WA SECTF - Public Meeting
(April 26, 2022)

Here are some observations from the Tuesday April 26th Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) Public Meeting.

My top 5 takeaways:

• Work group members developed recommendations on cannabis licensing, community reinvestment, and overall equity in the state cannabis sector during the preceding months.
  • The Licensing Work Group first met in April 2021 and provided input on WA SECTF recommendations that September. Additional licensing recommendations were approved by the group the prior week on April 21st. 
  • The Community Reinvestment Work Group conducted a survey to help determine which organizations were worthy of reinvestment dollars on April 14th. The group’s only other meeting was on February 17th.
  • On April 26th, WA SECTF Chair Representative Melanie Morgan was absent, requiring Senator Rebecca Saldaña to step into that role for the meeting. Members discussed that situation near the meeting’s end.

• Licensing Work Group leads recommended additional cannabis licenses for existing and new license types, as well as an overall goal for industry equity as members debated and adopted all the suggestions “in principle.”
  • Saldaña acknowledged the additional volunteer effort contributed by the group co-leads (audio - 1m, video):
    • Monica Martinez, Owner of The Calyx Co., a task force member appointed to represent licensed producers
    • Micah Sherman, Raven Co-Owner, a task force member appointed to represent licensed processors
  • Sherman explained there were four recommendations based on license types, all of which were “pretty broad.” His ambition was for task force members to agree to the ideas “in principle, and that’s going to allow us to continue to do the work of assembling a final report which is going to get passed along to the legislature with these recommendations along with quite a bit of supporting materials, and documentations, and data” to “support the rationale” for them. Referring to the recommendation outline, Sherman said there would be “editing, updating, additions” to the wording and suggestions were still being accepted so they could have the “best information we can” in the final report due by December 9th (audio - 2m, video). 
  • Retail License Recommendations - “The legislature should create additional retail licenses available across the state exclusive to social equity applicants until 2029. The Social Equity Task Force recommends at least twice as many stores be added between now and 2029” (audio - 9m, video). 
    • Sherman noted they used 2029 as that was the end date of the retail license program, but stated if that end date changed, the recommendation should as well.
    • Pablo Gonzalez, owner of The Bake Shop representing cannabis retailers, asked how many new retail allotments were being recommended.
      • Sherman answered that the final report would explain “where we're at, as a state, in our licensing” and “how that compares to other states" rather than a set number of new stores. He elaborated that “rather than have this recommendation be that specific, we want this recommendation to” address market factors which have “a long ability to be implemented” by lawmakers who would determine “how many numbers of stores there should be.”
      • Gonzalez then wondered “are we recommending anything for processors as well?” Sherman responded that since any licensed producer was eligible for a processor license through the Washington State Liquor and Cannabis Board (WSLCB), they’d been treated “as a block” but they could explain the distinction in their report. Gonzalez agreed that most equity applicants were likely to want both licenses. Martinez appreciated this suggestion and thought it was worth including the distinction between producer and processor licensing in the final report.
        • WSLCB Cannabis Manager Linda Thompson confirmed that while producers had been allowed "to apply to add a cannabis processor license. However, we are no longer accepting applications, please see WAC 314-55-077." Subsection (c) states that the "application window for marijuana processor licenses is closed. The board may reopen the marijuana processor application window at subsequent times when the board deems necessary."
    • Saldaña was curious if materials comparing Washington’s cannabis license types to other states would “help distinguish that other states may have different licenses?” Sherman said it would, such as “which states have delivery licenses, and which states have social consumption licenses.”
    • When it came time to vote to adopt the recommendation, Gonzalez called for a set number of new retail licenses, and a clear “goal” about how many could be allotted annually. Even as a retail owner, he wasn’t certain how saturated parts of the state cannabis market were, and he preferred “stability” to a rapid expansion of cannabis storefronts. Saldaña preferred for her fellow legislators to settle that specific issue in any bill on equity licensing, feeling the vote before them was a general issue of whether “new retail licenses, at least between now and 2029” would be “reserved only for the social equity program.” The Republican task force appointees, Senator Curtis King and Representative Kelly Chambers, were the only dissenting votes (audio - 6m, video).
  • Producer Licenses - “​​The legislature should create additional producer licenses available across the state exclusive to social equity applicants until 2029” (audio - 1m, video). 
    • Sherman specified that the viability of adding more supply to the Washington cannabis sector had to be considered carefully by lawmakers before providing a path for equity applicants.
    • Following a vote, the recommendation was adopted 13-2 with King and Chambers again opposed to the concept (audio - 2m, video). 
  • New License Types - “The legislature should create a cannabis delivery license and cannabis social consumption licenses across the state exclusive to social equity applicants until 2029” (audio - 15m, video). 
    • Looking at two broad license types, Sherman remarked that "home delivery retailing" had been implemented in other legal cannabis states and allowed for residential and hotel delivery of cannabis to adults via a website or mobile application. He said that consumption licensing was a "pretty complicated business model," particularly due to the Clean Air Act making it unlikely “that any indoor smoking will ever occur in a public facility,” but private membership clubs could be permissible. Sherman suggested this model wouldn’t allow a club owner to sell cannabis, merely to host its consumption. He commented that a second consumption recommendation could be for “special event licensing” similar to already permitted alcohol sales “at a concert” or other temporary activity. 
      • The work group heard dedicated presentations on delivery and consumption policies in November 2021 and on March 17th, respectively.
    • Chambers brought up the club model, wondering how it would “work with the clean air” laws. She recalled when indoor smoking had been banned in Tacoma, a “cigar lounge” private club had been attempted by a restaurant but was “a dead end." Sherman speculated that as a restaurant was a public space, it might not be able to “cohabitate” with a smoking club. She said the restaurant, El Gaucho, had a dedicated space, but separate access and/or a separate “lease” were things to consider. Sherman concurred that details would have to be “ironed out” in any legislation on the topic.
      • Learn more about El Gaucho’s owner and his unsuccessful litigation and legislative attempt to create a cigar lounge.
    • Tamara Berkley, Owner of Natural Blessings Recreational Marijuana representing cannabis retailers, inquired whether delivery would bypass stores like hers altogether. Sherman replied that it would as there’d been consensus that delivery shouldn't be a "fulfillment service" owing to “strong feelings” that such a model produced "inequitable results." Berkeley asked whether retail could “add a delivery [license] to their [retail] license.” Sherman agreed it was possible but hadn’t been brought up previously. Martinez spoke up to say the distinction between delivery and retail allowed equity businesses to develop separately from the competition of the retail market.
    • Paul Brice, Happy Trees Owner and “advisory community member,” sought clarification that both consumption and delivery license types were new businesses, or whether producers and processors could achieve "vertical integration" by obtaining one of them. Martinez shared this concern, but Sherman indicated that their proposal maintained a barrier between wholesale and retail. Brice then asked if retailers would be able to qualify for consumption licensing and Sherman answered that retail stores were considered a “public” business, but a retailer could run a separate private area limited to members only (“now, you’ve created a private space just like your home”). Brice pointed to Tacoma tribal business venues The Thunderbird and Commencement Bay Cannabis which both had “closed off” space for lounges. Sherman’s understanding was that they operated under tribal government laws. Brice then asked about vapor shops and requirements for ventilation of vaping areas, feeling this might be a “remedy” to allow consumption areas.
    • David Mendoza, Progreso Board President, “representing the Latinx community,” believed that public and private spaces lacked a “hard definition anywhere” leading him to think that defining membership would be “a critical discussion.” He claimed that “hookah lounges” use this membership model but that it was poorly defined and this couldn’t be similarly vague for cannabis. As for delivery, Mendoza wanted to avoid “a delivery endorsement” for existing retailers as the goal should be “more diverse ownership of businesses” and not "expansion of the status quo." He further believed that delivery drivers needed to be employees of any license and not “independent contractors” in order to “avoid…bad outcomes.”
      • At publication time, health laws in RCW 70.160 and 70.345 pertained to indoor smoking and restricted tobacco use in most areas, though smoked or vaped cannabis consumption was even more restricted. 
    • Before voting on the recommendation, Ollie Garrett, WSLCB Board Member representing that agency, asked if the recommendation included working on “the change in the law that prohibits…indoor smoking.” Sherman agreed legislation would need to address whether only outdoor use would be permitted or if indoor use with “air cleaning” equipment could also be supported. Saldaña personally didn’t want “secondhand smoke, of any kind.” She wasn’t familiar with the data on cannabis, but semi-enclosed or outdoor spaces had been incorporated in other states’ consumption policies. Moreover, consumption areas should be considered for non-smokable products like cannabis edibles, she noted. Sherman argued the new license types would serve an equity purpose of getting new licensees into the market, but new license types should eventually be available to all licensees. The task force then voted to adopt the recommendation, with the exception of King and Chambers (audio - 5m, video). 
      • Speaking about consumption policies in September 2021,  Cannabis Regulators Association (CANNRA) Executive Director Gillian Schauer said there’d been “increased evidence coming out that secondhand cannabis smoke looks like it has similar constituents and may cause some similar health harms.”
  • Overall Social Equity - “The legislature should establish a policy goal that 50% of total licenses should be owned by social equity licensees by 2029” (audio - 4m, video). 
    • According to Sherman, this proposed recommendation had been based on a New York State program approved in March 2021 that was beginning equity licensing “simultaneously” with the establishment of their adult use market, in order to ensure a “1:1 ratio of…social equity licenses and regular licenses.” Work group members appreciated this approach, he remarked, and thought a “policy goal” could be the introduction of new licenses and more existing licenses as a way to reach this goal.
      • Find out more about the status and progress of the New York equity program.
    • Chambers sought confirmation that the 50% goal had only come from the New York equity program. Saldaña inquired whether the 50% goal was intended to be achieved by issuance of licenses in the future, or to “somehow see ownership transition from the current base of owners” towards equity applicants “until 2029, and then beyond that…is holding this as a goal to track against?” Martinez responded that they hadn’t focused on replacement of existing licensees as much as adding more licenses overall.
    • After a motion to approve the equity goal recommendation, all voted in favor of the measure, except for Chambers and King, and the abstention of Gonzalez (audio - 3m, video). 
      • King and Chambers opposed licensing recommendations in September 2021, and Gonzalez also abstained at that time.

• Recommendations on how Community Reinvestment money should be allocated were discussed and approved over a single dissenting vote.
  • Work Group Co-Lead Raft Hollingsworth introduced the topic of “workforce job training” recommendations which would make “available funds for grants and scholarships to be issued to applicants from underserved communities” in order to support their professional development in the cannabis sector. Grants could go towards human resources, “manufacturing and training, engineering and science, creative writing, marketing, culinary agriculture, business operations management, [information technology], trademarking, law and policy” expenses, Hollingsworth remarked. He noted four areas where they’d surveyed the public for organizations to be potential recipients of funds (audio - 2m, video):
    • Economic Development
    • Legal Assistance
    • Violence Prevention
    • Re-Entry Services
  • Discussing the concept, Saldaña noted “encouragement of cannabis certification programs within our current education structure” like community colleges and universities. Work group Co-Lead Berkley felt making money available would “entice” those institutions to create and staff cannabis curricula (audio - 8m, video). 
    • Berkley explained that input came from a pair of work group meetings centered on engaging the community and work group members. Michelle Merriweather, Urban League of Metropolitan Seattle President/CEO and work group co-lead appointed to represent “the African American community” on WA SECTF, found their feedback reflected “the areas…that support the cannabis industry.” She added that “we didn’t want it to be solely retail, but everything that supports the industry.” Merriweather commented that the proposed recommendations reflected ideas of social equity both within the industry and society more generally.
    • Saldaña agreed the list of suggested groups was “extensive” and had organizations “throughout the state.” She felt this “align[ed] well” with what legislators wanted to see when they approved community reinvestment dollars through a budget proviso to the Washington State Department of Commerce (WA Commerce). Saldaña was grateful for the work of both work groups and welcomed additional remarks from “folks that we haven’t” heard from.
      • Neither Joe Solorio, a member of UFCW 21 representing “a labor organization involved in the cannabis industry,” nor Craig Bill, Director of the Governor’s Office of Indian Affairs (GOIA), were in attendance at the meeting. Original members of WA SECTF, both had shown up to meetings infrequently, rarely adding more to public meetings beyond their introductions.
  • Voting upon the recommendation, Gonzalez was the sole opposition to the proposal, though both King and Chambers abstained from the vote. Saldaña thanked the task force members for their work (audio - 3m, video). 

• During the meeting, Senator Curtis King promised to release a statement with “specific reasons” for being “a no vote at this point in time” or abstaining from votes (audio - 1m, video)
  • King and Chambers had opposed nearly all recommendations from the task force.
    • King opposed HB 2870, "Allowing additional marijuana retail licenses for social equity purposes," on the senate floor in March 2020, though he did vote for HB 1443 which expanded and amended the program in March 2021. Chambers represented Republican opposition to HB 1443 in multiple committee executive sessions on the bill that year.
    • During the first round of recommendations in September 2021, the pair opposed task force votes on technical assistance and mentorship, licensing, and disproportionately impacted areas (DIAs).
    • At the legislature during the 2022 session, Chambers questioned the merits of the recommendations in HB 2022, legislation to implement some WA SECTF recommendations which was not successful.
  • With the exception of King and Chamber’s abstention on the community reinvestment vote and their vote with the majority in favor of delaying consideration of some recommendations in September 2021, they opposed or had been absent from all task force actions.
  • One month after this meeting, Cannabis Observer Founder Gregory Foster reached out to King’s office to inquire about the statement and received a letter on June 24th in which King provided his reasons for opposing most of the recommendations at the April 26th meeting.
    • King opposed the Retail Licenses recommendation because:
      • There needs to be a quantity clearly identified.
        • Though HB 2022 failed to reach King in the Washington State Senate (WA Senate), as originally drafted it included a fixed number of additional licenses available per year.
      • Do not believe the legislature can dictate that only social equity applicants are eligible.
        • The existing law dictates that only social equity applicants are eligible for retail licenses subject to forfeiture, revocation, or cancellation by WSLCB until July 1st, 2029.
        • Studies on the consideration of race in cannabis equity policy making had been the subject of research for several years.
          • Race-Specific Language to Benefit African American, Latinx, and Native American Communities in Cannabis Equity Legislation (2021) conducted by NuLeaf Project and Law Students for Sensible Drug Policy at the Willamette University College of Law.
            • The WSLCB board held a conference call with a NuLEaf representative to learn about Portland’s equity program in July 2019.
          • Cannabis Social Equity: An opportunity for the revival of affirmative action in California (2019) by Rebecca Brown, published in the Willamette Social Justice and Equity Journal.
      • Concerned about who might be excluded under the term “social equity”.
    • He didn’t support the recommendation on Producer Licenses since:
      • There is already an overabundance of cannabis being produced currently in our state, so creating more producer licenses is not reasonable nor sustainable.
      • Do not believe the legislature can dictate that only social equity applicants are eligible.
    • Delivery and Social Consumption Licenses weren’t acceptable since:
      • The delivery license as explained is a retail license, but they can also deliver. They will then compete with the retail stores that cannot deliver. Just a way to increase the number of retailers without a limit.
      • Firmly believe the exclusion of others for these licenses is illegal.
      • For cannabis social consumption licenses, we already have laws that prohibit cigar lounges, and this is basically the same concept. It would put the people working in these lounges at risk.
    • Finally, King reported opposing the Social Equity Licensee Goal because:
      • I could not justify the 50% number nor understand how it was achieved.
      • Do not believe the legislature could legally set such a goal without discrimination issues.
    • For the Workforce Job Training Recommendation, he reported abstaining from voting “as I need more time to consider and understand the effects of both recommendations, including costs and reasonableness.”

• The next steps for work groups and the wider task force were laid out by staff members and Acting Chair Senator Rebecca Saldaña as the body looked to conclude their final recommendations for legislators ahead of the 2023 legislative session.
  • WA SECTF Manager Anzhane Slaughter announced that with their recommendations completed, the task force would be “closing out” both the Licensing and Community Reinvestment work groups. She reported that a Regulation of Cannabis Production Work Group (WA SECTF - Work Group - WSDA) and a “Home Grow / LCB Criminal Background Policy Work Group” would be established and staff would try to “narrow down” those groups’ schedules. She added that staff would send out “some surveys on what you all…would like to move forward as we progress” (audio - 2m, video). 
  • Saldaña said that she was interested in another update from WSLCB about their rulemaking project on social equity as well as a briefing on the community reinvestment fund implementation from the Washington State Office of Equity “or the governor’s office.” Some activities around the program were due to the “previous work” of the WA SECTF and their recommendations, so it was worth “tracking” implementation (audio - 1m, video).
    • WSLCB board members voted to withdraw proposed social equity program rules on May 11th. Policy and Rules Manager Kathy Hoffman discussed the pause on June 7th. At a Washington CannaBusiness Association (WACA) conference on June 15th, WSLCB Chair David Postman attributed the delay to officials taking “another hard look” at their proposal. At the June 21st board caucus, Hoffman stated that a revised CR-102 was expected by “either the first or second board meeting in July.”
  • Looking ahead to upcoming work groups, Saldaña expected they would only have a couple of public meetings and instead would be “looking at different ways to get to that data” in a “less formal way…between now and June” (audio - 3m, video). 
    • Sherman said that he and Jim Makoso, Flowe Technology CEO, Lucid Lab Group Director, and a WA SECTF appointee, had agreed to co-lead the Regulation of Cannabis Production Work Group and would be convening fewer public meetings to try to be “more effective.” He similarly felt the other work group would be “more manageable” with “a couple” of meetings.
    • Berkley, Hollingsworth, and Merriweather all expressed interest in the Home Grow / LCB Criminal Background Policy Work Group.
  • As the meeting was concluding, Garrett mentoned her understanding that WA SECTF “bylaws” required the group to have two co-chairs “so we weren’t put in a position like we were today” requiring Saldaña to step in. Saldaña’s understanding was that they were allowed to have co-chairs, but it wasn’t required in statute, “and when [former Co-Chair Paula Sardinas] was no longer on the task force, no one brought it up and we all just kind of managed.” Slaughter concurred that bylaws for the task force called for co-chairs represented by one legislative and one community member. She noted that with Morgan as the legislative representative, members would need to elect a community representative as co-chair. Saldaña and Sherman advised bringing the issue back up at the next WA SECTF meeting (audio - 4m, video). 
    • A vote on a new co-chair was on the agenda for the task force’s next meeting on Tuesday June 28th.