WA Senate - Session - Afternoon
(March 14, 2019)

Here are some observations about a new cannabis bill, SB 5985. This unusual bill was introduced on March 14th—the day after the house of origin cutoff—and attempts to revive parts of particular cannabis bills which were not moved by the usual means.

My top 3 takeaways:

• SB 5985 may be designated necessary to implement the budget (NTIB) to enable consideration by the legislature after cutoff deadlines have passed.
  • Senate Concurrent Resolution 8400, which established the cutoff calendar for the 2019 regular session, states: “the following cutoff dates apply to all bills, memorials, and joint resolutions with the exception of budgets, matters necessary to implement budgets, matters that affect state revenue, initiatives to the legislature, and alternatives to initiatives to the legislature…”
  • Governor Jay Inslee’s proposed 2019-20 biennial budget highlights includes the following mention in the General Government section:
    • Enhance cannabis enforcement and licensing efforts. Boost cannabis enforcement and licensing activities to meet the growth in the number of cannabis licensees. ($3 million Dedicated Marijuana Account State)
  • It is Cannabis Observer’s understanding that designation of a bill as NTIB is a parliamentary procedure that is not formally defined. We were unable to confirm if SB 5985 has been designated NTIB, and still consider the bill sufficiently unusual to merit attention.
• SB 5985 – “Concerning provisions impacting marijuana business licensees.”
  • The bill would raise the cap on ownership by individuals, while creating residency, naming, disclosure, and transfer exceptions for cannabis licenses based upon businesses paying a fee and having a labor peace agreement in effect. The bill would also amend retail signage statutes, add definitions, and require disclosure of licensee demographic information to the Washington State Liquor and Cannabis Board (WSLCB).
  • Section 1 would amend RCW 69.50.342 to limit WSLCB rulemaking regarding:
    • Licenses held in aggregate,
    • True parties of interest (TPI),
    • In-state residency requirements.
  • Section 2 would amend RCW 69.50.331 to create an exception regarding who needs to be named or disclosed on licenses for businesses or nonprofits with labor peace agreements in effect. The bill would allow cancellation, suspension, or revocation of previously approved licenses which no longer maintain a labor peace agreement. It would also allow license transfer “upon the death or incapacity of the owner” to an heir, even if they are not yet 21, in accordance with RCW 11.114.
  • Section 3 would add a new section to RCW 69.50 outlining labor peace agreements, stating that licensees must submit a signed “attestation” to WSLCB that the business “has entered into a labor peace agreement with the bona fide labor organization” if:
    • The business is not “formed under the laws of this state.”
    • “[Not] all interest holders who must qualify for the license have lawfully resided in the state for longer than six months before applying” so long as 60% of the “interest holders meet the residency requirements.”
    • Retailers who “would hold more than a collective total of five marijuana retailer licenses but not more than a collective total of seven marijuana retailer licenses.”
    • Producers or processors who “would collectively hold more marijuana producer or marijuana processor licenses than any limit established under board rules for marijuana producers or marijuana processors without labor peace agreements in effect.”
  • Section 3 would also allow for conditional licensing, so long as applicants meet all other requirements and compliance is achieved before “final license approval.” Labor peace agreements are an “ongoing material condition” of the license. WSLCB may suspend, revoke, or cancel a license without an agreement in effect and collect fees to “recover any additional costs incurred in investigating any nonresident required to be investigated” for a license.
  • Section 4 would amend RCW 69.50.325 to raise the number of licenses individuals can own to seven retail licenses and “up to two more marijuana producer or processor licenses than would otherwise be allowed under rule” if the licensees have labor peace agreements in effect.
  • Section 5 would amend RCW 69.50.369 regarding advertising to:
    • Include “reader boards” in addition to two fixed signs allowed for retailers and remove dimension limits.
    • Allow local governments to “adopt rules of outdoor advertising by marijuana retailers that are less restrictive than the advertising restrictions imposed under this chapter, so long as the rules are consistent with the signage provisions allowed for other businesses.”
    • Allow local governments to “regulate the signage for marijuana retailers in terms of number, size, and content, except for the restrictions concerning advertising that is appealing to children and the restriction on location of signs” identified in the subsection.
  • Section 7 would require disclosure from “Applicants for marijuana licenses,
    marijuana licensees, and interest holders in marijuana businesses” of demographic data “including gender, race, ethnicity, and related geographic distribution” to WSLCB which will “report the aggregate data to the relevant committees of the legislature” by January 1, 2020.
  • Section 8 would require collection of “an additional fee of one thousand dollars for each additional license it issues” under labor peace agreements.
  • Section 2 would add definitions for “Entity”, “Interest”, and “Interest holder” to RCW 69.50.331 and section 6 would add “Board” and “Labor peace agreement” to RCW 69.50.101.
• SB 5985 incorporated policy concepts that were proposed via other legislation, or had previously been discussed by licensees or the WSLCB.
  • Senator Rebecca Saldaña is the bill’s primary sponsor. She sits on the Senate Labor and Commerce Committee where the bill was referred. Senators Ann Rivers and Guy Palumbo are cosponsors.
  • Labor Peace Agreements. SB 5985’s proposed changes to cannabis licensure based on labor peace agreements—including raising the limit on licenses held in aggregate, out-of-state ownership, and naming and disclosure requirements—are similar to HB 1289 and the substituted version of HB 1236.
    • Here are details on the policy committee public hearing for HB 1289. The bill was not referred out of its policy committee. Here is the House bill analysis for HB 1289.
    • Here are details on the policy committee public hearing for HB 1236 and the executive session where some of HB 1289’s changes were amended into a substitute bill. SHB 1236 was subsequently mentioned by WSLCB Director of Legislative Affairs Chris Thompson during the February 26th Board caucus. The bill was not heard by the House Appropriations Committee before the house of origin cutoff. Here is the House bill report on SHB 1236.
    • HB 1236’s companion bill in the Senate, SB 5409, was sponsored by Senator Palumbo and co-sponsored by Senator Rivers but was not heard by its policy committee.
  • Billboards/Advertising.
    • Bills seeking to ban billboards (HB 1466), and expand advertising in private venues (HB 5785) were considered earlier this year. Here are details on HB 1466’s policy committee executive session.
    • The changes are similar to a recent public comment to the WSLCB Board by licensee Eric Gaston who suggested WSLCB consider relinquishing some authority over advertising signage to local jurisdictions.
  • Demographic Data.
    • WSLCB planned to hire a “limited duration” employee last summer to update licensee demographic information, a project led by Board Member Ollie Garrett after public testimony by licensees last spring.