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If you’re considering entering the CBD industry in Washington, you’re in the right place. Securing a CBD license is your gateway to legally launching your business in a dynamic market. This guide will detail the essential steps and requirements to navigate the licensing process successfully. We’ll cover everything from starting your CBD business and obtaining a Washington CBD license to understanding the legal framework and opening a merchant account.
How to Start a CBD Business in Washington
To start a CBD business, begin by creating a detailed business plan that outlines your goals, product offerings, marketing strategies, pricing structure, and operational tactics.
Next, select the right legal structure for your business. Options include forming an LLC, partnership, or corporation. Individual proprietors typically own LLCs and partnerships, while shareholders own corporations—this will affect income generation and taxation.
Now, move on to the registration phase. In Washington, the Washington State Liquor and Cannabis Board (WSLCB) manages all hemp applications and related queries. You will need an Employer Identification Number (EIN) from the IRS to comply with tax requirements. Acquiring a Washington CBD license is essential before starting any CBD cultivation or production activities.
Following registration, establish a financial foundation for your business. Set up a dedicated bank account to facilitate access to credit and financing options, which will help build your business credit. This is crucial for securing future funding and supporting expansion efforts.
Lastly, it’s important to understand that licensing requirements can vary, but obtaining the appropriate license—whether retail, producer, or processor—is mandatory if you plan to sell, produce, or distribute hemp.
How to Get a CBD License in Washington
First, identify the specific type of cannabis license that suits your business activities, which may include production, processing, retailing, transportation, research, or cooperative registration.
Next, fill out the relevant license application form. Depending on the license type, submit your application to either the Washington State Department of Revenue’s Business Licensing Service (BLS) or the Washington State Liquor and Cannabis Board. Suppose you plan to structure your business as a corporation or LLC. In that case, you must register with the Washington Secretary of State’s office (SOS) to obtain a Unified Business Identifier (UBI) number—a crucial step for acquiring a Washington CBD license.
Remember, individuals associated with your business are required to fulfill residency prerequisites and pass criminal background checks in line with Washington state regulations.
Additionally, if your store is in a physical location, ensure your business location meets specific zoning requirements, particularly if you are seeking a retail license. The premises should not be within 1,000 feet of restricted areas such as schools, parks, and libraries.
Finally, submit your application to the designated authority and wait for approval from a Licensing Specialist before implementing any operational changes to your business.
CBD License Application Requirements for Washington
Here is what you’ll need for a Washington CBD license:
- Completed License Application
- Business Permit(s) — These permits may include zoning permits, land use permits, or any other local CBD-related permits.
- Business Structure Documentation — If your business is a corporation or LLC, you must provide documentation of your business registration. This typically includes obtaining a UBI number.
- Residency and Background Checks
- Location Compliance Information — Ensure that your business location complies with distance requirements, especially if you’re applying for a retail license.
- Additional Local, State, and Federal Licenses — Check with relevant regulatory agencies to determine if additional licenses are required.
- Insurance Requirements — Maintain commercial general liability insurance with a minimum coverage of $1 million. Product liability insurance is also required as part of the general liability policy.
- Financial Information — If you plan to accept funds from financiers, you may need to follow the application process for adding a financier and provide financial documentation. All financiers must be U.S. residents.
Laws & Regulations for Selling CBD in Washington
Washington State has enacted significant regulatory changes to CBD oversight with Senate Bill 5367, effective July 23, 2023. This legislation integrates CBD product regulation into the state’s marijuana industry. It specifically mandates that all THC-containing products, including Delta-8 THC, be sold exclusively in dispensaries with a Washington CBD license. The changes, influenced by successful lobbying from the marijuana industry, have sparked both support and opposition. The law significantly impacts CBD sales, affecting both in-state and online businesses by enforcing stringent THC testing and labeling requirements, leaving several questions unresolved.
Regarding CBD laws in Washington, CBD oil is legally available for purchase under state regulations such as RCW 69.50.326 and WAC 314-55-109. It can be used as an additive in licensed cannabis edible products to increase CBD concentration, provided these products contain less than 0.3% THC and undergo thorough testing for toxins and contaminants. Online purchases of CBD are allowed, generally requiring buyers to be at least 21 years old. While licensed cannabis retailers and dispensaries are permitted to sell CBD products, they are not available for sale in coffee shops, grocery stores, or restaurants.
How to Renew Your CBD License in Washington
To renew your Washington CBD license, follow the annual renewal process through the Department of Revenue (DOR) Business Licensing Service. You’ll receive a renewal notice 45 days before expiration, and timely payment is crucial to avoid penalties. Renewal costs depend on your license type (retail or non-retail). You can renew online if eligible or by mail using the provided form. Washington offers a Responsible Vendor Program for compliant retail licensees. If you don’t wish to renew, contact the Washington State Liquor and Cannabis Board (WSLCB) Customer Service Desk. Local authorities are informed 90 days in advance and can object or not. If they object, you can discuss or submit a rebuttal.
Start Selling CBD in Washington
Opening a CBD business in Washington State is a great idea due to the widespread acceptance of CBD products, a consumer base eager for natural wellness options, and supportive state regulations.
However, strategizing how to market and sell CBD products to your customers is crucial. Launching an online CBD business offers extensive reach, reduced overhead costs, and the ability to connect with a broader customer base, making it perfect for scalability and convenience. On the other hand, a physical CBD business allows for direct customer interaction, fosters local community support, and lends immediate credibility. Your choice should align with your marketing strategy, budget, and preference for online or face-to-face interactions. Many entrepreneurs adopt a hybrid approach, integrating online and in-store elements to maximize the advantages of both, and develop a comprehensive business model.
A high-risk merchant account is vital for a CBD business in Washington due to the industry’s perceived risks. This account provides benefits such as reliable payment processing, a lower risk of account closures, and enhanced fraud protection. Additionally, many high-risk merchant account providers offer features tailored to CBD businesses, simplifying the process for entrepreneurs to access essential payment tools. So, what are you waiting for? Contact a high-risk merchant service provider today to start processing CBD payments in Washington!
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Washington CBD License: FAQs
Is CBD legal in Washington?
Yes, Washington has legalized hemp cultivation and permits the sale of specific CBD products within the state. However, it’s important to note that only licensed businesses can sell CBD-infused products.
How much does a CBD license cost in Washington?
Here’s a list of all CBD licenses you can obtain in Washington and how much each one costs:
- Cannabis Producer License: $1,381
- Cannabis Processor License: $1,381
- Cannabis Retailer License: $1,381
- Cannabis Transportation License: $250 application fee, $1,300 license fee
- Cannabis Research License: $250 application fee, $1,300 license fee
- Cannabis Cooperative Registration: No Fee
Can you sell CBD without a license in Washington?
No, you can’t. Effective on July 23, 2023, with Senate Bill 5367, only licensed dispensaries can sell CBD-containing products in Washington.
How long is a CBD license valid in Washington?
Much like other states, a CBD license in Washington lasts one year. After that, you’ll have to renew either online or by mail to operate within the law. To avoid penalties, making a timely payment upon receiving the renewal notice 45 days before expiration is crucial.
