor and a retailer violates that rule. Moreover, the WSLCB stated that these deals violate Washington law that prohibit a cannabis industry member from entering into an agreement that results in one member having undue influence over another. The WSLCB’s position on pay to play arrangements is not off the mark
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