WA House COG - Committee Meeting
(January 11, 2022)

Tuesday January 11, 2022 8:00 AM - 9:45 AM Observed
Washington State House of Representatives Logo

The Washington State House Commerce and Gaming Committee (WA House COG) considers issues relating to the regulation of commerce in alcohol, tobacco and cannabis, as well as issues relating to the regulation and oversight of gaming, including tribal compacts.​

Public Hearing

  • HB 1710 - "Establishing a Washington state cannabis commission."
https://app.leg.wa.gov/committeeschedules/Home/Documents/29388

Observations

A majority of speakers favored legislation to create a cannabis commodity commission, but questions remained about costs, goals, and the inclusiveness with which the bill was drafted.

Here are some observations from the Tuesday January 11th Washington State House Commerce and Gaming Committee (WA House COG) Committee Meeting.

My top 4 takeaways:

  • WA House COG Counsel Peter Clodfelter gave the staff report on HB 1710, the latest iteration of legislation "Establishing a Washington state cannabis commission" (audio - 5m, video)
    • The concept of a cannabis agricultural commission overseen by the Washington State Department of Agriculture (WSDA) had been proposed in previous legislation:
    • Clodfelter reviewed the bill analysis, which described how the legislation:
      • “Establishes the Washington State Cannabis Commission (Commission) consisting of cannabis producers, producers/processors, and the Director of the Washington State Department of Agriculture (WSDA).
      • Specifies purposes of the Commission including related to planning and conducting programs, research, advising government agencies, reviewing market metrics, educating and advising cannabis producers, limiting youth access, and other specified purposes.
      • Grants the Commission powers and duties related to internal governance, employment and contracting, cooperating with other entities and persons, acquiring and owning intellectual property rights, representing the state, adopting rules, and other specified powers.
      • Requires the Commission to submit a research plan, an education and training plan, and the Commission's budget each fiscal year to the Director of the WSDA for approval.”
    • According to Clodfelter, the 13 member commission would be funded through “an assessment on cannabis producers and producer/processors” beginning October 31st, 2022 in the amount of “0.29% of all [producer] sales revenues,” or “0.145% of all sales revenues” for licensed producer/processors. This money would cover operational costs of the commission and “reimburse some of Department of Agriculture’s work related to the bill,” he told lawmakers.
    • The commission would have several purposes, with Clodfelter highlighting:
      • “Planning and conducting cannabis-related programs; 
      • providing for research; 
      • advising government agencies and other interested persons on cannabis-related matters; 
      • educating and training producers, producers/processors, researchers, and their employees; 
      • advancing knowledge and practice of the production of cannabis in Washington; 
      • limiting youth access and exposure to cannabis; 
      • and a number of other purposes that are listed in section 4 of the bill.”
    • Clodfelter identified some powers and duties of the commission in section 5:
      • “Elect a chair and adopt and amend rules of internal governance; 
      • employ and discharge staff and administrators, and professional consultants;
      • institute legal actions; 
      • enter into contracts or cooperative agreements for research or other interagency agreements;
      • acquire and own intellectual property and collect royalties that could result from the sale or licensing of commission-funded research; 
      • speaking on behalf of the Washington State government regarding cannabis” subject to WSDA staff oversight.
      • “Other powers and duties.”
    • The Director of WSDA would appoint the inaugural members of the commission who would have “initial, staggered terms of one, two, or three years,” said Clodfelter. After that, he explained that members representing producers and producer/processors “would be elected for three year terms on the commission” by those licensees “who would be voting for them in the districts throughout the state that the bill creates based on counties.”
      • An additional non-voting advisory committee would also be stood up and “include one stand-alone processor licensee as well as a testing lab member.” The bill analysis described the advisory committee as being “created to assist the Commission. The Director must appoint members of the advisory council” who “must be considered from a pool of self-nominated active business representatives from each business type.”
    • The commission would be responsible for submitting a “research plan, an education/training plan, and its budget each year to the Director” of WSDA for approval, Clodfelter noted. He then described other provisions on information sharing with the Washington State Liquor and Cannabis Board (WSLCB), limiting the state’s liability for “commission liabilities, and an exception to the state civil service law that applies to officers and employees” of the commission.
    • Representative Steve Kirby noted the agricultural focus of the bill, asking if anyone was “surprised this even came to this committee.” He wondered if HB 1710 becoming law would mean “any future bills would then go to the agriculture committee” (audio - 3m, video).
      • Clodfelter acknowledged that WSDA officials would have “a number of roles in the context of this bill and the cannabis commission” but felt their authority was confined to the commission’s responsibilities. It wouldn’t alter the authority of WSLCB, he indicated, nor would it direct “committee referrals” for the legislature.
      • Kirby said Clodfelter’s reply was “the best you can do,” but Kirby suspected any future legislation “having to do with anything included in the bill would get referred” to another committee, although he acknowledged even committee chairs were sometimes confused by such referrals. Chair Shelley Kloba remarked that “it is somewhat deliberate because” of a difference in “content knowledge” between legislative committees. 
  • 26 people either spoke or signed in support of HB 1710, and lawmakers were curious about potential impacts on research and social equity.
    • The primary bill sponsor, Representative Sharon Shewmake, spoke to the merits of her legislation. She said she’d worked on the bill for “a few years” and agreed that it could have been heard by the Washington State House Rural Development, Agriculture, and Natural Resources Committee (WA House RDAN), but she was appreciative of the cannabis expertise of WA House COG members (audio - 4m, video).
      • Shewmake argued that the agricultural sector of the economy “has been an incredible story of lower priced food, of lower priced goods” and that one aspect of that was “the story of agricultural extension, of research and development” into improving crop yields or other efficiencies. By making research widely available to farmers, she stated “it’s been incredibly important both in producing food and producing lower cost food” while also having sustainability benefits for the environment. The continuing federal prohibition on cannabis had impacted access to similar opportunities for its producers, Shewmake observed, meaning the commission could “provide a way to at least start some of the low-hanging fruit and some of the easier questions to answer.” She suggested possible topics like energy efficient indoor lights, mitigating odors, and worker training or safety issues. If producers united to fund “that research once instead of every single farm having to do it, then they can really see the benefits and economies of scale.”
      • The commission would not focus on marketing cannabis, Shewmake insisted, instead emphasizing “production, and then some of the other side issues.” She’d tried to ensure accountability measures and oversight were included even as the commission would not work with “public partners” such as Washington State University (WSU). Shewmake had also looked to make sure "that one group doesn't get control of it" to decide the commission’s agenda. She asserted commission work would not conflict with cannabis packaging and labeling requirements nor other agencies with cannabis responsibilities.
      • Representative Melanie Morgan, also chair of the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF), noted that she saw “a lot of overlap with things that are already in place for cannabis” like the equity task force. Looking at the proposal to divide the commission members based on “districts around the state,” she asked how “racial equity on this, in communities of color” would be ensured, as “I know from experience around this” that if the subject wasn’t explicitly stated it “could be overlooked.” Shewmake agreed that prioritizing equitable representation should be unambiguous and was “happy to strengthen that language” (audio - 2m, video). 
    • Shawn DeNae Wagenseller, Washington Bud Company Co-Owner and  Washington Sun and Craft Growers Association (WSCA) Board Member (audio - 5m, video)
      • Indicating she’d worked on the topic since 2016, Wagenseller credited “Dr. Alan Schreiber, an agricultural research scientist” who advised the Cannabis Alliance, for bringing her attention to the subject. After “evolving years,” she claimed the commission’s opponents cited a lack of “outreach.” Wagenseller took issue with this talking point, saying bill language had been presented at cannabis conferences and trade shows for years, as well as “virtual outreach” webinars hosted by the Cannabis Alliance. Additionally, she testified to working with WSDA and WSLCB representatives, the Washington State Office of the Attorney General (WA OAG), and university researchers. Wagenseller believed this made HB 1710 “the first cannabis bill ever presented to you that has had broad outreach.”
      • Describing cannabis producers as “the backbone to the entire scheme,” Wagenseller said licensees deserved “the help of the WSDA and researchers at our universities.” Producers helped generate “far more taxes for Washington state than all other crops combined,” she remarked, insisting the crop sale assessment in the bill was the “least expensive” of any commodity commission currently operating. Using her own business as an example, Wagenseller said that with $1.2 million in sales the previous year “we would have paid an assessment of about $1,740.” Pooling this money with every other licensed producer and producer/processor would allow for research “to guide good policy and safe growing practices.”
      • Wagenseller previously advocated on the issue as a member of the Washington State Cannabis Commission Action Committee.
    • Steve Walser, Buddy Boy Farm Owner (audio - 5m, video)
      • Walser said he owned an organic farm that had grown several crops and been involved with multiple agricultural commissions, finding them beneficial to his business. “If anything, the cannabis plant has much more of a need” for a commodity commission, he suggested, as most agricultural products had “basic information available” such as established "critical values" for growing. While his two tier 3 production licenses did well, selling “about $10 million a year in business,” he and other “less experienced” producers could benefit from the “expensive, time consuming” work of a commodity commission.
      • Walser stated that he was happy to pay an assessment fee since there was a lot “that can, or needs to be, learned” about cannabis as a crop. Acknowledging he was a Washington CannaBusiness Association (WACA) member, Walser argued that although the group “doesn’t formally support this,” he knew of several members who backed the measure “because we can see the use of it.” He spoke to another licensee opposed to the bill who articulated their objection as not wanting to pay for research that was shared “with a bunch of smaller growers,” an attitude he called “a little reprehensible." Walser was skeptical that the other licensee could independently afford the costly studies a commission could pursue.
      • Representative Kelly Chambers asked what would prevent WSU researchers from being involved in research, and Walser assumed a lack of funding as well as federal cannabis research restrictions. Shewmake reinforced the difficulty posed by federal cannabis prohibition and how this impacted the choices of WSU staff who “don’t want to jeopardize any of their other grants.” Kloba mentioned committee member familiarity with cannabis research being conducted in the state, noting some researchers had found “ways to design and conduct the experiments” to collect data “in ways that don’t…put them on the wrong side of the federal prohibition.” This gave her “no doubt that they would be able to overcome that issue” (audio - 3m, video). 
    • Ryan Sevigny, Landrace Brands President and board member for the Cannabis Alliance and WSCA (audio - 3m, video)
      • Sevigny explained that his production facility was in Okanogan County, surrounded by mountains “and other orchards, mostly apples and cherries.” He said these crops were harvested at different times of the year and “the challenge really lies within the types of pests that seek refuge in both types of crops.” According to Sevigny, a “pest migration pattern” had emerged and cannabis crops suffered pest damage right before they were due to be harvested later in fall. He’d reached out to his neighbors to share his observations but “the fact is none of this is actually proven” and individual cannabis producers couldn’t afford the “comprehensive” research needed. A cannabis commission could study an issue like this and make the findings publicly available, he argued.
      • Morgan asked Sevigny about “communities of color that are engaged in this farming that you speak of.” He responded that his “neighbored orchardists are all members of minority communities” but amongst cannabis producers, members of such communities were “few and far between.” Sevigny voiced support for the work of the WA SECTF and advised engaging with Shewmake to amend language if Morgan found it warranted. Morgan followed up to say improvements in cannabis equity shouldn’t be limited to the task force, and that other stakeholders needed to be involved as “we have to be intentional about finding communities of color and bringing them aboard.” Morgan urged Sevigny and others to reach out to their region’s communities of color “and engage them in this industry” (audio - 2m, video). 
    • Jeremy Moberg, CannaSol Farms Owner and WSCA Board Member (audio - 4m, video) 
    • Lara Kaminsky, The Cannabis Alliance Government Affairs Liaison (audio - 5m, video)
      • Responding to earlier remarks, Kaminsky was open to amending language about commission appointees to ensure diverse representation, noting the Alliance had worked with Paula Sardinas and the Washington Build Back Black Alliance (WBBBA) on “how we would hope it would help your communities.” She was similarly amenable to revisions to HB 1710 that clarified the roles and responsibilities of state agencies. Kaminsky stressed that the commission had no say in compliance training and pointed to section 4(3) which attempted to make this distinction in statute.
      • Kaminsky told lawmakers that research priorities of the commission would be “driven by the industry to address the most pressing concerns” rather than other entities. She emphasized that the group would not engage in cannabis marketing, which she knew could be “an element of commissions, but it’s not their primary purpose.” Kaminsky didn’t feel marketing was needed as much as agricultural research, as cannabis reamined “a closed market.” She reasoned that a marketing component could be added “later, should that be required.” Kaminsky then commented that the agricultural focus of the group meant it wasn’t an appropriate body for retailer representation.
      • Citing the Washington State Wine Commission as an example of helping small businesses, Kaminsky asserted that a cannabis commission would similarly help smaller producers. “Traditionally, the benefit of commissions to the industry is consistent and striking,” she observed, “we looked at ten commodities, pre and post-commission, and without fail all industries flourished.” Kaminsky wrapped up by saying a cannabis commodity commission would improve safety for workers, consumers, and products.
      • Morgan returned to cannabis equity. While appreciative that Kaminsky had reached out to WBBBA, Morgan nonetheless claimed “they’re one entity, and I don’t want us to be tokenized by one entity.” Identifying the Hollingsworth Cannabis Company as “the only Black cannabis farm in the state,” she felt that company should have been lobbied along with other racial minorities “in the business.” Kaminsky “completely appreciate[d] that” and was happy to contact more businesses, adding that she had spoken to the owners of Hollingsworth Cannabis and believed they supported the bill (audio - 2m, video).
    • Albert Sardiñas, WBBBA Board Member, signed in to testify in favor of HB 1710 but was unavailable when called (audio - <1m, video).
    • Signed in but not testifying (20):
  • Seven people signed up or testified against passage of the bill, citing reasons such as federal cannabis prohibition and the cost to licensees.
    • Brooke Davies, WACA Deputy Director (audio - 3m, video)
      • Davies claimed that the legislation hadn’t previously been advanced due to “fundamental” problems and a commission wouldn’t make sense “until cannabis is legal federally.” She said WSDA described existing agriculture commissions as “engaged primarily in marketing and/or research” and, while suitable for other crops, a commission wasn’t appropriate for a federally illicit commodity. Davies believed research being done by existing universities couldn’t utilize state-legal cannabis products without risking federal grant money. Since peer-reviewed studies were “very expensive,” she saw the benefits of a commission being “extremely curtailed by federal law.”
      • Based on a December 2021 economic analysis funded by WACA, Davies reported that existing cannabis taxation in Washington state was “by far the largest such tax in the U.S.” with consumers paying on average 42.6% on their cannabis purchases. She claimed that cannabis businesses struggled to compete with the “untaxed, unregulated, illicit marketplace” and couldn’t afford an assessment fee to pay for the commission’s activities.
      • Morgan stated that tax dollars from cannabis already went to research efforts, “and they’re doing some great work.” She asked if some of the subjects in the bill could “be moved and talked about in” WA SECTF. Davies was uncertain as she found the bill’s “goals are a little bit unclear" and overly broad. She said WACA leaders “did some calculations and it seems like it would raise in revenue about $1.6 million” which she doubted would leave much research funding after administration of the commission itself. Davies was nonetheless receptive to the introduction of new topics in WA SECTF meetings (audio - 2m, video). 
    • Bethany Rondeaux, Falcanna Owner (audio - 2m, video)
      • Rondeaux was against passage of HB 1710 as she considered the primary purpose of a commodity commission would be to market items “in other states like the wine commission does.” With cannabis federally prohibited, she didn’t see the point of the bill while the 0.145% assessment on sales by producer/processors would cost her business $13,000 annually. Rondeaux preferred being able to cover 85% of her staff’s health insurance coverage, and hoped to one day cover that entire expense. However, "another non-voluntary expense" like the commission assessment would hurt growers and leave her farther from that goal, she argued.
    • Paige Berger, Hygge Farms Owner (audio - 2m, video) 
    • Signed in but not testifying (4):
  • Four people testified or signed in as ‘other,’ neither for nor against passage of the bill, including two representatives of state agencies.
    • Kelly McLain, WSDA Policy Advisor to the Director and Legislative Liaison (audio - 3m, video)
      • McLain conveyed that WSDA leaders were neutral on the bill "for some specific financial and legal reasons" although staff had worked with proponents “for years” and “previous issues have been addressed.” She said that “cannabis growers in Washington continue to struggle with a lack of directed research on topics you’ve heard about” that might otherwise be addressed by “land grant universities” such as WSU which were significantly restricted. “A research-focused, industry-funded commission is one way this could be addressed,” she commented.
      • Concerns with the bill wording identified by McLain included having commissioners, and possibly cannabis licensees, “take the lead in speaking on behalf of the state” about the plant. She wanted this language changed “because cannabis is not a traditional commodity like potatoes or apples” as it was regulated by the state “from seed to consumer” which could be undermined by a “state advocate” for the crop. McLain further wanted changes in sections 4, 5, and 7 “to reduce liability for our agency as well as other regulatory agency conflicts.”
      • McLain said that a fiscal note had been prepared by WSDA officials showing initial costs of implementing HB 1710 amounting to $23,750 while “all other costs would be recoverable from the industry based on current bill language.” She said half of a full time employee (FTE) at WSDA was already dedicated to agriculture commissions, and some of this staff resource costs “would be recoverable from this commission.”
      • Kirby was curious about the current role WSDA had in cannabis production, “particularly hemp,” asking if the department regulated indoor production sites, or only outdoor. McLain responded that WSDA was the “housing unit for the regulatory program for commercial hemp production” and that the majority of the divisions at the department work “on topics related to cannabis.” She conveyed that “the same pesticide rules apply in an indoor, or an outdoor, cannabis grow as apply in any other agricultural settings” and that WSDA staff had other duties like inspections or applying worker protection standards in addition to being the “regulatory lab space” for WSLCB. McLain added that she’d worked on the language of cannabis commission legislation since 2018 and that cannabis was “not a new space for us” (audio - 3m, video). 
    • Chris Thompson, WSLCB Director of Legislative Relations (audio - 4m, video)
      • Thompson testified that the agency was supportive of increased research and agreed the existing bill “completely removed” marketing and promotion priorities which existed in other commissions. “Other positive elements” were in the proposal, he said, complimenting Shewmake and advocates for working with WSLCB staff.
      • According to Thompson, a “few areas of concern” remained, seconding McClain’s hesitation about having commissioners act as spokespeople for the state government. He hoped for another change to “make it clear that this commission” would coordinate in a “consistent fashion with other state regulatory agencies including our own.” Education and training were WSLCB responsibilities, he noted, seeking to avoid conflict or inconsistencies between the agency and a prospective commission.
      • Thompson promised a fiscal note for the agency was being drafted by staff, saying it would likely cost nothing if WSLCB shared in the assessment funding the commission collected, but “at this point we’re projecting more than one FTE” due to the costs of fee collection duties.
      • Responding to Morgan’s questions about equity, Thompson told the committee that the bill did have language instructing that appointments to the commission reflect “balance and diverse distribution of members based on disproportionately impacted communities, ethnicity, geographic location, gender identity, sexual orientation, and age where practicable.” He was supportive of WA SECTF members reviewing the bill, confirming that WSLCB licensee statistics suggested “that the producer/processor sector is even less diverse than what we see in the retail sector.”
      • Kloba mentioned education and training for licensees and employees, asking Thompson whether WSLCB representatives could collaborate with a commission so that education could “go further than or cover areas that are outside” of the agency’s current scope. Thompson was receptive, saying there needn’t be conflict if the educational topics each entity was responsible for could be more clearly delineated in the bill (audio - 3m, video).
      • Morgan thanked Thompson for highlighting the equity language in the bill while remaining curious about which “stakeholders of community of color have actually been involved” in the development of the legislation. Based on what she had heard at the hearing, she was uncertain “that really has happened.” Morgan said she’d reached out to racial minority groups before the hearing and found “no one has really heard about” the concept of a cannabis commission, leading her to feel that “more massaging of the language” was needed to ensure there was “the equity that we need” (audio - 1m, video). 
    • Adán Espino, Craft Cannabis Council (CCC) Executive Director (audio - 2m, video)
      • Espino told the committee that the goal of HB 1710 was “important and worthwhile,” but found it “problematic that a key pillar of the state industry is excluded” by not having retail representation on the agricultural commission. He remarked that CCC members would support the creation of a commission so long as they weren’t assessed a fee as it would “increase costs to consumers.” Espino hoped to work with legislators to amend the bill to include space for retailers on the commission.
    • Bob Cooper, Washington Association For Substance Abuse and Violence Prevention (WASAVP) Lobbyist, signed in as ‘other’ without requesting to testify.

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