WACA - Fall Policy Conference - 2021 - WA Legislative Leaders
(November 3, 2021)

Here are some observations from the Wednesday November 3rd Washington CannaBusiness Association (WACA) Fall Policy Conference.

My top 4 takeaways:

• WACA Deputy Director Brooke Davies offered brief introductions of Senators T’wina Nobles, Derek Stanford, and Curtis King before welcoming them to offer their general perspectives on cannabis policy. 
  • Davies began by announcing that scheduled panelist Representative Steve Kirby, a Washington State House Commerce and Gaming Committee (WA House COG) member, was unable to attend due to a family commitment.
    • An earlier agenda listed Representative Cyndy Jacobsen as a panelist.
  • Senator T’Wina Nobles, whom Davies noted joined the legislature in January 2021, was introduced as the “first Black state senator to serve in over a decade.” She said Nobles’ background included “a Master of Arts in Teaching and she currently serves on the University Place School Board.” Davies mentioned how it was the senator’s “first time joining us for a WACA meeting, so we’re really happy to have her here.”
    • Davies laid out Nobles’ committee assignments since being sworn in:
      • Vice Chair of the Washington State Senate Early Learning and K-12 Education Committee
      • Vice Chair of the Washington State Senate Higher Education and Workforce Development Committee
      • Washington State Senate Transportation Committee member
      • Washington State Senate Health and Long Term Care Committee Behavioral Health Subcommittee member
    • Nobles brought up her “day job as President and CEO of the Tacoma Urban League, focusing some of our work on the cannabis industry and access” to opportunities for “economic independence to the Black community.” This included job opportunities with cannabis businesses, which she learned more about by touring licensed facilities since becoming a senator. She said, “I threw my rainboots in the car and just automatically assumed it was outdoors” only to find herself in “this industrial place here in Tacoma” learning “a lot.”
    • Nobles had met “young leaders” who were innovating in “testing and technology,” who had “great criticism about the state’s...database that seems not to be working for many people.” She’d found out more about “the science behind” the cannabis sector from a tour of an accredited lab. As a lawmaker, “I think some things that will be critically important for my colleagues and myself” included understanding “the challenges [of] the many tiers, and layers, and levels of all the different cannabis participants,” Nobles added. Even though it was “a huge and growing industry,” she nonetheless saw many small “and family-owned businesses,” often with “a handful of employees.”
    • “And then, of course, as I was preparing to speak” at the conference, Nobles said she’d “received a few emails...just warning me that this is not the place I should be” and that WACA had “an agenda I may want to think about.” After looking into it, she’d determined that “folks just want people in this room to pay attention to social equity.” Nobles felt many licensees continued struggling to be profitable, “and I think the compliance makes that more difficult sometimes.” She’d found that “our Black, Indigenous, and other people of color...feel left out,” and that the licensing process and industry “is not equitable. And so, they want folks who have power and influence and capacity to advocate for social equity to do so.” Nobles reported that the Washington State Senate (WA Senate) Democratic Caucus had recently met and affirmed “equity is a huge focus in our caucus” and members intended to “think about those who are left out and missing.” While seeking to help businesses, “we want to know that we’re not bringing harm to community.”
    • Having visited an outdoor “family-owned” cannabis producer “towards Olympia,” Nobles stated she aimed to be a “supporter” of the cannabis sector but also of “those who go unheard consistently and are not represented.” Feeling there were licensees who were “serious about this work and serious about giving back to community and just doing the right thing,” she believed there were “many positives” and fewer negatives, even as a mother who was concerned about “safety and access” and reducing underage use of cannabis. Nobles concluded that she was “really excited to continue learning and visiting producers and processors and retailers” and hoped to pass legislation “that will help the industry to move forward and achieve some of these things.”
  • Senator Derek Stanford, Vice Chair of the Washington State Senate Labor, Commerce, and Tribal Affairs Committee (WA Senate LCTA), had become “a familiar face to all of you,” Davies remarked. WACA leaders had worked with him when he was WA House COG Chair and then in the senate, as WA Senate LCTA handled “workforce issues every session” in addition to being the policy committee for cannabis legislation. Stanford was the principle consultant for Bright Crane, LLC, a business “specializing in analytic solutions and statistical consulting,” she indicated, as he had “a degree in Mathematics, and also a PhD in Statistics from” the University of Washington (UW).
    • Davies relayed that Stanford also served as a:
      • Washington State Senate Agriculture, Water, Natural Resources, and Parks Committee (WA Senate AWNP) member
      • Washington State Senate Environment, Energy and Technology Committee member
    • Stanford told attendees about his cannabis-related priorities for the 2022 session.
      • He aimed to continue “a culture change” in the Washington State Liquor and Cannabis Board (WSLCB) favoring compliance over enforcement actions which had “kind of a short timeline.” There had been progress, “but we still have some struggles there,” he acknowledged.
      • “The next big priority...social equity,” because if regulators behaved “arbitrarily, that tends to usually fall hardest on those who are the most marginalized.” Knowing the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) would continue developing recommendations to lawmakers while the disparity in industry ownership would “not get solved overnight," Stanford called the issue “real” and felt “we will all be better off if we can start moving in the right direction on that.” He anticipated there would be proposals “around using some of the revenue from marijuana taxes” to support “marginalized communities” in restoration of “some of what was taken from them in the war on drugs.”
      • The delta-8-tetrahydrocannabinol (delta-8-THC) “and other cannabinoids issue” was something legislators “need to get on top of” as there was “so much harm that can come from this.” It was a matter where lawmakers and regulators “have to keep up” with technology and new compounds, but he admitted the legislative body was “not always great at being super fast about adapting to new things.”
      • Finally, Stanford highlighted infrastructure, “the stuff that” licensees and ancillary businesses “deal with every day.” He noted traceability and “concerns around testing” which had been underway “for a while,” but he also believed other aspects of Washington’s cannabis infrastructure were “lagging” behind other jurisdictions. Officials needed to “get rid of the barriers."
    • Stanford echoed Nobles’ remarks, saying “there are a lot of people who are, kind of, left out right now,” and that the legislature would be considering that “in so many areas.” Lawmaking with “an equitable, inclusive approach” went beyond business development to “building a community,” he said, “and that makes everyone stronger and more resilient.”
  • Senator Curtis King, the Minority Caucus Ranking Member on WA Senate LCTA and an appointee to the WA SECTF, had collaborated with WACA leaders “for a long time,” Davies commented. He was also the Ranking Member on the Transportation Committee, she said, and had run “a commercial cabinet shop,” King Brothers Woodworking. King had a “bachelor’s degree in Physics...and Mathematics.”
    • King saw the state’s economy was “going 90 miles an hour...and I hope your businesses are doing the same.” He called attention to cannabis “revenues far beyond what we had anticipated,” believing it would be “interesting to see how we handle that” money, and hoping some of it went towards Washington’s transportation needs.
    • As a WA SECTF appointee and work group participant, he’d been able to learn “a lot” more about the cannabis sector, and “look at the regulations that we have” which he felt were “overregulating your industry, comparable to others.” King didn’t want laws to regulate people “out of being able to have a successful business,” and felt that policy “reasonableness” mattered.
    • Licensees getting “access to capital” would have to be addressed, commented King, as start-up costs for cannabis businesses went into the millions and “you gotta come up with that money somewhere, and it isn’t always easy to come up with it within the state of Washington.” He expected legislation on out-of-state ownership previously supported by WACA members would be introduced again, “to make sure your business grows” so that the “revenues for the state of Washington grows.” King further felt taxes and regulations for the cannabis sector had to be reviewed as they “relate to the black market" which was bolstered by “overtaxation [and] overregulation.”
    • “I believe that with the new census, and the increase in population...there will be some additional licenses that” King expected WSLCB leaders “will bring forward.” He wanted to see them distributed in a manner that “diversifies this industry...in a fair way for everybody.”
    • King, who had opposed many WA SECTF recommendations, said he was most concerned about buffer zone distance revisions in relation to “how do we do this...in a way that still protects the people that need to be protected?”
    • Task force recommendations were “going in the right direction,” he suggested, but he highlighted “a point system” for potential social equity applicants. He remained critical of assigning points for people “arrested for selling of hard drugs, now to me, there’s a world of difference there.” He indicated there was “no regulation on who they sold those hard drugs to,” suggesting it could have been an underage person. King was open to “looking at things in a certain way now that our laws have changed and all of that, but there are some limits to where I can go."
    • King shared the story of WA SECTF member Pablo Gonzalez, a licensed retailer, saying that when he’d applied for licensure (in “a blind lottery”), he had “maxed out every one of his credit cards, he borrowed money from his family, I mean, he did everything you could.” King wanted Gonzalez’s story to be “repeated over and over again" in order to “move this industry forward” and “keep your businesses successful.”

• Participants asked about federal legalization and out-of-state ownership.
  • Federal legalization, a topic of concern for regulators and trade groups, was brought up by Davies, who noted it was nearly a decade after Washington state voters approved cannabis legalization. She asked panelists, “what does the next ten years look like?” She was especially interested in “predictions” for industry evolution “if we were to see federal legalization,” citing the success of other agricultural sectors in the state.
    • Stanford acknowledged his expectation “at some point, to see federal legalization, we don’t know when.” Noting other states were “getting ready for that,” he wanted the legislature to work on topics like “investment coming into this state” which could lead to jobs and “intellectual property” increasing in Washington. Preparation for that eventuality was “part of why we need to get our infrastructure working...so we can be ready for that,” Stanford said. Expecting national legalization would have “strong disruptions” on the existing market, he believed preparing for that would “be a big thing in...the next ten years.”
    • King observed, “believe it or not, I agree with Derek,” as national cannabis reform was certain to happen - “we just don’t know when.” He felt it “goes back...to access to capital, it goes back to regulation, it goes back to taxes.” All would determine the state’s competitiveness and viability on a national level, King asserted, and if not done well “we’re gonna get rolled.” He mentioned a cannabis licensee he’d heard from “eight, nine, maybe even ten years ago” from Vashon Island who “had a specific type of cannabis that she grew” and couldn’t find the capital to stay open. King said, “if it does it for her business, it’ll do it for others,” again noting the increased taxes that would be collected through their success.
      • King was referring to former WACA Member Susie Gress, co-owner of tier 1 producer Vashon Velvet, whom Davies added “did go out of business” in 2019. The viability of tier 1 licenses at the initial canopy limit of 2,000 square feet was considered insufficient, eventually leading the WSLCB board to adopt rulemaking to raise the limit for that tier on July 7th.
    • Nobles commented that she’d asked those in the cannabis industry what the implications of national legalization would be for them. She’d heard general excitement at the chance to “grow their business,” but also people who were “concerned as well, because, like many industries, this is business.” Nobles viewed the market as “based on relationship, this is America” with “far more White people who have relationships and so when these things open and grow, now you need” national level relationships to do business. Opportunities for national expansion and access to capital came with “increased costs to just do business,” she stated, making relationships within the industry even more important. Nobles explained that “even in business, I like to think about the majority, which is smaller businesses.” She saw “state level” challenges pertaining to “the length of time that it takes to get information” that needed to be addressed or they would be a larger hindrance to Washington’s competitiveness nationally. She indicated that businesses which “have the capital, who have the access, the knowledge, the innovation, who are a part of associations like this one, they’ll be far more equipped.” Businesses lacking those relationships would find national growth “another barrier for them to achieve, you know, their own personal dreams.”
  • WACA Executive Director and Lobbyist Vicki Christophersen said the three had identified the organization’s “theme which came out of our member dinner” which was to “get ready for federal legalization” by getting “our house in order here in Washington first.” 
  • WACA trustee and Evergreen Market Chief Strategy Officer Shannon Vetto shared the view that state officials should focus on how “nationalization is occurring, regardless of federal legalization, or free flow of capital.” She said there’d been “brands from all of the other larger states coming into our state...to populate our shelves,” and the “export of revenue that we’re paying for brands” meant, even if they were growing in Washington, “nationalization is occurring.” Vetto asked for protections for “our state and for the industry we started.”
  • Andy Brassington, WACA Board of Trustees Vice President and President of Evergreen Herbal, asked about legislation for out-of-state-ownership which addressed “the residency requirement” for license ownership. He indicated a U.S. Supreme Court case, Tennessee Wine and Spirits Retailers Association v. Thomas, found a similar requirement for “issuance of a liquor license is unconstitutional under the dormant commerce clause." Brassington said litigation brought in Maine against a cannabis license residency requirement led to Maine’s Attorney General agreeing in 2020 not to enforce it. Of the opinion such laws were “clearly unconstitutional” and Washington’s was a “holdover from the [Initiative-]502 statute,” he urged lawmakers to pass a “targeted bill” removing the residency language.
    • Stanford called attention to a bill he’d sponsored in 2020 “that tried to do that,” agreeing with Brasshington’s constitutional interpretation while finding the subject to be “one of those...messy areas of the legislature where it can still be hard to get a bill through.” He believed the “gray area" resulted in a situation where someone would have to “go to court and pay a whole lot of money” to get “relief” from the requirement. Stanford hoped the revision could get passed (“perhaps as part of another bill”) as he wanted “to get us there.”
    • In Maine, a federal district court issued a ruling on August 11th invalidating the state residency requirement on dormant commerce clause grounds.

• Issues of achieving future social equity in cannabis license ownership as well as challenges around access to capital for existing licensees were also raised.
  • Christophersen mentioned how social equity in cannabis had been “front of mind” for members since passage of legislation forming WA SECTF in 2020. She described how “perception is always one thing, and then there’s reality,” as WACA members had invested “many hours” at the end of 2020 to “bring some perspectives and suggestions to the task force, while at the same time respecting the work that needed to be done.” Christophersen’s hope was that WA SECTF members would take the group’s views “into account,” claiming that some of their input matched what “has come out of the task force.” She described WACA as having worked “to create space for the task force to do their work,” and looking forward to that group’s recommendations.
  • Eric Gaston, Evergreen Market Co-Founder, WACA member, and Craft Cannabis Coalition (CCC) member, lauded Nobles for “stepping into the lion's den," remarking that the issue of social equity in the cannabis sector had resulted in “a lot of invective that hasn’t always been healthy. I think oftentimes when you have strong language it comes from a place of fear, and you know, I think that goes both ways.”
    • Gaston seconded King’s story of a retailer “maxing out their credit cards,” which could “be told a thousand times in this industry.” This made “conversations around doubling the number of retail stores when there’s already more than we were supposed to have to begin with” difficult to hear. He didn’t find it felt “good to say ‘this should just be about what we have and nobody else should have an opportunity,’ and that’s what the other side is seeing.” Gaston felt that for “a person of color, access to capital has plagued your communities forever, not just in cannabis.” 
    • “And I’d love to see the narrative change,” Gaston argued, away from adding more cannabis licensees from disproportionately impacted communities to, “what can we do to support these communities in a bigger way,” rather than “limiting it to the cannabis industry.” Focusing on that business sector, “is very shortsighted, on some levels I think it’s offensive,” he stated, since some communities may not “want more pot stores. What they want is the ability to get a loan” for starting “any other business.” Gaston backed community investment grants and business development loans to help “in a broader way than just giving someone a license to sell weed.”
    • Gaston said strict regulations led to costs that exceeded other business startups, and cannabis licensure absent “a path forward to success is not a good idea in my opinion.” His call for equity options aside from licensing more cannabis companies drew applause from attendees.
    • On November 16th, social equity task force members voted to recommend that “50% of all cannabis revenue that comes to the state, should go back into communities,” with 35% going to reinvestment in ”areas that have been also impacted” disproportionately by drug prohibition enforcement.
  • Bailey Hirschburg, Citizen Observer with Cannabis Observer and Washington chapter of the National Organization for the Reform of Marijuana Laws (WA NORML) Board Member, asked the panel a “two-part question” about the WA SECTF “recommendation for 50% of cannabis licensees to qualify as social equity applicants by the year 2029.” First, he asked if senators “think 50% is a fair goal or reasonable number to shoot for” to achieve “general equity in this market.” And then he wondered “what are some ways you’d favor getting there? More of existing license types, new license types like delivery or social consumption venues, or just gradually reissuing...forfeited or cancelled licenses” to qualified social equity applicants until 2029. Hirschburg summarized as “what do you think is the best approach to [bring] diversity into the licensee market?”
    • King wanted to “look at what percentage that really means” since lawmakers didn’t understand “how many new licenses might be out there, and then you gotta look at where those licenses might be located.” Skeptical as to whether “we can put a number on” how many licenses would go to equity applicants, he instead advocated for “a fair and equitable way...that these licenses will be issued going forward.” King noted that many licenses supposedly available for the program were in areas of bans or moratoriums, “is that going to change in the near future? I don’t know.” He was open to making such stores part of “new licenses” for social equity to get diversity in market ownership “in a fair way.” Having received a letter from “a gentleman that is the president of one of the cannabis...minority groups,” King learned he wanted 500 licenses for social equity applicants. “Well, we’re not gonna have 500, we’re not gonna double [licenses], I don’t believe,” he said, adding “I would not be in favor of a percentage.”
    • Stanford said it had been some time “since the last market study” to determine appropriate cannabis licensing, and advised that a new study could suggest how many additional cannabis companies “we think the market would support.” He didn’t believe that issuing licenses in “an area that’s highly competitive” without a market study supporting the need for additional stores would be “a helpful thing." Stanford argued that legislators would want a survey as “a new place to work from, to say maybe we can expand, or maybe not.” As for new license types, he rationalized that each type had “its own set of issues” which would need to be debated and settled by lawmakers before considering their allotment, though if new types were adopted he favored equitability in issuance. For the time being, Stanford called for “looking at what we’ve got now and how we’re going to advance social equity within the current system.”
    • Cannabis market studies in Washington include:
      • Estimating Adequate Licensed Square Footage for Production (2013)
      • Suppressing Illicit Cannabis Markets After State Marijuana Legalization (2019)
      • 2020 Contributions of the Washington Cannabis Sector

• A couple of questions about the 2022 legislative session focused on the overall timeline and legislators' expected mix of virtual and in-person meetings.
  • Joseph DuPuis, Doc and Yeti Urban Farms Owner and WACA trustee, pointed out that 2022 was the “short” session in the legislative biennium and sought advice “to help you be successful so we do get some of these issues addressed.”
    • Nobles mentioned this would be her first short session as a legislator, but encouraged anyone advocating for cannabis issues to “be organized and very focused in what your agenda and goals are.” She asked for unity from the industry on legislative priorities as lawmakers often had to evaluate legislation “in alignment with our caucus priorities.” Groups that could relate their goals to those of a legislative caucus or chamber could aim “to achieve the same goals for our community.”
    • King wanted cannabis advocates “to keep talking to us” as it would regularly “take two or three years to get a bill through the legislature...if it's going to happen at all.” 
  • Davies’ final question was on the session format, noting WACA leaders had previously organized meetings at the capital as well as “legislative days” to lobby en masse. Acknowledging that “obviously we’re in a very different environment with COVID-19 and...the virtual session,” she asked what the 2022 session “might look like.”
    • Nobles said discussion at a “retreat” indicated legislative leadership would allow virtual committee meetings and in-person floor activity. In regards to the Democratic Caucus, working from their capitol offices would be at the discretion of each senator and there might be limitations on group size for lawmaker meetings. Some senators were expecting to work remotely or “require vaccination” proof, Nobles added.
    • King had heard similar expectations that senators and staff would be “on the floor if you’re vaccinated” and that senators would potentially hold committee meetings in person with virtual testimony. He agreed office meetings would be up to each senator, noting “my office will be open” as he’d missed “interaction with our citizenry,” fellow legislators, and lobbyists during the 2021 session.
  • Pre-filed bills for the session began to be published on Monday December 6th, allowing for lawmakers to “prefile bills for introduction in the month before session begins” while “officially introduced the first day of the session.” The first new cannabis-related legislation pre-filed for 2022 was SB 5517, “Concerning employment of individuals who lawfully consume cannabis.”