WA Governor - Bill Action
(May 3, 2021)

Here are some observations from the Monday May 3rd Washington State Office of the Governor (WA Governor) bill action.

My top 3 takeaways:

• Introduced February 1st, HB 1443 ("Concerning social equity within the cannabis industry") extends prior law establishing the social equity task force, a social equity retail application process, and technical assistance grant program.
  • HB 2870, which started as WSLCB request legislation, was signed into law in March 2020 to establish a framework to begin addressing social and economic equity within the Washington state cannabis sector. In part, the law established the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) which held its first meeting in October 2020. At their January 25th meeting, the group approved two motions calling for modification of qualifying criteria for equity applicants and the technical assistance grant program. HB 1443 and SB 5388, its senate companion, were introduced shortly thereafter.
  • Take a look at the House policy committee public hearing and executive session on HB 1443; the House fiscal committee public hearing and executive session; and passage by the full Washington State House of Representative (WA House) on March 2nd. The legislation received a Senate policy committee public hearing and executive session during which further changes were made prior to passage by the Washington State Senate (WA Senate) on April 6th. WA House voted to concur with WA Senate changes on April 15th.
  • The final House bill report on HB 1443 from April 20th summarized the effects of the bill:
    • Expands the purpose of the Task Force on Social Equity in Cannabis (Task Force) to include providing Social Equity Program recommendations to the Liquor and Cannabis Board on the issuance of existing cannabis producer and processor licenses.
    • Modifies Task Force reporting requirements, including adding Task Force recommendation topics and extending the due date for the final Task Force recommendations to December 9, 2022.
    • Expands the entities eligible to be awarded grants under the Cannabis Social Equity Technical Assistance Grant Program to include certain existing cannabis license holders and cannabis license applicants who meet social equity criteria.
    • Authorizes the Department of Commerce to contract to establish a roster of mentors for the purpose of supporting and advising social equity applicants and current cannabis licensees who meet social equity applicant criteria.

• On May 3rd, Governor Jay Inslee signed the bill and funding for its programs had been appropriated by the legislature.
  • Signing the bill at the capitol, Inslee said that HB 1443 “makes changes to the social equity in cannabis task force we established last year” while thanking Representative Melanie Morgan, Co-Chair of WA SECTF, and Senator Rebecca Saldaña, who represented Senate Democrats on WA SECTF (audio - 1m, video). The law takes effect on July 25th.
    • A legislative overview explains the remaining steps before the measure takes effect: “From the Governor's desk, bills go to the Secretary of State who assigns a session law chapter number.”
  • The most recent fiscal note for the bill generated on March 22nd projected budget impacts on the State for the coming fiscal years (FY). Mentions of the law in SB 5092, the state operating budget passed by the Legislature on April 25th but not yet acted upon by the Governor at publication time, covered all estimated costs in the fiscal note.
    • Washington State Department of Commerce
      • Fiscal note request:
        • FY 2021-23 - $321,412
        • FY 2023-25 - $317,412
        • FY 2025-27 - $318,728
      • Section 129(78) of the operating budget allocated the department “$163,000 of the dedicated marijuana account—state appropriation for fiscal year 2022 and $159,000 of the dedicated marijuana account—state appropriation for fiscal year 2023 are provided solely for implementation of” HB 1443.
      • Section 986, describing changes to standing appropriations from the dedicated marijuana account (DMA), increased the FY appropriations to Commerce for the as yet unimplemented technical assistance grant program. Previously $1.1M “annually,” the appropriation was changed to $1.65M for FY 2022 and FY 2023.
        • The grant money originally approved in HB 2870 for FY 2021 wasn’t disbursed. WSLCB Director of Legislative Relations Chris Thompson discussed the money during the Cannabis Advisory Council (CAC) on January 6th. He said that in order to avoid a “loss of funds to the program,” agency leaders asked that the Governor’s proposed budget include “an effort to try and recapture those funds for this program out into the next biennium.” This would move “half into each fiscal year” for 2022 and 2023, allowing the grant money to be used once WSLCB and Commerce implemented WA SECTF guidance, Thompson indicated.
    • Washington State Liquor and Cannabis Board (WSLCB)
      • Fiscal note request:
        • FY 2021-23 - $38,307
      • Section 142(5) provides the agency “$38,000 of the dedicated marijuana account—state appropriation for fiscal year 2022 is provided solely to implement” the bill. 
    • Washington State Department of Health (DOH)
      • Fiscal note request:
        • FY 2021-23 - $363,000
      • Section 222(28) for DOH allocates “$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” HB 1443.

• Jointly, the legislature, social equity task force, WSLCB, and Department of Commerce would continue to address issues of social and economic equity in and around the Washington state cannabis sector during ensuing years.
  • Final recommendations from WA SECTF to lawmakers and WSLCB on an expanded list of topics would be due in December 2022.
    • HB 1443 required the appointment of two additional members from among existing producers and processors by Speaker of the House Laurie Jinkins and President of WA Senate Denny Heck, the Lieutenant Governor.
    • Following the legislative session and for undisclosed reasons, Task Force Co-Chair Paula Sardinas announced her resignation from the Washington State Commission on African American Affairs (CAAA) which she had been appointed to represent on the task force. RCW 69.50.336(2)(c)(i)(A) specifies the CAAA appointment will be made “from” the Commission, so it was uncertain whether CAAA would recommend a new appointee or retain Sardinas as that organization’s voice on WA SECTF. At publication time, Sardinas remained listed as Co-Chair on the WA SECTF website.
  • WA SECTF work groups dedicated to specific recommendations would adapt to the new law.
    • The Disproportionately Impacted Communities Work Group, led by task force appointees Cheri MacLeod and Christopher Poulos, was helping refine eligibility and prioritization criteria for issuance of social equity retail cannabis licenses and technical assistance grants. The group met later that same day.
    • The Licensing Work Group was focused on developing recommendations for the full task force to consider incorporating into formal guidance to the WSLCB to help that agency define the scope of social equity cannabis licensing. The group first met on April 21st and was co-led by task force appointees Michelle Merriweather and Monica Martinez.
    • The Technical Assistance and Mentorship Work Group, led by WA SECTF appointee Raft Hollingsworth, planned to discuss the technical assistance grants and mentoring program to be developed by Commerce. The group was scheduled to meet for the first time on May 11th.
  • WSLCB was waiting on guidance from the task force, and would be required by HB 1443 to consult with “community members” before and during possible agency rulemaking to develop a social equity program.
    • At publication time, it was unclear when to expect the next round of WSLCB retail licensing to open. Agency staff had publicly stated they planned to wait to receive recommendations from the task force before proceeding. But with the due date for final recommendations pushed out to December 2022, it remained unclear if the task force would issue preliminary recommendations before that time.
    • Following receipt of recommendations, RCW 69.50.335(4) specifies WSLCB “may” define rules to implement a social equity program. Agency staff have indicated that’s a likely path and presuming a rulemaking project without major delays or revisions, a minimum three month rule implementation by WSLCB would further push back the earliest potential date the agency would approve rules opening an application period for social equity applicants.
    • After repeated public comments in agency outreach and at WA SECTF events, the board opened rulemaking on February 17th relating to criminal history background check rules for future applications or renewals (Rulemaking Project).
  • The Department of Commerce was waiting on WSLCB to establish a social equity program and start processing applicants before beginning to evaluate grant applications and disburse funding. Commerce may also undertake rulemaking.
    • HB 1443 directed the department to connect applicants “with established industry members and tribal cannabis enterprises and programs for mentoring and other forms of support” while removing the expectation that such programs and support be approved by WSLCB.
    • The bill initially proposed a pilot program, however, Saldaña indicated during the March 24th executive session on the bill that Commerce staff stated “that doing a pilot would actually diffuse their ability to just focus on actually building up a program that would be informed by the recommendations” of WA SECTF.