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Washington’s Initiative 502 decriminalized, licensed and regulated marijuana sales under state law, and prospective retail licensees are gearing up to begin operations. On June 3, 2014 a suit was filed by one prospective licensee against the City of Wenatchee over its prohibition on issuing business licenses for business activities that are not lawful under city, state, and federal law. Because the sale of marijuana remains unlawful under federal law, Wenatchee has made clear that it will not license marijuana businesses that are duly licensed by the state Liquor Control Board to operate in Wenatchee. In October 2013, the Wenatchee City Council voted 4-3 against a proposed ordinance that would have allowed business licenses to be issued to state-licensed marijuana businesses.

The suit challenges Wenatchee’s authority to prohibit business activity that is lawful under state law and licensed by the state. This issue is being hotly debated by Washington legal authorities. In January the Washington Attorney General issued a non-binding opinion in which he concluded that I-502 did not prevent local governments from banning marijuana businesses within their jurisdictions. In April, a Washington Court of Appeals issued an opinion concluding that local governments could prohibit collective medical marijuana gardens because they remained unlawful under the State’s medical marijuana law. It remains an open question whether Washington courts will allow a local government to prohibit business activity that is lawful under state law or whether the state-licensed and regulated marijuana market will preempt local bans.

This suit will be closely watched by local governments and marijuana businesses alike. If the reaction of Wenatchee’s Mayor reported, as by The Wenatchee World, is any indication, local governments are not excited about becoming the subject of costly litigation to establish the boundaries of state and local law: “‘I’m trying to balance a budget.’ . . . ‘We’ve got big issues in the city. Having the distraction of this marijuana issue is not something I want to deal with.’”  These concerns could rise dramatically if Wenatchee chooses to respond to such suits by arguing that the state’s licensing and regulation of marijuana businesses is in conflict with federal law. That claim would expand the lawsuit while threatening newly forming marijuana businesses statewide, and could invite the participation of groups like the American Civil Liberties Union and possibly Washington State itself to defend state law.

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