WA House COG - Committee Meeting
(February 5, 2021)

Friday February 5, 2021 10:00 AM - 11:45 AM Observed
Washington State House of Representatives Logo

The Washington State House Commerce and Gaming Committee (WA House COG) considers issues relating to the regulation of commerce in alcohol, tobacco and cannabis, as well as issues relating to the regulation and oversight of gaming, including tribal compacts.​

Public Hearing

  • HB 1443 - "Concerning social equity within the cannabis industry."
https://app.leg.wa.gov/committeeschedules/Home/Documents/28501

Observations

Legislation which would expand the scope of the state’s cannabis social equity program, assistance grants, and social equity task force received a welcoming policy committee hearing.

Here are some observations from the Friday February 5th Washington State House Commerce and Gaming Committee (WA House COG) meeting.

My top 3 takeaways:

  • Representative Melanie Morgan, the sponsor of the bill, and staff introduced the committee to legislation to refine and expand applicant criteria as well as the scope of authority of the state’s cannabis industry social equity task force.
    • At the Washington State Legislative Task Force on Social Equity in Cannabis (WA Task Force on Social Equity in Cannabis) January 25th meeting, a consensus on next steps emerged among members resulting in the adoption of two motions. The first was on social equity applicant criteria, which the group resolved to open up to consider applicant race in addition to location. The second recommended that the legislature modify the technical assistance grant program criteria to allow otherwise eligible current licensees to apply for funds allocated by the state but unable to be disbursed until the Washington State Liquor and Cannabis Board (WSLCB) received guidance on the equity applicant process.
    • WA House COG Research Analyst Kyle Raymond briefed members on HB 1443 following background information about the original law, grant program, and existing structure of the task force (audio - 11m, video).
      • HB 2870. Raymond described the originating legislation, which was signed into law in 2020, as permitting “marijuana retailer licenses that have been subject to forfeiture, revocation, cancellation, or were not otherwise issued” to be “issued or reissued to a social equity applicant who meets the requirements for the retail license” by WSLCB. Eligible applicants were expected to provide a social equity plan “with other application materials,” he said. WSLCB was empowered to “add additional social equity plan components or requirements following consultation with cannabis social equity stakeholders including the Washington State Commission on African American Affairs (CAAA).” Raymond then said that in determining applicant eligibility, the agency could prioritize “based on the extent to which the application addresses the components of the social equity plan” and reviewed definitions in RCW 69.50.335 for ‘Social equity applicant,’ ‘Disproportionately impacted area,’ and ‘Social equity goals.’ Raymond noted that WSLCB could “further define” disproportionately impacted areas after consulting with CAAA and “other stakeholders.”
      • Technical Assistance Competitive Grant Program. Raymond established that the grant program was run through the Washington State Department of Commerce which had to “award grants on a competitive basis to retail license applicants who are social equity applicants submitting a social equity plan under the program.” Moreover, the Department was mandated to “award grants primarily based on the social equity plan submitted by applicants but they may also consider additional criteria as deemed necessary,” he said. Raymond reported that the grants had been funded by the legislature “with a $1.1 million appropriation from Washington’s dedicated marijuana account” and could be spent:
        • “Navigating the retailer licensure process, marijuana-business specific education, and business plan development,”
        • “Financial training,”
        • Connecting applicants “with established industry members, tribal enterprises, programs for mentoring, as well as other forms of support” sanctioned by WSLCB.
      • Task Force. Raymond said the group’s purpose was to advise WSLCB on the social equity program, including “establishing a program for the issuance and reissuance of existing retail licenses,” He further explained that the task force could advise “the Governor and the Legislature on policies that will facilitate the development of the social equity program.” He noted the legislative mandate for the task force was set to expire June 30th, 2022; went over task force membership; and acknowledged that the group’s first report had been due to lawmakers in December 2020. 
    • Turning back to HB 1443, Raymond told the committee the bill would modify the grant program, applicant criteria, and the task force itself.
      • For the grants, he said “eligible applicants under the program are expanded to include all existing cannabis license holders who meet the social equity applicant criteria” as well as new equity applicants. Commerce staff would be expected to “create a pilot program by August 2nd, 2021 to provide technical assistance to current cannabis retail licensees” who met criteria for eligibility, Raymond stated, and “must allocate a minimum of $150,000 for the pilot program...and the activities include infrastructure projects, technology upgrades, incubator and mentorship programs, as well as supplies.” Grant recipients were expected to “demonstrate that the project has been completed within twelve months of receiving the grant,” he added
      • The social equity program itself would be extended a year to July 1st, 2029, Raymond remarked, “in addition, under the program a couple of the key terms previously mentioned are modified.”
        • The “Disproportionately Impacted Areas” definition removed mention for the task force to consult “stakeholders” in favor of “commissions and advocates." The amount of time an applicant must have lived in disproportionately impacted areas was modified from “five out of the previous ten years” to any five years “between the period of time of 1975 and 2015.”
        • Criteria “to be considered a social equity applicant are also modified” to allow that “conviction of a drug offense of an applicant or a family member is added as a qualifying factor.”
        • Furthermore, applicants “must meet criteria defined in rule” by WSLCB which “must consult with” CAAA and “other commissions, agencies, and advocates as determined by the liquor and cannabis board before adopting these rules of further defining the criteria.”
          • In a September 2020 email, lead task force staffer Christy Curwick-Hoff discussed I-200, an initative voted into law in 1998 which provides that the State “shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.” Sent to WSLCB leadership, Hoff’s email asked “What guidance have you received (if any) about how it may apply to licensing? I’m thinking about the ‘place based’ definition in HB 2870 and am wondering if the TF can even have a conversation about a more ‘persona based’ approach based on race/ethnicity and other factors… I have also asked this of Yasmin Trudeau who is representing the [Washington State Office of the Attorney General] on the Task Force.”
          • During her introduction to the task force in October 2020, Senator Rebecca Saldaña noted I-200 and said the State had no problem “with affirmative action as long as it’s affirmatively advancing and consolidating opportunities for white individuals that have settled here in the state of Washington and that everyone else needs to have barriers set up for them to be able to access the fullness of their lives” (audio - 5m, video).
          • The Attorney General’s Office has released one opinion on I-200.
      • Raymond said the task force’s purpose would be “expanded to include providing recommendations” to WSLCB “on the issuance of existing cannabis producer and processor licenses.” And “members are added to the task force” so that there would be “two processors and two producer license holders” represented “in comparison to two total.”
      • Required task force recommendations would be expanded to include:
        • “The social equity impact of altering residential cannabis agriculture regulations,”
        • “The impact of shifting the primary regulation of cannabis production” from WSLCB “to the [Washington State] Department of Agriculture (WSDA),”
        • “The impact of removing nonviolent cannabis related felonies and misdemeanors” from consideration when obtaining a license,
        • “Whether to create...workforce training opportunities for underserved communities to increase employment opportunities in the cannabis industry,”
        • “An additional recommendation is added....related to the social equity impact of reducing or ending the funding directed to the Washington State Patrol (WSP) drug enforcement task force and redirecting those funds to the cannabis social equity program,”
          • Under the 2020 Supplemental Biennium Operating Budget, the WSP received $5,246,000 for fiscal years 2020 and 2021 with the vast majority of the money “provided solely for the Washington state patrol to partner with multi-jurisdictional drug and gang task forces to detect, deter, and dismantle criminal organizations involved in criminal activity including diversion of marijuana from the legalized market and the illicit production and distribution of marijuana and marijuana related products in Washington state.”
        • “The social equity impact of creating new cannabis license types.”
          • License types common outside Washington include cannabis delivery; states including California and Michigan provide licensing for events, wholesale distribution, and microbusinesses as well.
      • Raymond also said the “due date” for recommendations from the task force was “extended to January 10th, 2022.”
    • Representative Melanie Morgan, Co-Chair of the social equity task force and a WA House COG member, introduced her proposal as a "bicameral effort” and credited senate staff “for laying out the bill language” (audio - 3m, video).
      • The group’s delayed start left “the original reporting deadline unattainable,” Morgan said, and task force members had “realized the limitations of the original authorizing legislation.” Morgan told colleagues that the task force had “lots of agreement from the community during public comment to broaden our approach” and appointees had voted to “provide a true, comprehensive social equity plan” which required “expanding the scope of the task force work.”
      • Calling attention to a recent committee work session on February 4th, she said “there is language, especially around disproportionality, that will be carried over from the original legislation.” She stated that HB 1443 addressed “gentrification and drug offenses;" allowed for additional recommendations from the task force to WSLCB; and expanded “task force size to include two processor license holders” and scope to “include all cannabis licensing." Morgan explained that the bill addressed “existing technical assistant grants and creates expedit[ed] small pilot programs” which, like the initial law creating the task force, was “extremely important for inclusion.”
    • Committee Chair Shelley Kloba inquired as to the ability for task force recommendations to “go directly into rulemaking and bypass the legislature.” Morgan responded “yes and no,” saying the provision in question regarded “recommending criteria for the LCB to get, not necessarily rule changing at all.” She said the bill required “that that all comes through the legislature...so this is just about allowing the LCB to implement social equity applicant criteria at a faster pace if the task force has already agreed this is the criteria.” Speaking to the authority vested in the task force, Morgan said “a lot of that has already come from the previous piece of legislation.” She mentioned that the task force could move to include “additional criteria” for WSLCB consideration without further legislative authorization (audio - 2m, video).
  • Paula Sardinas, the social equity task force Co-Chair, provided an enthusiastic endorsement of the bill.
    • Sardinas, the CAAA commissioner appointed to the task force, was grateful for Morgan’s sponsorship of the “incredible” legislation. “This is a culmination of more than 300 interviews the commission has conducted from Spokane to Bellingham,” which she said showed communities had been “left out of I-502...and they needed some diversity, equity, and inclusion” (audio - 3m, video).
      • Sardinas believed that HB 1443 "summarized everything" the task force and public had been asking for, and was “probably without question one of the most excellent pieces of cannabis social equity legislation" she’d encountered.
      • The bill addressed the “unfair, very predatory, and discriminatory war on drugs for the African American community” she said, while also considering the absence of “tools and the resources in our communities to be competitive” within the cannabis sector by providing grant money.
      • "This bill is a healing process for the Black community," Sardinas explained, thanking the bill’s backers who drafted a “representation of the entire Black community, 318,000 Washingtonians that are asking for equity in this industry."
  • A representative of the Washington State Department of Agriculture asked for inclusion in discussions about shifting cannabis regulatory powers to their agency, and people who signed in with a position on the bill were acknowledged by the committee.

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