WA Senate WM - Committee Meeting
(February 17, 2021)

Here are some observations from the Wednesday February 17th Washington State Senate Ways and Means Committee (WA Senate WM) meeting.

My top 3 takeaways:

• Legislation which would exempt medical cannabis patients registered with the State from paying the 37% cannabis excise tax was considered during a committee executive session.
  • SB 5004 ("Providing a tax exemption for medical marijuana patients") was heard by WA Senate WM members on January 18th. The prime sponsor, Senator Karen Keiser, first mentioned her intent to introduce the bill during a legislative work session in November 2020.
  • WA Senate WM Revenue Counsel Alia Kennedy reviewed the bill which “Provides an exemption to the 37 percent excise tax for certain purchases made by qualifying medical marijuana patients who are in the statewide database and hold a recognition card” (audio - 2m, video).
  • She then went over the most recent fiscal note.
    • Kennedy said, “in the original fiscal note the bill reduced dedicated marijuana revenues by about $7.5 million this biennium, and $10 million in the next. The revenue reduction is now about seven and a half thousand per biennium.”
      • In making their initial projections, WSLCB staff admitted the revenue impact of the bill was ‘indeterminate’ as the agency didn’t know which tax exempt sales qualified. After receiving better information from advocates, the agency issued a revised fiscal note which anticipated revenue reductions closer to $500K. That amount was further reduced in the third fiscal note presented to the committee.
    • The final estimates for cash receipts and operating expenditures totaled:
      • FY 2021-23: $5,295 (receipts) $54,236 (expenditures)
      • FY 2023-25: $7,442 (receipts) $62,472 (expenditures)
      • FY 2025-27: $7,562 (receipts) $64,472 (expenditures)
  • Kennedy then described proposed amendments to the legislation:
    • 5004 AMS WM S1010.1 from Chair Christine Rolfes was immediately withdrawn. The amendment had been filed prior to the committee’s February 11th meeting when SB 5004 was first scheduled to receive an executive session, but no action was taken. The amendment would have restricted the exemption to sales of “high CBD compliant product.”
    • 5004 AMS WM S1052.2 from Ranking Member Lynda Wilson would end “the tax exemption on qualifying medical marijuana products on January 1, 2025.”
    • 5004 AMS WM S1138.1 from Keiser would end the patient exemption earlier, “on January 1, 2023; and requires the Joint Legislative Audit and Review Committee (JLARC) to conduct a study to determine whether the exemption results in any changes in consumer behavior or unanticipated decreases in state revenue, and submit a report of its findings to the Legislature by December 1, 2023.”
  • Chair Christine Rolfes observed that before committee hearings were organized remotely, Wilson and Keiser would’ve negotiated which amendment to vote on. She offered the opportunity for either senator to propose which one to advance and Wilson said she’d confer with Keiser.

• Committee members agreed to an amendment that would eliminate the tax exemption in 2025 and require a study of its impact (audio - 7m, video).
  • Wilson withdrew her amendment. Keiser explained that she and Wilson had reached an agreement “to do an oral amendment of the date, so that instead of having the bill expire in 2023 it expires in 2025, and the date for the JLARC study is also moved to 2025.” A brief conversation ensued about whether lawmakers should receive the study prior to the tax expiring and Keiser agreed to have the study due to the legislature in December 2024. Senators adopted the amendment by a unanimous voice vote and Julie Murray, WA Senate WM Senior Budget Counsel, indicated she would implement the change to Keiser’s amendment. Rolfes shared her gratitude to Keiser and Wilson for “working this out and I think we’re going to get this accomplished.”
  • Having voted to modify Keiser’s amendment, the committee unanimously approved inclusion of the amendment in SB 5004.

• Democratic members voted to move the legislation forward while Republican members were divided on the bill.
  • Robinson moved passage of the bill out of committee. A roll call vote was taken which resulted in 20 yeas and 5 nays. Republican votes were split on the bill, with five supporting its advancement and five opposed.
  • Most of the opposition voted ‘do not pass’ on the legislation:
    • Assistant Ranking Member for Capital Jim Honeyford
    • Assistant Ranking Member for Capital Mark Schoesler
    • Senator John Braun, Republican Leader
    • Senator Chris Gildon, Republican Deputy Floor Leader
  • One senator voted against the bill ‘without recommendation’:
    • Assistant Ranking Member for Operating Sharon Brown, Republican Deputy Leader
  • Following approval by the committee, Rolfes confirmed the bill would be sent to WA Senate RULE to be considered for a pull to the chamber’s floor calendar for its second reading. At publication time, the bill remained in WA Senate RULE.