WA SECTF - Work Group - Licensing - Public Meeting
(April 21, 2021)

Here are some observations from the Wednesday April 21st Washington State Legislative Task Force on Social Equity in Cannabis licensing work group (WA SECTF - Work Group - Licensing) public meeting.

My top 3 takeaways:

• Work group members introduced themselves.
  • Work group Co-Chair Michelle Merriweather, representing the African American community on the task force, said she was “here to help represent those that I serve and add their voice to this conversation” (audio - 1m).
  • Co-Chair Monica Martinez, a cannabis licensee appointed to the task force, was honored to serve “on this work group tasked with the important job of recommendations for equity within cannabis licensing.” She said the cannabis business she co-owned, The Calyx Co., was “a woman and Latino owned company who came into this industry with very limited funds and know the hardships of being a small cannabis farmer in Washington.” She noted that her husband would qualify as a social equity applicant under statute since “when my husband was 21 he was convicted of a cannabis-related crime that made it difficult for him to obtain a job early in our marriage.” The difficulties of this experience, coupled with Martinez’s “passion to achieve equity in Washington’s cannabis industry are what I hope to bring to the conversation” (audio - 2m).
  • Ollie Garrett stated she represented the Washington State Liquor and Cannabis Board (WSLCB) on the task force (audio - <1m).  
  • Micah Sherman, Raven Co-Owner, talked about having “spent a good portion of the last five years drafting and building support for a bill that’s kind of known as the ‘craft cannabis bill,’ which is a bill to define and differentiate small craft producers in a distinct license type that would allow us to create a similar business ecosystem to what we have for craft brewers and craft distillers.” He articulated one benefit of this distinction was building “a more equitable industry in its bones” through a “business ecosystem that allows for small businesses to thrive.” Sherman couldn’t imagine that “having a cannabis industry with four or five large companies leaves any space for something that we could describe as social equity or racial justice.” He believed cannabis policy should “support businesses of all kinds of sizes and scales and experiences” (audio - 3m).  
  • Angel Swanson, a retail title certificate holder and member of the WSLCB Cannabis Advisory Council (CAC), said she’d gotten two licenses in “areas that have moratoriums” and represented “people of color who have these licenses, and have had them for quite some time, but yet have not been able to open.” She said she’d been working with WSLCB leaders to instead “get these licenses open in areas that would welcome us” (audio - 1m). 
    • Swanson last attended a CAC meeting in May 2018. She participated in a WSLCB focus group that June on medical cannabis delivery.
    • In 2020, Swanson testified in favor of HB 2870, citing her role on CAC and contributions to development of the bill. Later that year, she lobbied the WSLCB board to move her retail title certificate to a different jurisdiction.
  • Mike Asai, former owner of Emerald City Collective Gardens (ECCG), said his medical cannabis collective was “closed in 2016” but had been the “second Black-owned [medical collective] in Washington state” and “the first downtown Seattle collective.” His intention was to “bring some insight into licensing that was done in the past” so that in “the future we won’t have these issues going forward.” Additionally, he hoped for the opportunity to “get back into the game of cannabis, legal cannabis” (audio - 1m).
  • Kevin Oliver, Executive Director of the Washington chapter of the National Organization for the Reform of Marijuana Laws (WA NORML), noted that NORML had been around for 50 years as “a nonprofit consumer lobbying organization, and public opinion lobby.” WA NORML members “provided strategic and logistical...support for [Initiative] 502,” he said, and wanted “to see equity in licensing through expanded licensing that benefits both communities and consumers” (audio - 1m).  
  • Crystal Oliver, Washington SunGrowers Industry Association (WSIA) Executive Director, participated in cannabis law reform organizations where she became acquainted with “other advocates and outlaw farmers” (audio - 4m). 
    • She volunteered for I-502 and was “undecided about whether or not I’d attempt to enter the market” ultimately choosing to “support implementation and become a licensee myself.” Oliver felt that the “structure of the Washington marketplace centered most of the power in the hands of the retail store owners who have also enjoyed significant economic benefit while the farmers have really struggled to stay afloat.”
    • Having witnessed “regulation, enforcement, and legislation really bend in favor of the well capitalized,” she said, “I came to realize that, you know, having a good business plan wasn’t going to be enough to succeed in this industry.” Oliver got involved in WSIA and had “testified before many councils, commissions, boards, and the legislature and I’ve also served on several other cannabis-specific work groups” in organizations such as “the State Building Code Council, Spokane [Regional] Clean Air Agency, Spokane Conservation District, and the LCB.” She felt the “structure of the market and our policymakers’ refusal to intentionally make space for small businesses to thrive” was a factor that prevented her “majority woman-owned” cannabis license from “realizing this and last summer I was forced to sell that business.”
    • Oliver believed in “an ideal world we would have modeled our regulated system after the informal market” which had been “much more diverse and included a greater variety of business types.” The implementation of I-502 failed to “create a good path for many to transition to the regulated industry,” she commented, and individuals who “have been adversely impacted by the drug war and who participated in civil disobedience and noncompliance with prohibition, they played a key role in preserving the cannabis plants and I believe that they deserve to be here financially benefiting from legalization.” Oliver was looking forward to the “significant structural reform” task force member recommendations could have on the cannabis sector.
    • Establishing that she supported craft cannabis licensing and an “event license” giving farmers direct sale privileges “and consumption on-site,” Oliver added the concept of a “non-storefront retail, or peddler’s, license type as well.”
  • Christy Curwick Hoff, lead WA SECTF staffer, introduced herself as manager of the Washington State Governor's Interagency Council on Health Disparities which had been staffing WA SECTF within available funding. “I’m crossing my fingers that we’ll get some dedicated funding in this next budget to be able to hire some dedicated staffing for this really important, important work,” she said. Hoff had been involved with issues of equity in the state “for 15 years now” and had abundant experience in the area as well as staffing state bodies, however, “cannabis policy is an area where I am not coming with any knowledge, this is all brand new to me.” She promised to “lean” on those with more industry expertise or know how than herself (audio - 2m).
    • The 2021-23 fiscal biennium operating budget was passed by the legislature and signed by Governor Jay Inslee on Tuesday May 18th. In it, the Washington State Department of Health (DOH) received an appropriation of “$374,000 of the general fund—state appropriation for fiscal year 2022 and $362,000 of the general fund—state appropriation for fiscal year 2023 are provided solely for implementation of Engrossed Substitute House Bill No. 1443 (cannabis industry/equity).”
  • Anzhane Slaughter, former Program Director for the Institute for Black Justice (IBJ), identified herself as a task force staffer from the Council on Health Disparities who would be in “all of the work group meetings and the task force meetings. I’m either collecting notes in the background or helping with our facilitators.” Aside from equity and justice issues, she noted her “policy and campaign background as well” and willingness to “do some policy analysis and research for you guys” (audio - 1m).  
  • Joe Radermacher, Assistant to WSLCB Deputy Director for Licensing Jeanne McShane, was an Army veteran “in logistics and supply management” and familiar with the U.S. Army Equal Opportunity Program. Looking forward to being involved with WA SECTF, he said his role would be akin to Slaughter’s “background” work while less involved in “administration” or “leading meetings or work groups or small group sessions” (audio - 1m).  
  • Elise Rasmussen, a former WA SECTF support staffer, had “recently accepted another position” with the state Environmental Justice Task Force. While she’d worked for WA SECTF “from October [2020] through March” 2021, her goal was to “make sure the meeting goes smoothly.” She looked forward to watching “how this work evolves.” Hoff spoke up to laud staff efforts to support administration of WA SECTF. Merriweather was also grateful, having found staff “support us with excellence” (audio - 2m). 
  • Pablo Gonzalez (audio - <1m) and Craig Bill (audio - <1m) were not in attendance.

• Lead task force staffer Christy Curwick Hoff provided a presentation on the scope and responsibilities of the work group (audio - 18m, presentation) .
  • Hoff started off the “foundation setting” overview, intending to provide “a really good sense of what the task force as a whole has been charged with if you don’t already, and what in particular this work group is going to be working on.” She stressed that the work group members were “not going to be making any hard decisions” but rather would make “proposals that will go to the full task force for its considerations.” Hoff felt that if members were “coming to consensus on, on direction that we would like to go, at that point our co-leads, Michelle and Monica, will take those to the full task force” whose choice it would be to adopt, reject, or modify the work group’s input.
  • After a brief background on the legislative process that created laws which usually had to be implemented via “specific processes” in rules developed by state agencies, Hoff called attention to the two bills which established WA SECTF, the social equity technical assistance competitive grant program to be administered by the Washington State Department of Commerce, and the social equity retail license application program to be administered by WSLCB:
    • HB 2870, which was passed in 2020 and created the statutes.
    • HB 1443, which had not yet passed, proposed expansion and modifications to those statutes. Hoff identified “eight areas” of required recommendations in the legislation and, specific to the work group, “whether any additional retail, producer, and processor licenses...should be issued” as well as “recommendations on whether new cannabis license types should be created.”
      • HB 1443 was subsequently signed into law on May 3rd.
  • Hoff explained that the cannabis retail licenses available were those “that have been forfeited, revoked, or cancelled, or that have never been issued, without exceeding the limit on the statewide number of retail licenses established before January of 2020.” She said there were approximately “36 licenses that have either never been issued or that have been revoked or suspended or cancelled, that are currently set aside for the social equity program.” 
    • In comments on May 11th, WSLCB leaders articulated a position that despite the authority of the board to set the number of allotted retail outlets, any increase in stores would not happen prior to receipt of a recommendation by WA SECTF which, in turn, “must be approved by the legislature.”
    • A spreadsheet of retail store allotments available by jurisdiction as of September 2020 listed 35 licenses, but Garrett clarified that out of 570 total retail allotments “there’s currently 37 open allotments but 22 of those are in ban and other” restricted jurisdictions. Hoff observed that “those numbers keep shifting” as she tried to keep an accurate number.
      • The last retail allotment increase announced by WSLCB officials in December 2016 identified the cap as 556 stores including retail title allotments that cannot be used. It is possible that Garrett’s total of 570 stores included retail stores for tribal nations with cannabis compacts, sovereign entities not mentioned in the statute on retail allotment.
  • Discussing applicant eligibility, Hoff noted the Disproportionately Impacted Communities work group---whose membership she gave a similar presentation to on February 25th---would be developing recommendations to WA SECTF members on who might apply and who might warrant prioritization by WSLCB licensing staff. She added that the Technical Assistance and Mentorship work group would “be spending its time looking at the technical assistance grant program and making recommendations to the Department of Commerce. She also suggested the possibility of new WA SECTF work groups to address other recommendations which would be required under HB 1443.
  • Hoff’s presentation defined issues the work group would study:
    • “Understand the state of the cannabis industry broadly,” which Hoff termed “supply and demand issues,” the “slices of this industry,” and where the legal market could “stand some growth.”
    • “Should more retail licenses be issued for social equity?” Feeling it was obvious that 15 licenses in areas without bans or moratoriums “out of 570” wasn’t representative of equity, she suggested the “quick and easy” answer for this was “of course.” But a more nuanced response to the question of how many would be one responsibility of the work group, Hoff concluded.
    • “Should more producer and/or processor licenses be issued for social equity?”
    • “Should other license types be created and set aside for social equity?” Hoff recalled a critique heard during the first WA SECTF meeting of any approach focused on “creating a social equity program as a layer on top of a current program which wasn’t created with equity as a core value.” She said the concept of a separate “sector of the industry...new license types, and setting those aside entirely for social equity” for a set amount of time had been called for, and she was intrigued whether new license types could incentivize equity practices in other legal cannabis businesses.

• Members and the public offered comments and questions on the presentation as the work group began to explore ways to adjust licensure to support an equity program.
  • Sherman seconded Hoff’s perspective that task force members and cannabis stakeholders “had an opportunity to do things that don’t yet exist,” but he also felt existing licensees need to “orient ourselves towards ‘how does Washington exist within the context of a nationally legal cannabis market?’” He wanted equity applicants and licensees to be poised to “take advantage of the fact that we're an established cannabis marketplace” going into a possible national market “orders of magnitude larger than what we’re operating in right now.” Sherman said stakeholders should be using the nationwide “change in paradigm to bring success for both the people that are currently operating in this space and the people that have been thus far excluded.” Hoping the task force would “not think too narrowly about what’s possible because more than likely,” he expected the cannabis sector could be “overwhelmed with, with what’s available for us to do and to be successful at.” This made Sherman want a “business ecosystem to facilitate our collective success.” As a licensee he’d encountered “all of the tendencies towards selfishness and towards greed and towards short term thinking that has dominated our development,” but still saw a chance for a “rebuilding of the cannabis industry that’s foundationally equitable” (audio - 4m).  
  • Sherman noted that one license type that had been considered by lawmakers in 2016 before the formation of WA SECTF was home delivery of cannabis. A possible “delivery driver-owned Uber for cannabis" was one option, he suggested, saying this distribution system could be similar to “what we, you know, all probably used to buy cannabis for a majority of our lives which was we had a relationship with a human being that had a relationship with farmers and then they brought us our cannabis.” Sherman believed policymakers had ignored “what really great things came out of the culture of prohibition” which had brought a lot of damage but also “produced real resiliency in communities and in relationships and I think we really missed out on not fostering that mentality in the legal cannabis industry.” He considered “doing delivery right” as being “absolutely critical” to redistributing power within the cannabis sector. He added the idea of using title certificate holders' licenses to “facilitate some farmers markets throughout the state,” and believed WSLCB leaders were already able to act on that through rulemaking (audio - 3m).
    • WSLCB produced a mandated report on delivery possibilities for medical cannabis patients in 2018.
  • Swanson wanted to see retail certificate holders “who are fitting the definition of equity” separated out for swift prioritization. Prospective equity applicants and title certificate holders “were in the same situation, but [certificate holders] are holding licenses,” she said, referring to her early work getting the board to establish title certificates in 2018 so that she didn’t have to pay to maintain a business premises she couldn’t operate (audio - 3m).  
  • Swanson understood Sherman’s point of view on the merits of farmer’s markets, but expected most certificate holders wanted a “brick and mortar [store] as they had planned." Having invested over $100,000 in her unopened business, she wanted a resolution “as expeditiously as possible” (audio - 2m). 
  • Crystal Oliver remarked that “structural issues with the marketplace that we have in place right now” made her hesitant to encourage equity applicants to join “this system that’s unfair only to see other folks struggle.” She’d found the profits and power in legal cannabis, “have not been distributed to, like, the farmers or the producers or processors, they’ve centered mostly in the hands of the retailers.” Oliver hadn’t appreciated how many of the supposedly available retail licenses were limited by local ordinances, finding it “unfortunate” the Washington State Office of the Attorney General (WA OAG) had issued an opinion affirming local authority. She considered whether stakeholders should be lobbying the legislature to change the law “so that these cities and counties have to do a vote of their communities before they can adopt these bans or moratoriums” (audio - 3m).
    • The WA OAG opinion was unanimously supported by a state appeals court in 2018. Read a supplemental brief from WA OAG lawyers in 2015 responding to a different lawsuit brought by multiple cannabis licensees challenging a ban in the City of Fife.
    • Legislation to reduce the revenue received by jurisdictions with bans and moratoriums was proposed in 2017.
    • On May 12th, WSLCB board members talked about implications should county or municipal officials modify or end bans.
  • Garrett spoke up to say that there needed to be a list of possible new license types to “see what’s doable” (audio - 1m) and called attention to the fact that a third of retail certificate title holders self-identified as racial minorities as of July 2020. She said when developing a social equity program “one of the things that slowed us down in that process was” that most certificate holders were unlikely to count as equity applicants. She added that the board was “trying to wait for the social equity program to come into play to try to incorporate it in some way” (audio - 2m). 
  • Kevin Oliver said “social consumption lounges” could have a big consumer benefit, as would policies for producer and processor “direct sales” to the public, “much like the winery model.” He further called for license types to support events and tourism so that “when you can go to a beer garden, or a concert, or a county fair, you can also go to a social consumption lounge” (audio - 1m).
  • Martinez defined craft cannabis as offering “small farmers the ability to have limited direct sales to customers” (audio - 1m) and argued that retail title certificate holders “as well as those that were...previously in the industry before it went legal” should be considered for social equity license prioritization (audio - 1m).
    • Martinez and Garrett discussed the ratio of certificate holders who were racial minorities (audio - 3m).  
  • Sami Saad, a former dispensary owner, made several allegations of discrimination and claimed he’d be bringing legal action against WSLCB officials who had not approved a license for him (audio - 6m). 
  • Aaron Barfield, Black Excellence in Cannabis (BEC) Founder, considered it “crucial that we get additional retail licenses here” since producers and processors lacked “access to the customer base.” He alleged a general opposition from “wealthy, White, male owners of these retail stores who are monopolizing the industry.” While supportive of new license types, “adding stuff for producers or processors to benefit from, that’s not really what this conversation should be about,” Barfield commented, saying it should be about “additional retail licenses in multiple jurisdictions.” Sherman chimed in to say he saw the starting point as "we need a lot more paths to market, including a lot more retail licenses" and that his advocacy for new license options rested on a presumption that WA SECTF members would be recommending additional retail allotments (audio - 3m).
  • Merriweather shared a question in the chat box from Darlene Conley, Co-Owner of Social and Economic Equity and Diversity (SEEDS) for African Americans in the Legal Cannabis Industry, who wanted to know if sales of licenses could be monitored by WSLCB staff, with a requirement “that they be sold to social equity applicants.” Garrett promised to look into the feasibility of the suggestion (audio - 1m).
  • Conley also asked if cancelled producer and processor licenses could “be reserved for social equity” with Garrett answering that they had no application process for those license types currently open. Hoff shared her understanding that any retail license which became available before the end of the equity program’s application window in July 2028 would be reserved for equity applicants, with Garrett emphasizing that this only applied to retail licenses (audio - 2m). 
  • Jim Buchanan, a former license applicant and business partner of Barfield’s, seconded his comments, saying the “topic is, or suppose to be, social equity specifically for African Americans and somehow there are a lot of different topics and thoughts and ideas that folks, you know, have kind of thrown into this.” He remarked that “if you’re not Black you might think you understand” what it was like to experience racial prejudice, “but you don’t unless you live it.” Buchanan found the topic of adding more retail licenses was being “diluted” and he urged continued focus to get the licensing part of the social equity program “done right” (audio - 4m).
  • Peter Manning, a BEC member and former applicant, said Washington’s legal retail sector reflected “what the White people feared when Tiger Woods started playing golf”: the ability of African American men to “get on top” in areas controlled by White men. He believed there was a “conspiracy” to keep African American business owners out of the Seattle area cannabis market and that “White, rich, influential people” enjoyed an inordinate level of influence over WSLCB officials and decision making. He claimed BEC had been called “the prophets of cannabis" since “what we say actually materializes...we’re not going nowhere.”