Washington’s cannabis market saw action on three fronts in October 2026. The Washington cannabis medical certificate cleared the Liquor and Cannabis Board, giving state licensees a way to document their regulatory status as federal rescheduling reshapes who qualifies for tax relief. Pasco widened its retail cap to five stores, and a residency dispute out of the state reached the U.S. Supreme Court.
Top Headlines This Month
- 📋 LCB approves medical cannabis certificate for state licensees
- 📋 Pasco raises retail cannabis cap to five outlets
- ⚖️ Supreme Court asked to review residency licensing rules
📋 WASHINGTON: LCB APPROVES MEDICAL CANNABIS CERTIFICATE FOR STATE LICENSEES
The Washington State Liquor and Cannabis Board voted 3-0 to create a new certificate that would let Washington cannabis businesses prove they engage in “state-authorized medical cannabis activities,” according to MJBizDaily reporting published October 8. The board acted on a petition from The Cannabis Alliance, a statewide industry advocacy organization, which laid out the request in an August letter. The context is Washington’s single-permit structure. Unlike most other states with mature cannabis markets, the state licenses businesses in its roughly $1.1 billion annual market through a single adult-use permit, with no separate medical license. That became a complication after the April federal Justice Department final order reclassified state-licensed medical marijuana as a Schedule 3 drug, because benefits such as federal tax relief under IRS Code 280E and registration with the U.S. Drug Enforcement Administration appear limited to compliant medical businesses. The board approved the certificate over opposition from its own staff, who argued that a licensee holding a medical certificate could still sell to adult-use consumers, which very likely would not conform to federal medical cannabis standards.
The certificate is meant to give licensees state-issued documentation of their regulatory status as they seek banking, federal registration, research participation, or insurance coverage, without forcing a brand-new license designation that could stand between them and the DEA. It is not clear when Washington businesses will be able to obtain the certificate, and regulators are still waiting on the U.S. Treasury Department for details on what qualifies a licensee for 280E relief and when it applies.
📋 PASCO: COUNCIL RAISES CANNABIS RETAIL CAP TO FIVE OUTLETS
On September 21, the Pasco City Council voted 4 to 3 to amend municipal code and expand the number of allowed retail cannabis licenses from four to five. The same measure increased the city’s social equity reserved licenses from one to two, so a second reserved license is now set aside under that track. Council also added driving schools to the list of uses that trigger a 1,000 foot separation requirement for retail cannabis locations, with limited grandfathering for existing businesses. Council member Figueroa moved the amendment to add driving schools, and the Community & Economic Development Deputy Director Craig Raymond was part of the discussion. The vote came after public comment and council debate.
The added fifth storefront slot opens a new retail opportunity in Pasco, while the second reserved license channels one of those slots specifically through the social equity track. The driving school separation rule tightens where new retail can site, because any parcel within 1,000 feet of a driving school now falls under the buffer, though existing businesses keep limited protection under the grandfathering provision.
⚖️ WASHINGTON: SUPREME COURT ASKED TO REVIEW CANNABIS RESIDENCY LICENSING RULES
Michigan resident Kenneth Gay has petitioned the U.S. Supreme Court to reverse a ruling from the Ninth Circuit Court of Appeals that upheld the denial of cannabis licenses to his companies, Peridot Tree WA, Inc. and Peridot Tree, Inc., in Washington State and Sacramento, California. The denials rested on his nonresident status, and the Ninth Circuit found that the Constitution’s Dormant Commerce Clause, which bars protectionist state laws that unduly restrict interstate commerce, does not extend to activity that remains illegal under federal law. The petition, published September 16 by Marijuana Moment, argues that the Ninth Circuit’s opinion is wrong because the Dormant Commerce Clause is a self executing limit on state power and federal illegality does not authorize discrimination. It points to a split among federal appeals courts, noting that the First Circuit and the Second Circuit reached different conclusions, finding that cannabis licensing schemes in Maine and New York respectively likely violate the Dormant Commerce Clause by favoring state residents.
Nearly all states with legal cannabis markets limit the number of licenses they issue, so the outcome would govern who may compete for a finite pool of permits in Washington and beyond. A Congressional Research Service report said the split among lower courts likely increases the odds that the Supreme Court takes up the question, though it added that the justices might instead wait to see how analysis evolves in light of the Trump administration’s move to federally reschedule some state medical marijuana activities. The report also noted that Congress holds the power to settle the matter itself, either by authorizing residency preferences outright or by expressly barring states and localities from favoring residents over nonresidents.
The Bottom Line
The Washington cannabis medical certificate gives state licensees paperwork to prove their regulatory status while federal 280E details remain pending. Pasco added a fifth retail slot and a second social equity license, and the question of residency rules in cannabis licensing now sits before the U.S. Supreme Court.
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