WA SECTF - Public Meeting
(September 14, 2021)

Here are some observations from the Tuesday September 14th Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) Public Meeting.

My top 4 takeaways:

• Licensing Work Group members presented their first legislative proposal to reserve all new licenses and license types for social equity applicants through 2029.
  • Work group co-lead Michelle Merriweather, appointed to represent “the African American community,” shared the work group’s proposals, mentioning they would continue “to meet to make other recommendations” (audio - 3m, video):
    • “Any new licenses...issued be reserved for social equity through 2029, and this includes any new license [type] that gets passed through the legislature.”
    • “All social equity licenses are mobile within their respective counties...there are a number of city bans and moratoriums, and allowing the mobility of these licenses will be beneficial.”
    • “Reduce buffer zones from 1,000 feet to 500 feet, reserved for social equity licenses. RCW 69.50.331 allows cities to reduce the buffer zones from 1,000 feet, but not less than 100 feet from recreational facilities, public transit centers, correctional facilities, libraries, and game arcades. And this excludes elementary schools, secondary schools, and playgrounds that must remain at 1,000 feet.”
  • Micah Sherman, Raven Co-Owner and a work group member, explained how all their recommendations were legislative proposals (audio - 2m, video).
    • He noted that the allotment of additional retail licenses was “something we intend to bring up,” but work group members were moving towards “determination about numbers on that first.” The work group intended to have a recommendation before the 2022 legislative session, he stated, and were moving ahead on other recommendations “that are more established.”
    • WA SECTF Chair and Representative Melanie Morgan cautioned him that “we’re running out of time” and the drafting of “preliminary legislation” was underway in the Washington State Legislature (WA Legislature). She wanted to vote on a measure before the meeting concluded so she could arrange to “get this to the [Washington State House] Commerce and Gaming Committee” (WA House COG) because there would be “prefiling dates in early December, so...we don’t have a lot of time.”
    • Sherman then asked that all three recommendations from the work group be debated “as one group.”
      • Sherman’s appointment to WA SECTF to represent licensed processors was announced on August 17th.
  • Task force member and Representative Kelly Chambers, appointed to represent the Washington State House Republican Caucus, asked whether the 2029 sunset for licenses to be dedicated to social equity existed in statute. WA SECTF Manager Anzhane Slaughter replied that the deadline was in law (audio - 1m, video).
    • RCW 69.50.335(1) states, “Beginning December 1, 2020, and until July 1, 2029, cannabis retailer licenses that have been subject to forfeiture, revocation, or cancellation by the board, or cannabis retailer licenses that were not previously issued by the board but could have been issued without exceeding the limit on the statewide number of cannabis retailer licenses established before January 1, 2020, by the board, may be issued or reissued to an applicant who meets the cannabis retailer license requirements”
  • When task force member and Senator Curtis King, appointed to represent the Washington State Senate Republican Caucus, raised the 2029 end date as a potential problem, Sherman reiterated that the date was in law and the work group was “just modeling this recommendation off” existing statute (audio - <1m, video). 

• The second recommendation to authorize social equity license mobility within counties resulted in at times contentious discussion regarding the location of existing social equity retail allotments, as many were tied to jurisdictions with bans or moratoriums.
  • King had reservations about license mobility within counties. As there were “businesses already in these counties,” he wondered what would stop an equity licensee from “going right next door to ‘em?” (audio - 1m, video) 
  • Paul Brice, Happy Trees Owner and advisory member of WA SECTF, suggested that he was open to more cannabis revenue “back to the counties or the cities” and allowing cannabis delivery as “a roundabout way to...let a city/county know we can take away your funding and you can be a detriment to...your community by not getting this funding.” Delivery ensured that consumers would be served regardless of the jurisdiction’s stance on cannabis retail, Brice asserted, and was the best argument “to get any county or city to start bending” (audio - 1m, video). 
  • Morgan asked about social equity applicants who qualify by having lived in a disproportionately impacted area (DIA) that has a ban or moratorium in place, did that mean they would automatically receive “a mobile license?” Sherman’s “understanding of the DIA was that was about...where the applicant lives, not necessarily where their business is going to exist” (audio - 2m, video). 
  • King pointed out that Yakima County had a ban on cannabis businesses but “numerous cities” in the county allowed them. The idea of cannabis retail allotted for unincorporated areas moving into those cities bothered him, and he asked for “more restrictions.” Sherman noted that allowing stores in unincorporated parts of counties to move to cities that permitted retail could mean “that population in the county...could be served by a city store” and not require counties to change their ordinances (audio - 1m, video).
  • Jim Makoso, Flowe Technology CEO and a Technical Assistance and Mentorship Work Group member who was appointed to represent licensed processors on the task force, was also curious about license mobility. He seemed interested in an exception for existing processors having to move operations based on local bans and moratoria. “Every time I have to move my license, whether it’s in county or out of county, I gotta go through the whole licensing process again, prove that I got money, prove that I’m following all the rules,” he told the task force (audio - 15m, video). 
    • Sherman said of the 39 licenses available for social equity applicants, “some of them are in bans and moratorium areas” and this would allow them to relocate “within the county where there is no ban” making “more of those 39 licenses available to be issued.”
    • Morgan suggested an edit to the legislative proposal so that it didn’t reference “all” licenses but only the already available retail licenses in ban or moratorium areas. However, Merriweather wanted that word to remain in the event “future licenses come back to us” for social equity: “we want to make sure that those are eligible to be mobile as well if they’re in banned and moratorium areas.”
    • Members discussed the mobility of current license types and what should be allowed for future retail licenses set aside for social equity applicants. King didn’t like the concept but Morgan contended bans didn’t “allow for this pathway for equity” nor moving those stores to help “individuals who could be using them.”
  • Task force member and Senator Rebecca Saldaña, appointed to represent the Washington State Senate Democratic Caucus, said this proposal addressed a frustration she’d had with the existing retail licenses set aside for social equity, and supported “any word language you wanna do.” She supported mobility for existing licenses in ban or moratorium areas “and if other licenses come back in, only for social equity do they have that flexibility.” Saldaña wanted fewer licensing barriers to “make it as fair as possible” for equity applicants to enter the industry against established competitors as well as “on-ramps for a lot of these other potential” license types devoted to social equity. She suggested revising language to indicate “all licenses available for social equity...retail...are mobile based on local jurisdictions within the respective county.”
  • Brice advised limiting mobility to “a one time move only,” saying he’d been told by WSLCB Administrative Regulations Analyst Frank O’Dell that location changes “tie up more of LCB staff...and they’re losing files and fingerprints and everything else.”
  • Morgan noted “when the state got out of the alcohol business they stopped controlling where those stores would be” and wondered about bringing “everything into parity with other industries.”
  • Task force member Pablo Gonzalez, appointed to represent cannabis retailers, added that retailers could move within “their respective municipality.” He cautioned that shuffling of retail locations between cities could lead those jurisdictions to cap the number of allowed retail stores.
  • Chambers inquired about census data and possible changes in retail allotments due to population growth. Slaughter said that was possible but “it doesn’t address the ban and moratorium issue, which this proposal is addressing” (audio - 6m, video).
    • Brice argued that some counties’ allotments hadn’t increased, some cities had reached their retail cap, and it was difficult for stores to move once they’d settled into an area. Chambers asked if Brice knew of cities in Pierce County that were amenable to having more cannabis retail within their boundaries. He pointed to the City of Tacoma, where the City Council passed a resolution asking the state for more retail locations in July 2020, as he believed there’s “an appetite there.” Saldaña indicated that Kent had a moratorium and that stores allotted for that city could move to Seattle where there was “maybe an appetite for a couple” more retailers.
    • Makoso brought up an April 2020 appeals court opinion in a case brought against Yakima County that upheld that jurisdiction’s authority to prohibit cannabis businesses in unincorporated areas. Sherman clarified the proposal wouldn’t seek to challenge local choice to have bans, but instead allow businesses to respond to that choice by taking their business elsewhere. “This does not force any city or county to accept any of this,” Sherman added, but instead gave social equity licensees “the maximum amount of flexibility.”
    • At the July 27th task force meeting, WSLCB Director of Licensing Becky Smith said agency staff considered population changes in an initial review “of the number of retail stores” including stores “that are in moratoriums and bans as well” and recommended “51 more retail stores.” 

• The work group’s final recommendation was to reduce buffer zone distances for social equity applicants, which drew several questions about potential impacts on local control.
  • Earlier in the discussion, King said he was fearful about “changing these buffer zones” since it could be “within a hundred feet of game arcades,” believing that kids were the most likely demographic to use them. Excluding schools and playgrounds from buffer zone changes wasn’t sufficient for King, who wanted to “keep it at a thousand [feet], leave it at that” (audio - 1m, video). And Brice observed that “no kids go into” cannabis retailers...you gotta be 21 and older” and it wasn’t different than walking by “any other liquor store” (audio - 1m, video).
  • Task force member and TA and Mentorship Work Group co-lead Tamara Berkley, appointed to represent licensed retailers, suggested that reduced buffer distances may be something social equity licensees “could apply for, versus it just being across-the-board lowered” (audio - 3m, video).
    • Gonzalez highlighted the fact that local jurisdictions already had some control over lowering buffer distances in RCW 69.50.331(8).
    • Sherman said numerous municipalities had “removed their buffer down to three or five hundred feet, or they are allowed to bring it down” and could continue to do so even if the state’s minimum distance for equity licensees was cut in half.
    • Task force member Cherie MacLeod, appointed to represent the Association of Washington Cities (AWC), noted that Seattle had lowered their buffer distance to 500 feet---and 250 feet in the downtown area---as that was “literally the only way any stores could site in...viable areas.”
  • Task force member Christopher Poulos, appointed to represent the Washington State Department of Commerce (WA Commerce), asked if equivalent buffer zone restrictions existed for alcohol businesses, noting the “stigma around cannabis” could be impacting potential equity efforts. Morgan mentioned that it could be worth reminding people “a lot of this cannabis money is coming back for the educational piece on cannabis” and that there could be an awareness campaign “educating our youth on cannabis and safety” (audio - 1m, video).
    • While there are not buffer distances on alcohol retailers, some are affected by Alcohol Impact Areas (AIA) described by WSLCB as giving local authorities “a process to mitigate problems with chronic public inebriation or illegal activities linked to the sale or consumption of alcohol within a geographic area of their city, town or county, but not the entire jurisdiction.” AIAs are designated with geographical boundaries as defined in WAC 314-12-15. Alcohol restrictions for these areas include: 
      • “Restricting the off-premises sale of certain alcohol products (banned products list)
      • Restricting the business hours of operation for off-premises consumption liquor sales
      • Restrictions on container sizes available for sale”
      • Check out agency information on existing AIAs.
    • A 2017 bill proposed banning cannabis retail in AIAs but wasn’t advanced.
  • Morgan emphasized local override of buffer distances, wondering “do we really need legislation?” Slaughter replied that “not all cities” were lowering buffer distances, mentioning Mercer Island where “they don’t currently have a ban or moratorium, it’s the buffering that has...created more barriers to entry.” Sherman commented that “the mobility of the licenses, if a city didn’t want stores sited in their city they would still be able to not allow for that use type to exist...it doesn’t force any municipality to accept something that they don’t want” (audio - 2m, video).

• A motion and vote recommending all three amended legislative proposals from the Licensing Work Group was passed decisively, likely initiating the drafting of one or more bills for lawmakers to consider in 2022 (audio - 2m, video).
  • Merriweather moved to accept the revised proposals which were approved by all members except for King and Chambers, with Gonzalez abstaining. Morgan said the task force had accepted “these proposals to send forward to the legislature.”
    • Morgan’s mention of WA House COG, a cannabis policy committee on which both she and Chambers serve, suggests that one of the representatives on the task force may be a bill sponsor.
    • In 2020, Saldaña sponsored SB 5388 and Morgan sponsored its companion legislation, HB 1443, which successfully modified the task force and social equity program.

Here are some observations from the Tuesday September 14th Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) Public Meeting.

My top 4 takeaways:

• Technical Assistance and Mentorship Work Group co-lead Raft Hollingsworth discussed the first of the task force proposals, a recommendation to use appropriated funds due to expire in fiscal year (FY) 2022 for a pre-applicant mentorship program.
  • Hollingsworth, a Hollingsworth Cannabis Company Co-Owner appointed to the task force to represent licensed producers, said the work group wanted the task force to formally advise the Washington State Department of Commerce (WA Commerce) to “use the funds that [were] allocated for the fiscal year 2022 to implement the...cannabis mentorship program,” one part of the state social equity technical assistance grant program. Indicating that FY 2022 would end in “June of next year,” he wanted to see that WA Commerce staff “has direction on how to use these funds” (audio - 2m, video).
    • Hollingsworth described how the recommendation included a call for “classes that are both general business and cannabis-specific” including a “variety of deliverables” such as “seminars, panels, in-person support structures, not one-on-one mentorship currently due to the timing...to verify social equity applicants.”
    • The state biennium operating budget signed on May 18th amended the WA Commerce appropriation in the original law by removing $1.1 million appropriated for the program for fiscal year (FY) 2021 which was not distributed. The funds were carried over into the next biennium by modifying the standing appropriation required under RCW 69.50.540 “to fund the marijuana social equity technical assistance competitive grant program under RCW 43.330.540” in FY 2022 and 2023, an increase from $1.1 million to $1.65 million.
  • Task force member Curtis King, appointed to represent the Washington State Senate Republican Caucus, wanted to know why there would be an “in-person support structure but not one-on-one mentorship, I don’t understand...are you giving the mentorship before they’re even selected or is it after they’re possibly selected?” (audio - 8m, video) 
    • Hollingsworth responded that the intent was “to put together literature in a structure to which to accept specific social equity candidates, but in anticipation of their not being social equity candidates before June 2022, we’re opening it up to all people who want to participate” until applicants could be accepted by the Washington State Liquor and Cannabis Board (WSLCB).
    • King asked if people who were not eligible “social equity candidates” could apply for the mentorship program. Following a brief discussion, Task Force Chair Melanie Morgan, appointed to represent the Washington State House Democratic Caucus, interpreted King’s query as wanting clarification as to why people weren’t being vetted first “opening it up to the community at large, why would they go through this process knowing that it’s for social equity only?” Hollingsworth believed it could “educate the public to see if they want to participate, [and] prepare them for the process of running a cannabis business.” The goal was to have “people who do sit through this mentorship program, the general one that we’re proposing...learn about the process,” he said, combating misinformation and ensuring more applicants could be “better prepared.”
    • Task force member Ollie Garrett, appointed to represent WSLCB, asked "does that make sense, or not...should that be there or not" if TA and mentorship funds were intended for equity applicants, “why would anyone else want to be part of it?” Hollingsworth explained that “operationally, Commerce doesn’t have the capacity to verify eligibility to allow for one-on-one training...and this is our workaround.”
    • Task force member Rebecca Saldaña, appointed to represent the Washington State Senate Democratic Caucus, suggested the proposed approach could help identify those who “think they might be” applicants, and asked whether it would become exclusive once the application process was underway. If the intention was for WA Commerce officials to “start moving and spending this money,” she was open to recommending “that they can’t do one-on-ones if things move forward,” only the other formats mentioned.
    • Task force member Yasmin Trudeau, appointed to represent the Washington State Office of the Attorney General (WA OAG), clarified that “this is open, the money is there, it needs to get spent, so anybody could access this, but..it would provide some additional...footing or incentive for social equity applicants or people interested in that.” She was fine with the arrangement so long as it was allowed under law.
    • Work group co-lead Tamara Berkley, appointed to represent licensed retailers, suggested that the recommendation was about educating those waiting to apply.
  • Task force member Kelly Chambers, appointed to represent the Washington State House Republican Caucus, asked whether mentors needed “to meet some social equity criteria” (audio - 2m, video).
    • WA SECTF Manager Anzhane Slaughter replied that mentoring companies needed to be a “51% women or minority owned business.” Chambers interpreted this expectation for mentors as being “not about your experience as a professional” but “meeting social equity criteria first.” Slaughter cited RCW 43.330.540(4), which required mentors to “Have knowledge and experience demonstrating their ability to effectively advise eligible applicants and licensees in navigating the state's licensing and regulatory framework or on producing and processing cannabis” while also representing “a business that is at least 51% minority or woman-owned.”
    • Chambers then asked about whether there had been “an inventory taken...with like current licensees who might be eligible” and if there was “a bench of, of potential mentors. Do we know what that looks like?” Slaughter replied that mentors weren’t required to be “current license holders.” She invited any WA Commerce officials in attendance to respond, though none did (audio - 1m, video). 
    • Next, Chambers was curious if WA Commerce offered “general business classes” already as she hoped to avoid “duplicating efforts” even as she acknowledged “there are things very specific to cannabis.” Hollingsworth estimated classes would consist of “about 75 or 80% cannabis-specific guidance, 20% general business.” Slaughter indicated that WA Commerce officials weren’t in attendance but “we have been discussing this in parallel with the department” and there was no intention of “reinventing the wheel” (audio - 2m, video).
      • WA Commerce operates many programs between five divisions. On June 8th, Policy Advisor Rick Anderson told the task force that the Office of Economic Development and Competitiveness would be responsible for the assistance grant program as part of their “broader ecosystem of small business support” with dedicated Economic Development and Business Assistance programs.
  • King asked how mentors would be compensated as he was familiar with the Retired and Senior Volunteer Program (RSVP) where “people come in and help businesses...provide this very guidance as to how you start a business...available, I think, at no charge.” Morgan said they’d mentioned SCORE and chambers of commerce as “volunteer-based” business guidance state officials would consider during “in depth” conversations with WA Commerce representatives (audio - 2m, video). 
  • Chambers was curious if mentors would invoice the state “like an attorney would” or charge an “average rate for a mentor in cannabis.” Berkley commented that there were likely to be “different rates for different professionals” (audio - 5m, video). 
    • Slaughter noted that the recommendation was “open for any amendment or suggestion from task force members on this topic” adding that there was “urgency” in ensuring FY 2022 money was spent before the fiscal year concluded. She reported that the remaining recommendations from the TA and Mentorship work group would cover “increasing the allotment for funds that are appropriated to this program as well as offering to current...license holders as well.”
    • Saldaña commented that she had worked with WA Commerce staff “on this piece of the legislation and they felt very confident and comfortable” that they could accommodate mentor compensation, only asking for clarification “around social equity or criteria of what would be the most useful” skills to prioritize in mentors. She asked the co-leads if the recommendation “would give [WA Commerce staff] enough clarity to then move forward in the next step?”
    • Morgan spoke to Chamber’s concern over “duplication” of business training: “It’s still general business to the cannabis industry” and might “look different than what is typically offered in a general business class.” She considered it “adding to, rather than a duplication.”
  • The task force voted to adopt the recommendation to WA Commerce on the mentorship program, with Chambers opposed and King excused from the vote (audio - 3m, video). 

• The second work group recommendation was a proposal to lawmakers “to add financial assistance as a use of funds for the technical assistance grant program” by equity licensees.
  • The financial assistance proposal was moved for adoption by the task force and Morgan invited discussion (audio - 2m, video). Chambers asked what constituted financial assistance (audio - 2m, video).
    • Berkley responded that it could be used “for legal [assistance], for build outs possibly, for rent. There should be milestones that the applicant reaches and then they’d be able to apply for these grants or fundings to...help them, you know, open up and operate their business” 
    • Micah Sherman, Raven Co-Owner and a WA SECTF Licensing Work Group member who was later appointed to the task force, asked whether this would be a legislative proposal. Slaughter answered that WA Commerce representatives had interpreted “technical assistance" to mean “transfer of skills” rather than money (audio - 2m, video).
    • Task force member David Mendoza, appointed to represent “the Latinx community,” asked about a “legal evaluation of whether this would violate” the “state constitutional provision on a gift of public funds?” He also asked for clarity around the distinction between a “grant program and a loan program” (audio - 4m, video).
      • Berkley talked about how loans needed to be repaid while a grant program wouldn’t, leading Mendoza to ask “why would they be funded differently?” She replied, “to put a cap on the grants” which would go “up to a certain amount and then loan dollars would be available in the event...additional money’s needed.” Trudeau, emphasizing she was not a legal advisor for WA SECTF, offered to have the Washington State Solicitor General’s Office review the proposal.
      • Saldaña chimed in to say that federal and state officials “gave a lot of relief...to small businesses across our state” during the pandemic but cannabis businesses hadn’t qualified. She expected grants would help equity licensees who “incurred an expense, or you are about ready to lose your business” but not for “new things.” By contrast she viewed the banking challenges for cannabis businesses as potentially being helped by a dedicated loan program for social equity licensees who had faced “historic barriers” to business investment.
    • Chambers wondered about “differentiation in criteria” for social equity applicants versus current licensees to get grants, specifically a “financial threshold that a business would need to...meet or qualify for in order to get a grant.” She then asked about statutory changes about loan rates, “who gets to decide...what a low-interest loan is?” Berkley said research on other states’ banking policies showed “monies are being distributed by private entities” but specific loan rates and qualifications had not been determined aside from “a cap...as far as qualifying for grant monies, that you couldn’t have earned over” in the preceding year. Morgan said the task force members believed “financial assistance is something that’s extremely important to the communities that we’re exactly trying to serve” (audio - 3m, video).
    • Trudeau stated that the wording of the proposal could avoid the gifting concern voiced by Mendoza if adequately defined. Berkley said the WA Commerce “current statute allows for up to $75,000” but Morgan liked Trudeau’s suggestion, since “if we have these many members of the task force questioning that then for sure the legislature is going to question it as well.” She asked for any input to “clearly define what we’re talking about” (audio - 2m, video). 
    • Chambers called for “separate grants and loans.” While she “liked the idea” of a loan program, she preferred a “revolving loan program” that utilized “seed money” to support businesses. When the loans were repaid that money was “then available for future use.” Such a system wouldn’t entail “an ongoing ask to the legislature,” she argued. Trudeau said “you may even want to be more general” as a way to pass that decision making to lawmakers, as she’d found they like “putting in their own details.” Morgan proposed, and task force members accepted changing “‘add’ to ‘expand’ on the use of technical assistance dollars” as it would give “legislators more room to work in” (audio - 3m, video). 
  • The task force voted to adopt the amended language for the financial assistance proposal, with task force member Pablo Gonzalez, appointed to represent licensed retailers, voting against it and Sherman abstaining (audio - 3m, video). 

• Work group co-lead Tamara Berkley introduced the third recommendation, a legislative proposal to increase technical assistance grant allotments to “ten percent of the cannabis tax revenue that currently goes into the state general fund...approximately $30 million” (audio - 1m, video). 
  • Berkley cited the WSLCB annual report for 2020, which reported that in 2019, Washington cannabis taxes amounted to “$390.4 million,” growing to “$469.2 million” in 2020.
    • The Washington State Economic and Revenue Forecast Council (WA ERFC) September 2021 forecast noted, “The final tally of [General Fund - State (GF-S)] distributions in the 2019-21 biennium was $361.0 million, unchanged from the June forecast. The forecast of GF-S distributions for the 2021-23 biennium has been decreased of $6.7 million to 393.7 million and the forecast for the 2023-25 biennium has been decreased $3.6 million to $416.8 million.”
  • Chambers wanted to know “where that money would go, if it wasn’t spent on this new program,” seeking assurance the money wouldn’t be taken from “some of the work we're doing in research or prevention” (audio - 1m, video).
    • Berkley reiterated that the money would be “from the general fund,” not removed from other programs. Chambers then asked how much grants would “increase this fiscal year over the previous” from the change. Berkley replied the increase would be “$78.8 million, collectively.” Morgan observed that “during the lockdown...cannabis businesses were still open” meaning that “revenue was still being added” by the sector.
  • Charie MacLeod, appointed to represent the Association of Washington Cities (AWC), asked about funding levels in other jurisdictions for “something similar to technical assistance funds” because she knew “the City of Oakland, California through the California State program, received $6.5 million...just for their city’s social equity in cannabis program.” She noted this program included “mentorship and technical assistance as well.” Berkley said “Illinois gave $30.1 million,” and WA SECTF Policy Analyst Joy Hollingsworth mentioned “the City of Portland [allocated] 2% of their tax dollars that go directly to [the] NuLeaf Program” which distributed grants to qualified businesses. Slaughter added that “Massachusetts’ Renew Reinvest Program also gave around $30 million” (audio - 2m, video).
    • The Oakland equity program also includes legal assistance, workforce development grants, and a property purchase program. 
    • A medical cannabis provider in Massachusetts announced a minority business grant program in June 2021.
    • Berkley noted the precedent for a direct grant program established by officials in Long Beach, California. “The state of Illinois also offers a social equity in cannabis loan program,” she remarked, “for purposes of providing financial assistance to social equity licensees to assist with the expenses of starting and operating a cannabis business.”
  • Sherman inquired what increase the proposed amount would represent compared to the current grant funding. Slaughter said the current amount budgeted was $1.1 million. She then indicated that the “revenue forecast specifically for cannabis tax dollars to the general fund for the next biennium...already exceeded our...estimated revenue...flow for the next biennium” (audio - 1m, video).
  • Chambers asked whether the additional grant money was on top of the 5% of cannabis revenue being requested for low-interest loans to equity licensees. Slaughter confirmed that understanding, saying 15% of the general fund revenue from cannabis would be reserved between the two programs (audio - 4m, video).
    • Morgan shared her view that “there’s a lot of money being collected by the state” from cannabis retailers by WSLCB officials who deposited money in the dedicated marijuana account. Funds were then disbursed through various appropriations, including to the general fund, and she noted that legislation had already budgeted where these funds would go. Morgan argued that “we’re just simply making it equitable, at this point” between other issues the state had already funded, finding that the cannabis industry was “making enough money that this is possible.”
    • Joy Hollingsworth reported that “the state of Colorado introduced a $4 million program...reserved for social equity licenses” and that Oakland officials reserved “$6 million...for social equity programs” which didn’t include additional funds for programs like property purchasing and leases in an “incubator model.”
    • Berkley asked that the group “understand that Washington has the highest tax rate, at 37%, for cannabis retail.”
  • Sherman was curious how the general fund percentages for the grant and loan programs were determined (audio - 2m, video). 
    • Berkley remarked that while researching other state programs “it was apparent that our number just wasn’t going to cut it.” Raft Hollingsworth added that the increase reflected “listening to community.” Sherman wondered if a single increased budget request would prove more flexible for use as either loans or grants.
    • Morgan asserted that prospective equity licensees would often lack “seed money.” For those disproportionately affected by cannabis prohibition to participate as equity licensees, she said “we’re going to need to be asking for a lot more grant money to get them to the place of having seed money in order to even apply for a loan.” Grant money alone wouldn't be enough “for a business to be up and running and ready to go...this is just a beginning.”
  • Gonzalez asked about tax breaks, saying a retailer might need to operate for two years “to break even and start actually making some profit.” He speculated that equity retail licensees could be permitted to collect excise taxes at a lower rate. Helping equity licensees “get up on their feet” in a competitive market was “super important” he believed, adding the view that loans weren’t “healthy” for businesses. “They’re good to keep you alive, but they’re not really the healthiest thing, in my perspective,” said Gonzalez. Morgan was supportive of the idea, “but I’m gonna put that one piece of conversation on a parking lot for some future discussion” (audio - 3m, video).

• The last recommendation, loans for existing licensees meeting social equity criteria, was only briefly mentioned before a final vote by the task force on the last two recommendations.
  • Berkley introduced the final recommendation “to allow current license holders that meet the...definition of social equity [applicants] be eligible for grant dollars.” Morgan and Berkley felt the issue was “straightforward” (audio - 1m, video).
  • Berkley moved that “we recommend increasing the allocation for the TA grant program to equal 10% of cannabis tax revenue...allocating 5% of the cannabis tax revenue that currently goes to the state general fund” instead be made available as “low interest loans for social equity license holders, and I move that we recommend that current license holders that meet the definition of social equity be eligible for grant dollars.” Raft Hollingsworth seconded the motion. Morgan acknowledged the “good, lively discussion” on the recommendations and called for a vote, resulting in 14 in favor, Chambers opposed, and Monica Martinez, a task force member appointed to represent licensed producers, abstaining (audio - 3m, video).
    • The issue of current licensees receiving grant money from the social equity program was initially raised at the January 25th WA SECTF meeting.

Here are some observations from the Tuesday September 14th Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) Public Meeting.

My top 3 takeaways:

• Task force members discussed a recommendation from the Disproportionately Impacted Communities Work Group which defined an algorithm to be used to determine DIAs.
  • Work group co-lead Cherie MacLeod, appointed to represent the Association of Washington Cities (AWC), broached the topic, saying they would review “DIA maps,” the “application process flowchart,” and “a scoring rubric.” She started off by reviewing the definition of DIAs, one of three “eligibility criteria” used to determine who qualifies as a social equity applicant (audio - 2m, video).
    • The Disproportionately Impacted Communities work group last met on August 17th.
    • Reached by email regarding the lull in public meetings of the work group, WA SECTF Manager Anzhane Slaughter conveyed, “Although the DIA workgroup has not been meeting, the workgroup co-leads (Chris Poulos [appointed to represent the Washington State Department of Commerce (WA Commerce)], Cherie MacLeod and other group leaders) have been meeting on a weekly basis to finalize the proposals made on the workgroup level in preparation for the full Task Force meeting on Oct 28.”
  • MacLeod identified Massachusetts as a state where officials developed “essentially a formula to define” a ranking of “census tracts in our state [by] those who’ve been most impacted” by cannabis criminalization. Michele Cadigan, a graduate student looking at equity programs and a Disproportionately Impacted Communities work group member, reviewed the algorithm which was intended to give “a DIA score for each census tract.” Following a discussion of the formula, MacLeod concluded that ranking the tracts helped “determine eligibility” and it would also “help us prioritize applicants” (audio - 12m, video).
    • Cadigan had a WSLCB contract for a maximum of 35 hours of work between March 26th and June 30th.
  • Task Force Chair Melanie Morgan, appointed to represent the Washington State House Democratic Caucus, asked for an example of the formula’s application to census tracts. MacLeod said the “top 20%” of census tracts in the state identified by the formula would be declared DIAs. Slaughter then gave an example where, using a social equity applicant’s address, the corresponding tract and DIA score would be identified and shown to the applicant. She noted, “there is the [Washington Tracking Network] WTN, which is the state agency that already does a mapping system like this” that WSLCB licensing staff could “partner with” (audio - 6m, video) 
  • Following a motion to adopt the formula, the task force voted unanimously in favor except for member Yasmin Trudeau, appointed to represent the Washington State Office of the Attorney General (WA OAG), whose abstention was “an issue of process in our office” and not a stance for or against the recommendation (audio - 2m, video). 

• Members then discussed the proposed application process for the social equity program, leading to a variety of questions and remarks before the task force agreed to table the recommendation.
  • MacLeod described a flowchart outlining the application process, saying the established WSLCB licensing system would be augmented for social equity applicants with “more steps in the front end” (audio - 7m, video).
    • Applicants could “start off looking at mentorship, potentially, if they can go straight over and apply” with the Washington State Department of Revenue which would also send their application to a “community review panel, made up of community members.” This third-party weighed in on “preliminary approval,” at which point an applicant could seek a business location before their application was submitted to WSLCB licensing officials, she explained. MacLeod stated that the work group was also asking the task force to recommend “at least six months of time...to find a compliant location.” Applicants at this stage, “or later on in the process,” could seek social equity technical assistance grants from WA Commerce.
    • She continued, saying a “Social Equity Case Manager or Advocate” would be employed by WSLCB to “keep an eye on this process.” Expecting “far more applications submitted than there are licenses,” for social equity, MacLeod mentioned that the community review panel could also serve as a “tie breaking” entity for applicant prioritization.
    • MacLeod outlined how applicants progressing past this point would follow a process similar to existing WSLCB licensing procedures including inspections, fees, and license issuance. Once the equity licensee obtained local government approval, “they can eventually open up,” she commented.
  • Task force member Ollie Garrett, appointed to represent WSLCB, wondered about the potential for a six month delay before application denial and if applicants could work with case managers to address “what the issue is.” MacLeod answered that the time period could be a “minimum” and she hoped applicants wouldn’t be denied “without working with them” first (audio - 2m, video). 
  • Task force member Curtis King, appointed to represent the Washington State Senate Republican Caucus, wanted to know more about the review panel and if its members came from “a specific city, or county, or area” where the business was to be located. He asked whether the applicant timeline amounted to “holding a license for six months” while other applications could have been processed (audio - 4m, video).
    • MacLeod responded that the community review panel was still under development but was intended to include representatives of local communities and the cannabis sector. She noted that securing a location was a “large burden in this” involving high costs for applicants, but didn’t have additional insight into whether the timeline amounted to “holding” a license.
    • Slaughter stated the panel should include subject matter experts and DIA residents while avoiding “conflicts of interest.” She relayed that the process was already being reviewed by WSLCB licensing officials, including the concept of a Social Equity Case Manager.
  • King next asked who made a final eligibility determination, the panel or WSLCB representatives. MacLeod replied that “all the applications” went through the review panel and if they didn’t meet eligibility requirements they could reapply later (audio - 1m, video). 
  • Trudeau inquired about the existing “delegation of authority for decision making,” and if it would “ultimately, rest with LCB.” She attested that if the recommendation was for WSLCB “delegating the authority of these decisions with that third party reviewer, that might be something that needs to go to the legislature to adjust.” Slaughter confirmed that “final decision authority” would still be with agency leaders, which would consider applications after the community review panel vetted them. The group would send “recommendations for selections” of applications to agency staff, who she said would “hopefully respect” the panel’s recommendation. “At this point an individual is not given a license, they’re given a preliminary approval letter,” Slaughter stated, and still had to “go through the other agency checks” such as fingerprinting for criminal history background checks and “financial review.” But the applicant could show the approval letter to officials at WA Commerce “to apply for grants,” she added, saying the work group had heard “loud and clear from community” that they needed “grants to...help get the space.” Slaughter concluded that this stage of approval was for equity applicants who were “a little bit closer to receiving a license to then be able to take something to” WA Commerce to move forward with applying for a grant (audio - 3m, video).
    • See the presentation by WA Commerce representatives on the department’s role in administering the social equity grant program to the Technical Assistance and Mentorship Work Group on June 8th.
  • Trudeau then asked about the scope of the recommendation (audio - <1m, video) before commenting that review panel members---whether they were agency staff or a community member---could be “subject to depositions and any other sort of trial related, or process related” litigation brought to challenge the group’s decisions (audio - 1m, video).
  • Paul Brice, Happy Trees Owner and advisory member of WA SECTF, wanted to know if social equity applications were specific to a jurisdiction. Slaughter offered context that WA SECTF members would be voting on a licensing work group recommendation on additional retail licenses later in the meeting. Eventually, she expected “new license types” would be made available offering “more to choose from” and easing competition for specific jurisdictions between applicants. However, she confirmed that retail applicants would need to specify “where they would want their license” and anticipated “a lot of competition” (audio - 2m, video). King commented that the concept of license mobility “concerns me,” and Morgan asked that the issue be left to work group members (audio - 3m, video).
    • On September 22nd, the licensing work group decided to make a recommendation to WA SECTF that “all social equity retail licenses and current title certificate holders who fit the social equity definition can be located in any municipality that allows for the siting of additional retail licenses. This would not preempt local restrictions, but simply give flexibility to the licensee to locate said license where they’re able.”
  • Micah Sherman, Raven Co-Owner and a work group member, wondered if applicants would be limited to a single location, or if they could list several by order of preference “in case they don’t get their first choice.” MacLeod was amenable to the idea, with Brice adding that the established licensing process was “a one-time shot” and the idea of fallback locations for an application “has to be considered” (audio - 4m, video). 
  • Morgan requested a written version of the work group recommendation for the application process, hoping it would complement the flowchart. She pointed to the “new development pieces, like the community review panel, the social equity case manager” and wanted clarity on “who’s choosing that...what’s the makeup of that? Those are some details that are kind of missing.” She was curious if this was something that lawmakers would need to develop or if that authority would be granted to WSLCB leaders because “all of that is not laid out here.” The licensing steps for equity applicants would need to become a checklist, Morgan asserted, while the flowchart would need to be put into writing for legislators and WSLCB staff to specify “more direction in our recommendation” (audio - 12m, video)
    • MacLeod answered multiple steps required task force input on “whether folks do wanna go with” the concepts. Slaughter found “preliminary approval” and a six month timeline to find a location to be the biggest changes in the licensing process, and suggested WA SECTF would “be working alongside LCB” for implementation of “the details.” She agreed that establishing the review panel would necessitate “legislative action,” but in the meantime, approval of the recommendation amounted to “approval on the flow” of the application. 
    • Morgan didn’t believe that “working with LCB” was what WA SECTF “was tasked for.” Recommendations would be directed to that agency, where officials would “do their thing.” Slaughter felt it “behooves the task force” to collaborate with agency staff on “what’s feasible and what’s not” absent legislation, and reiterated agency leaders were already evaluating the Social Equity Case Manager idea. Morgan disagreed, confident the body was “tasked to give them recommendations” and could clarify if needed, but Garrett was the primary conduit for engaging the agency. Garrett chimed in to say agency staff had heard the task force “was working on things that may already be in place” which members might not need to “spend energy on.” 
    • Task force member Rebecca Saldaña, appointed to represent the Washington State Senate Democratic Caucus, voiced cautious support for the concept of the review panel, and had no stance on tie breaking. Believing that “the neighborhoods that would score high are in my district,” she said zoning remained a challenge but “six months gives a chance to say ‘here’s a couple places’” that would permit an equity business.
  • King had multiple comments on the application process (audio - 11m, video):
    • He understood that “you're going to have 40-50” community panels and tie breaking equally qualified social equity applicants would open “up a real Pandora's Box here." In the event the review panel started “picking winners and losers, you got a real challenge on your hands," he said.
    • Garrett suggested a panel wouldn’t be associated with each community and would primarily vet equity applicant “qualifications.” Slaughter added that community members had voiced opposition to applicant lotteries as a mechanism for moving applications forward. Brice mentioned that he hoped the process involved “picking winners” who were the “most deserving.”
    • King and Morgan wanted more definition about what the task force members were voting on and the criteria for the review panel. Slaughter said the vote would consider acceptance of the flowchart, and potential subsequent votes would address specific elements.
    • Saldaña wanted the task force to “give clear feedback” to the work group on “where we need more clarification.” Chambers had several questions, but concluded that WA SECTF wasn’t ready for a vote on the recommendation. Morgan agreed, asking for a motion to “table” the application process recommendation until it could be developed further “in word format.”
  • The task force voted unanimously to hold off on the recommendation “until a later date” and asked the work group to meet again so WA SECTF could vote “pretty quickly” on specifics before the 2022 legislative session (audio - 2m, video).

• The task force briefly talked about the proposed application scoring rubric before voting to postpone discussion and subsequently consider the recommendation.
  • Slaughter mentioned the scoring document, saying WSLCB leaders were waiting to implement recommendations on “how we can assign points to individuals based on eligibility” and application criteria. Morgan found the rubric to be so detailed that there wouldn’t be time in the meeting to adequately brief members. Poulos agreed a speedy overview wasn’t “practical,” as there were “potentially 13 separate things that need to be voted on” (audio - 2m, video).
  • The task force voted to postpone consideration of the rubric, with one member voting nay without identifying themselves. Morgan promised to communicate with MacLeod and Poulos since “we’re really treading on a deadline here” (audio - 2m, video). 
  • The October 28th WA SECTF meeting was scheduled to include a presentation on the DIA proposal.
    • In a subsequent communication about the status of the Disproportionately Impacted Communities Work Group, Slaughter noted that Poulos had “accepted a new leadership role with the Department of Corrections. With his new role, he will be stepping away from the Task Force and another representative from Commerce will fill his seat, not necessarily his position as DIA Co-lead.”
    • Slaughter went on to say, “Same goes for Cherie[‘s] seat on the Task Force. Since she is no longer representing the Association of Washington Cities, another representative from AWC will fill in.” AWC Government Relations Advocate Sharon Swanson represented the association in MacLeod’s place at the October 20th Licensing Work Group meeting.
    • Slaughter concluded that Morgan was “looking to dissolve the workgroups and move the work back to the Task Force level. Depending on the outcome of the Oct. 28 special meeting, The DIA workgroup may be dissolved. While the Licensing and TA&M workgroup meet until the end of the year to finish up their tasks.”