Kittitas Cnty. v. Wash. State Liquor & Cannabis Bd. (In re Kittitas Cnty. for a Declaratory Order)

438 P.3d 1199

In the MATTER OF the Petition of: KITTITAS COUNTY FOR A DECLARATORY ORDER.

Kittitas County, Respondent,

v.Washington State Liquor and Cannabis Board, Appellant.

No. 35874-7-III

Court of Appeals of Washington, Division 3.

FILED APRIL 11, 2019

Mary Maureen Tennyson, Washington Attorney General, Bruce L. Turcott, Office of the Attorney General, Po Box 40110, 1125 Washington St. Se, Olympia, WA, 98504-0110, for Appellant.

Neil Alan Caulkins, Kittitas County Prosecutor, 205 W 5th Ave. Ste. 213, Ellensburg, WA, 98926-2887, for Respondent

Milton G. Rowland, Law Office of Milton G. Rowland, 1517 W Broadway Ave., Spokane, WA, 99201-1903, for Amicus Curiae on behalf of Washington State Association of Municipal Attorneys.

PUBLISHED OPINION

Pennell, A.C.J.

¶1 This case asks whether Washington’s Growth Management Act (GMA), chapter 36.70A RCW, requires the Washington State Liquor and Cannabis Board (the Board) to defer to local zoning laws when making licensing decisions. Our answer is no. Neither the GMA nor the State’s marijuana licensing laws require the Board to issue licenses in conformity with local zoning laws. While the Board may consider zoning restrictions in making licensing decisions, doing so is not required under current law.

BACKGROUND

¶2 Washington voters legalized the sale and use of recreational marijuana in 2012. INITIATIVE 502, LAWS OF 2013, ch. 3. The new law created a legal marketplace for marijuana and delegated licensing, regulatory, and oversight powers to the Board. RCW 69.50.325, .331. Under the law, marijuana producers, processors, and retailers must operate under Board-approved licenses. RCW 69.50.325. Board licenses are site-specific, meaning they are valid only if used at the location approved by the Board in a license application. Id .

¶3 In December 2015, Kittitas County (the County) notified the Board of its objection to a license application for a marijuana producer/processor operation. The objection was based solely on the location of the operation.¹ Marijuana production and processing is permitted in the county only "in certain land use zoning designations" and "under strict conditions." Clerk’s Papers (CP) at 31; see also Report of Proceedings (RP) (Dec. 22, 2017) at 6-7.

¶4 The Board granted the license over the County’s objection. In correspondence to the County, the Board indicated that it could not base its denial of an application on local zoning laws.

¶5 In February 2017, the County petitioned the Board under RCW 34.05.240 for a declaratory order. The County argued the site-specific nature of marijuana licenses means that licensing decisions are subject to local zoning regulations.

¶6 In May 2017, the Board rendered a decision on the County’s petition after issuing a notice of proceedings and receiving input from numerous cities and counties. Although the County’s position garnered significant support from various municipalities and county governments, the Board determined that neither the marijuana licensing statute nor the GMA required its adherence to "all local zoning laws and land use ordinances prior to granting a license." Id. at 235.

¶7 The County successfully appealed the Board’s decision to the Kittitas County Superior Court. In reversing the Board’s decision, the superior court ordered the Board to "only approve those licenses which are in compliance with local zoning." Id. at 330; see also RP (Dec. 22, 2017) at 38.

¶8 The Board brings this appeal seeking reversal of the superior court’s order.

ANALYSIS

¶9 The Board’s appeal comes to us via the Administrative Procedure Act, chapter 34.05 RCW. In this context, we review the Board’s decision, not that of the superior court. Goldsmith v. Dep’t of Social & Health Serv., 169 Wash. App. 573, 583-84, 280 P.3d 1173 (2012). Because the Board’s decision here turns on statutory interpretation, our review is de novo. State v. Evans, 177 Wash.2d 186, 191, 298 P.3d 724 (2013). We begin with the statute’s plain language, and end our analysis there if the text is unambiguous. Id. at 192, 298 P.3d 724. In addition, if a statute has been interpreted by state agencies with relevant administrative expertise, we will give that agency’s legal interpretation substantial weight. Verizon Nw., Inc. v. Emp’t Sec. Dep’t, 164 Wash.2d 909, 915, 194 P.3d 255 (2008).

Marijuana licenses and the GMA

¶10 According to the County, the GMA requires the Board to deny marijuana licenses to marijuana producers, processors, and retailers whose site locations are in areas with local zoning restrictions. This argument is based on RCW 36.70A.103, which states:

State agencies required to comply with comprehensive plans.

State agencies shall comply with the local comprehensive plans and development regulations and amendments thereto adopted pursuant to this chapter except as otherwise provided in RCW 71.09.250 (1) through (3), 71.09.342, and 72.09.333.

The provisions of chapter 12, Laws of 2001 2nd sp. sess.^[2] do not affect the state's authority to site any other essential public facility under RCW 36.70A.200 in conformance with local comprehensive plans and development regulations adopted pursuant to chapter 36.70A RCW.

The County reasons that, because the Board is a state agency, this statute requires it to adhere to local zoning restrictions when issuing site-specific marijuana licenses.

¶11 The Board counters that RCW 36.70A.103 applies only to actions taken by a state agency acting in its proprietary capacity as the developer or operator of a public facility site. Because licensing decisions—even if site specific—do not involve a state agency acting in its proprietary capacity, it argues this statute is inapplicable.

¶12 The plain language of RCW 36.70A.103 favors the Board’s approach. As worded, the statute is concerned with governmental agencies involved in siting public facilities. According to the statute, when a governmental agency is involved in siting a public facility, it must follow generally applicable zoning rules, except in certain limited circumstances.³

While RCW 36.70A.103 requires governmental actors to abide by the same zoning rules as regular citizens, nothing in the statute suggests state agencies must be concerned with local zoning restrictions when engaged in purely governmental functions, such as determining the appropriateness of a state license.

¶13 Regulations promulgated by the Department of Commerce support the view that RCW 36.70A.103 is directed at governmental agencies involved in siting public facilities.⁴ Specifically, WAC 365-196-530(2) states:

The department construes RCW 36.70A.103 to require each state agency to meet local siting and building requirements when it occupies the position of an applicant proposing development, except where specific legislation explicitly dictates otherwise. This means that development of state facilities is subject to local approval procedures and substantive provisions, including zoning, density, setbacks, bulk and height restrictions.

(Emphasis added). Outside of the siting and development context, the regulations recognize the GMA imposes no strict obligations on state agencies. Instead, the GMA merely "implies" that governmental agencies "should take into account" growth management programs when engaged in "discretionary decision making." WAC 365-196-530(4).

¶14 The Board’s decision to issue a marijuana license is not a siting activity. Although the licenses are location-specific, they do not confer final authority to actually open a marijuana site. The Board’s regulations specify a license holder must comply with local laws—including zoning requirements—before going into business. WAC 314-55-020(15).

¶15 Because a marijuana license does not authorize the siting of a marijuana business, the Board cannot fail to "comply" with RCW 36.70A.103 merely by conferring marijuana licenses without regard to zoning restrictions. Zoning laws remain in full force regardless of whether a license is issued. The Board’s decision to license a business in a zoning-restricted area may mean the license will have little utility.⁵ But nothing in the limited nature of the Board’s license changes local development plans or undermines the GMA’s policy of coordinated development.

License requirements under the marijuana laws

¶16 The County claims that even if the GMA is inapplicable to the Board’s licensing decisions, the state’s marijuana laws themselves require the Board to adhere to local zoning rules in issuing licenses. The County points to RCW 69.50.331(7), which requires the Board to notify local governments of marijuana license applications and renewals, and to allow an opportunity for input. In addition, RCW 69.50.331(10) specifies that in making a licensing decision, the Board "must give substantial weight to objections from" local governmental authorities based on concerns regarding "chronic illegal activity."

¶17 The County’s reliance on the marijuana licensing statute is misplaced. That statute requires only communication with local governments; it does not require compliance with local zoning laws. If the legislature intended to require the Board to adhere to local zoning laws, it would have done so directly. See RCW 69.50.331(8)(e). The marijuana licensing statute sets forth numerous circumstances requiring license denial. RCW 69.50.331(1)(b), (2)(b), (8). Noncompliance with local zoning standards is not one of them.

¶18 Instead of tethering the Board’s licensing decisions to local zoning standards, the legislature has explicitly recognized that the Board’s licensing decisions are independent of local zoning restrictions. In 2017, the legislature amended the marijuana laws to address the plight of marijuana licensees who have been unable to open their businesses due to zoning restrictions. LAWS OF 2017, ch. 317, § 1. Normally, a licensee’s failure to begin operations within 24 months of licensure will result in license forfeiture. RCW 69.50.325(3)(c)(ii)(B). But under the 2017 amendment, a licensee who is unable...