Grower accuses LCB of overzealous action over containers

Spokane Valley’s GrowOp Farms recently filed a petition for review of agency action in Thurston County Superior Court over ongoing discussions with the Washington State Liquor and Cannabis Board over its packaging.

The company is one of the largest producers/processors in the state and the creator of recognizable brands such as Phat Panda and Sticky Frog.

In the petition, GrowOp Farm said it has been using larger-handled glass containers with a mason-jar style screw-top lid for approximately six years.

David Otto, attorney for GrowOp Farm’s owners, Rob and Katrina McKinley, said these mugs were chosen for price, ease of handling, shelf appeal and also to reduce carbon footprint, with the thinking that they could have other uses, instead of a single-use disposable plastic package.

Otto said the McKinleys found these mugs to be the socially and environmentally sound thing to do.

However, in the eyes of the LCB, the jars don’t fit the definition of proper cannabis containers.

LCB’s spokesman Brian Smith said the board has been clear that state law prohibits the sale of products in licensed retail stores that are not cannabis, storage devices for cannabis, or paraphernalia.

“While it may seem trivial that the handle transforms a jar to a cup/mug, it does make a difference with how an enforcement officer enforces the law as it pertains to merchandising,” Smith said.

He said a storage device that can be re-used is considered merchandise.

Smith that any changes to its current merchandising rules would require a change in state law. But for the last few sessions, the Legislature has shown no interest in passing bills that allow licensees to expand or modify these product rules.

One thing that troubles GrowOp, Otto said, is that the company wasn’t contacted directly by anyone at the LCB about concerns about the containers. GrowOp claims in its legal filings that the first it heard of a problem was when a cannabis retailer informed staff on March 13, 2021, about an email sent to an undisclosed list of retail stores by the LCB’s Kimberly Horton which directed recipients to pull the mugs from their sales floors.

GrowOp was not a recipient of the March email, Otto said. A notice to correct was sent from the LCB to the McKinleys on May 10, 2021, allowing GrowOp “up to 30 days to exhaust current inventory of unbranded merchandise” to send to retailers. Then the retailers had up to 60 days to exhaust the inventory. Otto said LCB should have issued an AVN, or administrative violation notice, and said it did not.

Meanwhile, he said LCB enforcement officers were visiting stores advising staff to pull GrowOp product from their shelves. Otto calls it “over zealous enforcement.” Compliance and education was what was needed instead of punishment, he said, adding that the process was totally inappropriate.

When the rules for Washington’s cannabis system were written, initial concerns about product merchandising revolved around trying to prevent growers from putting more expense into packaging and promotion than in taxable cannabis product. Otto said that isn’t the case here: the glass jar and mugs cost a fraction of the cost of the cannabis flower.

Still, Smith said “it’s crystal clear what the law says,” which is that it does not condone merchandising.

In April GrowOp learned of a visit by a LCB officer to a popular Seattle-based retailer. Otto said the McKinleys were told that the officer directed employees to remove GrowOp products from the retailer’s shelves.

The next month, GrowOp sent the LCB a photo of a prototype of a mason jar without handles, which are the same containers in question, but without the handle. Otto said the LCB responded that the photo sent appeared to be in compliance with its interpretation.

But on May 21, he said GrowOp was alerted by the Cannabis Country Store and Orchards Cannabis Market in Vancouver that an LCB officer told staff they could no longer sell any cannabis packaged in mason jars, with or without handles.

Otto said GrowOp believes it has acted in good faith with the LCB, and the company had been planning to start removing the handles from future mason jars, at considerable expense. But the company is now wary of future changes, fearing enforcement activity.

Otto said the next step is for the company to get in front of a judge and ask the court to stop the LCB from contacting retail stores about these containers until there is a final ruling.

He said the case is supported by a similar container case. The Podworks Corp., dba Top Shelf, an Arlington company, packages its cannabis in shot glass-size glasses and larger drinking glass-size containers.

A complaint against Top Shelf brought by WSLCB was dismissed in July. Administrative Law Judge Jane Cantor Shefler determined that the company didn’t produce, market or sell a branded promotion item. Top Shelf was represented by Cultiva Law of Seattle.