Strengthening Fairness in Cannabis Retail Ownership: Rulemaking for SB 5403

Washington’s cannabis industry continues to evolve, and with it, the rules that ensure fairness, transparency, and sustainability. Senate Bill 5403, passed during the 2025 legislative session, addresses one of the most critical equity and compliance issues in the market: how financial and management agreements are structured across retail cannabis licenses.

From the very beginning, The Cannabis Alliance worked closely with groups like the Washington CannaBusiness League (WCLA) and the Sun and Craft Growers Association to present a united front in advocating for clear, balanced, and enforceable rules. Together, we urged the Legislature to act in a way that preserves Washington’s diverse retail landscape while ensuring consistent application of the law.

Why SB 5403 Matters

Under existing law, no person or entity may hold a financial or ownership interest in more than five retail cannabis licenses. As the market matured, increasingly complex management and financial agreements began to blur the line between independent ownership and control. These arrangements risked concentrating market power and undermining the intent of the five-store limit, which was designed to maintain a diverse and competitive retail ecosystem.

SB 5403 provides essential clarity by limiting the types of management, brand, and financial agreements that can extend control beyond five licenses. It refines the definition of “financial interest” and prohibits agreements that convey control, profit-sharing, or decision-making authority across multiple retail operations, even when structured indirectly. This legislation protects small and independent retailers while reinforcing a fair marketplace that rewards integrity, transparency, and accountability.

The Cannabis Alliance’s Role

The Cannabis Alliance played a key role in developing and improving SB 5403 throughout the process:

• Engagement with LCB: Before the bill was introduced, we met with the Liquor and Cannabis Board to discuss concerns about complex ownership and management agreements that appeared to sidestep the spirit of the five-store limit.

• Legislative advocacy: During the session, we worked closely with bill sponsors, committee staff, and allied organizations to ensure that the language in SB 5403 was clear, enforceable, and balanced between flexibility and oversight.

• Community mobilization: Ahead of the Senate hearing, we issued a call to action to members and partners across the state. The strong response from our community helped shape key amendments and led to a proposal to adjust the content of the original bill before it advanced.

• Refinement and passage: Through ongoing dialogue with legislators and stakeholders, we advocated for a framework that prevents hidden consolidation while allowing legitimate management support structures to remain viable.

Beyond Compliance: Rethinking Fairness in the Marketplace

At its core, SB 5403 is not only about compliance — it’s about how we define fairness in a maturing industry. For decades, U.S. antitrust law has been guided by what’s known as the consumer welfare standard, a framework that measures market success by price and efficiency. Under that logic, if consumers pay less, the market is considered healthy.

But cannabis challenges that narrow lens. In a market shaped by prohibition, limited licensing, and community reinvestment goals, success cannot be measured by price alone. Fairness must also account for ownership diversity, community access, and the long-term sustainability of small and mid-sized operators who form the backbone of Washington’s regulated system.

By reinforcing the intent of the five-store limit, SB 5403 quietly reasserts a broader principle — that market concentration is not inevitable, and that regulation can be designed to promote community benefit alongside competition. In this sense, the bill reflects a new kind of antitrust thinking, one rooted in inclusion, resilience, and public trust rather than mere efficiency.

What Happens Next

With SB 5403 now signed into law, the LCB has entered the rulemaking phase to determine how these provisions will be implemented. This process will define how “financial interest” and “management agreements” are interpreted and enforced. Your input is essential to ensure the final rules protect equity, transparency, and opportunity for all licensees.

Upcoming Public Engagement Opportunities

The LCB will host two public virtual engagement sessions to gather feedback from stakeholders and the public:

Thursday, November 6 | 1:30 – 3:30 p.m.
Join on your computer, mobile app, or room device – Click here to join the meeting

Friday, November 7 | 9:30 – 11:30 a.m.
Join on your computer, mobile app, or room device – Click here to join the meeting

Call to Action

We encourage all stakeholders to participate in these sessions or submit written testimony to the LCB. Your perspectives will help ensure the final rules reflect the true intent of SB 5403: a fair, transparent, and competitive cannabis retail market that keeps opportunity within reach for small and independent operators.

Through collaboration and clear policy, we can sustain a cannabis industry that reflects Washington’s values of fairness and integrity.