Washington LCB Revokes Retailer License After Licensee Transferred 45% Ownership Without Board Approval (June 2025)

Washington Structural Change Requirements

RCW 69.50.342 and WAC 314-55-035 require all cannabis licensees to obtain prior Board approval before making any structural change that results in a transfer of 10% or more of ownership interest. Proposed transferees must submit a Personal History Statement and pass a criminal history and financial suitability review.

Audit Findings

During a periodic ownership verification audit in May 2025, LCB investigators discovered that the respondent had transferred 45% of its LLC membership interest to a new member (hereinafter "Transferee") in November 2024 without notifying the Board. The Transferee had not submitted a Personal History Statement and had not been vetted by the LCB.

Further investigation revealed that Transferee had a prior felony conviction for drug trafficking in another state — a disqualifying offense under WAC 314-55-090 that would have resulted in denial of suitability approval had the transfer been submitted for review.

Revocation Order

The LCB issued a Final Order of License Revocation (Order No. 2025-R-1847) effective June 20, 2025, citing:

1. Unauthorized structural change in violation of WAC 314-55-035(2)
2. Association with a person with a disqualifying criminal history under WAC 314-55-090
3. Material misrepresentation — the licensee failed to disclose the ownership change on its annual license renewal

Appeal Rights

The licensee has 20 days to request an adjudicative proceeding before an administrative law judge. During the appeal period, the revocation is stayed.

Compliance Warning

Any ownership change above 10% — including changes to voting or economic interest — requires prior LCB approval. Licensees should conduct an annual ownership structure review and consult with cannabis counsel before any investment transaction.