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Top Cat Enterprises, LLC v. City of Arlington

Court of Appeals of Washington, Division 1

January 6, 2020

TOP CAT ENTERPRISES, LLC, a, Washington Corporation, Appellant,
v.
CITY OF ARLINGTON, a Washington municipal corporation; and WASHINGTON STATE LIQUOR AND CANNABIS BOARD, a state agency, Respondents.

          MANN, A.C.J.

         Top Cat appeals the Washington State Liquor and Cannabis Board's (WSLCB) decision to license 172nd Street Cannabis in the City of Arlington. Top Cat contends that WSLCB incorrectly interpreted the meaning of "property line" in WAC 314-55-050(10), and improperly determined the distance between 172nd Street Cannabis and Weston High School, by measuring from the leased lot lines, rather than the fee simple boundary lines. Top Cat argues that the improper measurement resulted in 172nd Street Cannabis being located less than 1000 feet from a school.

         We agree with the WSLCB that the appropriate measure was between the leased lot lines. We affirm.

         I.

         In 2012, Washington voters approved Initiative 502 (I-502) Laws of 2013, ch. 3 (codified in part of chapter 69.50 RCW). I-502 established a regulatory system for the production, processing, and distribution, of limited amounts of marijuana for recreational use by adults. WSLCB used a lottery system to award 334 retail licenses. Licenses granted under the lottery system were jurisdiction specific. A license applicant was required to stay within the jurisdiction in which they applied, even if that jurisdiction issued a ban or moratorium on retail licenses.

         In 2015, the Cannabis Patient Protection Act (CPPA) merged the preexisting medical marijuana program with the recreational marijuana retail stores established under I-502. Laws of 2015, ch. 70 (codified in part of chapter 69.50 RCW). The CPPA also directed WSLCB to reopen the application period for retail stores and issue additional licenses addressing the needs of the medical market. Laws of 2015, ch. 70. WSLCB increased the number of retail licenses by 222. Rather than implement a lottery system similar to I-502, the CPPA prioritized new marijuana applications as Priority 1, Priority 2, or Priority 3, which distinguished between applicants' degree of experience and qualifications in the marijuana industry. Former RCW 69.50.331 (2015); former WAC 314-55-020 (2015). Because of the large number of applicants, only Priority 1 applicants were able to move forward with the licensing process. In addition to Priority 1 applicants, the CPPA allowed licensees from I-502's lottery that were barred from opening retail stores because of local bans to transfer their license to jurisdictions without local bans on marijuana sales.

         Because only a limited number of new licenses were available, applicants needed to finish the WSLCB licensing process before other applicants to ensure that they obtained one of the open spots in a particular jurisdiction. RCW 69.50.331 requires both I-502 licensees and Priority 1 CPPA applicants to meet statutory requirements before WSLCB grants a retail license. One of these requirements prohibits WSLCB from licensing a retail business within 1000 feet of "the perimeter of the grounds of" a school. RCW 69.50.331 (8)(a).

         Top Cat was originally selected in the I-502 lottery for a retail location in the City of Marysville. Top Cat completed the licensee process and received a license for a retail business in Marysville on November 12, 2014. During the licensing process, Marysville enacted a ban on marijuana retailers, which prevented Top Cat from opening its store.

         On January 29, 2016, Top Cat applied to move its retail license from Marysville to Arlington. At the time, there was only one available retail license available in Arlington.

         Previously, 172nd Street Cannabis applied for a marijuana retail license in Arlington under the CPPA's priority system and received a Priority 1 designation on December 8, 2015. WSLCB assigned 172nd Street Cannabis's application to WSLCB Senior Marijuana Licensing Specialist Sean Houlihan. 172nd Street Cannabis sought a license for a leased property at 5200 172nd St. N.E., F-101 in Arlington. The proposed location is leased lot 500B on the Arlington Municipal Airport property (Airport property).

         The Airport property is approximately 1, 200 acres in size and is partitioned into over 100 distinct parcels that are available to lease. Arlington School District No. 16 leases lot 301 for Weston High School. Weston High School's lease is recorded with the Snohomish County Auditor and includes a legal description of the property. A cyclone fence fully encloses lot 301 for security. Weston High School's lot 301 is on the north side of 172nd St. NE. 172nd Street Cannabis's lot 500B is located on the south side of 172nd St. SE.

         The following Airport Property Boundary and Lease Lot map depicts the Airport property boundaries, leased lots within the Airport property (including Weston High School), and the location of 172nd Street Cannabis.[1]

         (Image Omitted)

         Specialist Houlihan measured the distance between 172nd Street Cannabis's lot 500B and Weston High School's lot 301 and concluded that the lots are over 1, 600 feet apart from one another ...


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