SEATTLE — Seattle has dropped a $1,000 fine against the nonprofit organization that runs HempFest, the annual summer marijuana celebration.

The city accused Seattle Events, also known as HempFest Central, of operating a marijuana business without a license in a citation in June. The citation stemmed from a private party of about 75 people that the organization held at a home April 20.

A city inspector said he observed attendees using marijuana. However, his declaration in support of the citation did not explain how the group had operated a marijuana business in violation of city law.

HempFest attorney Fred Diamondstone contested the fine for that reason, among others. The city prosecuted the case until late Tuesday, when the Department of Finance and Administrative Services dropped the citation.

“It’s a head-scratcher to us,” Seattle Events President Vivian McPeak said. “It’s a private gathering with a small amount of people. They’re all adults. They brought their own cannabis. We don’t sell marijuana or anything like that.”

Recreational marijuana use is legal in Washington for people 21 and older. Under city law, a “marijuana business” is any person or entity that grows, processes, sells or transports marijuana for gain or that “allows for consumption on their premises.” The law defines “premises” as the site of a marijuana producer, processor or retailer.

The finance department was dropping the citation after further review and consultation with prosecutors, spokeswoman Julie Moore said in an emailed statement.

“We do not have sufficient evidence that the location where the conduct occurred meets the definition of ‘premises’ as currently defined in the Seattle Municipal Code,” Moore wrote.

She added: “Consumption on any business premises is considered a felony under state law. As such, FAS inspectors keep abreast of any event for which consumption of marijuana is advertised as a feature of an event.”