City of Seattle - City Council - Committee - Finance and Housing - Committee Meeting
(April 6, 2022)

Here are some observations from the Wednesday April 6th Seattle City Council Finance and Housing Committee (City of Seattle - City Council - Committee - Finance and Housing) Committee Meeting.

My top 4 takeaways:

• During preceding months, the committee learned how advancement opportunities for staff and diversity in license ownership were viewed as social equity problems in the city’s cannabis industry, as well as what other jurisdictions had tried to address these types of disparities in legal markets.
  • The topic first came to the committee’s attention in December 2021 during a presentation by staff of the City of Seattle Department of Finance and Administrative Services (FAS) on the Race and Social Justice Initiative (RSJI). Members asked for more background in the hopes of developing a city-level equity program.
    • The Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) was established in 2020 and had made recommendations to increase equity in license ownership and assist the Washington State Liquor and Cannabis Board (WSLCB) in the implementation of a retail social equity program. The group last met on April 26th.
  • On February 16th, the committee heard from a community panel made up of cannabis retail employees and stakeholders.
  • On March 2nd, members learned about other municipal equity programs and received a more in-depth briefing from FAS representatives. The briefing featured several possible goals and benchmarks for equity in the Seattle cannabis sector.

• A representative from the Seattle chapter of the National Association for the Advancement of Colored People (NAACP) and two budtenders reiterated the importance of equity efforts during public comment.
  • Claude Burfect, Seattle King County NAACP Vice President (audio - 2m, video) 
    • Burfect relayed that the policies under consideration by the committee were the result of “a large stakeholder process which we were a part of” that weighed what other cities had tried in order to make an ideal system for Seattle. "Black and Brown communities were harmed by the War on Drugs," he stated plainly, at “rates much higher than White people for possession of marijuana.” Though city officials had “taken steps to remove misdemeanors from records,” Burfect argued there was much more to be done, stating he was "urging you to take urgent action to address the systemic problems in the cannabis industry" through legislation to “ensure more equity in the system.”
  • Kristen Wells, Ponder Budtender (audio - 3m, video) 
    • Supportive of increasing equity in the cannabis sector, Wells said she’d joined the cannabis industry after she’d lost her job “in the middle of the [coronavirus] pandemic.” A medical cannabis patient as well, she reported that there was “a lot of equity work that needs to be done” in the cannabis space. She was especially interested in possible employee training and opportunities for staffers to “see what they would be good at” to advance within the industry. Wells’ initial medical cannabis consultant training had been paid for by her work, but she found the process was “not accessible” for most in the industry due to costs for the initial training as well as a need for annual renewal. Increased training opportunities would “help with the development of the workforce within the industry,” she added.
  • Zion Grae-El, Have a Heart Belltown Budtender (audio - 3m, video)
    • Having spoken to the committee on February 16th, he remarked that after five years in the cannabis space he was accustomed to “high volume cash handling" and even deescalating “situations between staff and customers at times." Grae-El indicated that he’d gotten into the cannabis sector even after several positions were “yanked out from underneath me" due to a felony conviction, but ultimately “the cannabis industry openly accepted me.” He considered vacating and expunging past convictions to be a “vital component” of increasing industry equity, along with a “commission” to oversee equity programs within the cannabis sector that was separate from WSLCB and representative of “the communities that have been wronged.” Grae-El believed it was “time that Seattle rights the wrongs of the War on Drugs and protects cannabis workers"

• Only two of four invited panelists representing cannabis businesses were available when introduced by City Councilmember and Committee Chair Teresa Mosqueda.
  • Mosqueda thanked her Legislative Assistant, Aretha Basu, for her assistance organizing the panels which would help the committee better grasp “what cannabis equity funds and equity licensing processes look like,” confirming they were still taking input from equity licensees and regulators in other states. Acknowledging Norbert Pickett was unavailable (the Owner of Cannabliss, Washington, D.C.’s first African American owned medical cannabis dispensary), she was “very excited” to hear from those present (audio - 3m, video).
  • Javier Hernandez, Humble Root Founder and CEO (audio - <1m, video) 
    • Hernandez described his Sacramento-based “cannabis delivery company” as a “social equity” licensed business with “about seven years in operation.”
    • On March 2nd, committee members heard a presentation from Davina Smith, City of Sacramento Office of Cannabis Management Program Manager and Administrative Analyst Larissa Wohl, about that jurisdiction’s Cannabis Opportunity Reinvestment and Equity (CORE) program.
    • Humble Root Co-Owner Chris Thao was also listed as a panelist, but wasn’t in attendance.
  • Trey Reckling, Academy of Cannabis Science Founder (audio - 2m, video) 
    • Reckling said the academy was founded in 2015 and was the “first company approved by the [Washington State] Department of Health” (DOH) to train medical cannabis consultants. While not taking a legislative position on the ideas discussed by the committee, he conveyed a wish to “champion the efforts of equity,” particularly on the “transformative influence of education.”
    • Reckling explained that the academy had partnered with South Seattle College, Highline College, and the University of Nevada, Las Vegas (UNLV). He commented that leaders at South Seattle College had been interested in developing “the largest education and professional training footprint in the state….developing about ten different courses in cannabis, as well as two certificate programs.” He felt this work aligned “with their values as an institution related to social justice and equity.”
    • Other businesses the Academy had partnered with included the Last Prisoners Project “prisons to prosperity program” and Green Legacy, which was “founded by one of our former students to help people support and empower underrepresented cannabis entrepreneurs and founders.” He added that his company had entered into talks with equity organization Think BIG, founded by C.J. Wallace, “son of the late Chris Wallace, popularly known as ‘Notorious B.I.G.’”
    • At publication time, Reckling was also a Cannabis Alliance board member and had been the Have a Heart Training and Development Manager.

• Two council members posed several questions about Sacramento’s cannabis equity program, barriers to entry, training needs, and possible elements for a comparable program in Seattle.
  • Mosqueda first asked about Hernandez’s experience with the City of Sacramento equity program, inclusive of “challenges” he would have faced “had you not had the CORE program” (audio - 2m, video).
    • He described Humble Root as a “non-storefront dispensary" licensed for “delivery only.” A legacy cannabis business in Sacramento which started as a medical dispensary before adult-use retail was licensed by the state, Hernandez said CORE had been set up to help “people of color, people that grew up in the impoverished areas” of the city. Among the most “crucial” services the program offered had been “priority licensing” before there’d been “big money” in that cannabis market, he stated. A “workshop” on cannabis licensing had also been useful, Hernandez added, “as well as some cash grants" for security upgrades.
    • Without CORE, Hernandez believed the length and cost of the licensing program would have been prohibitive, relaying that the equity program “cut it in half.” Garnering consumer awareness early on had been crucial; “If you're not into the market early,” getting in later comes with higher costs, he warned
  • Mosqueda wanted to hear how issues of “racial equity” Hernandez had encountered in the California cannabis sector might have been obstacles to getting more “business owners of color to be able to enter the cannabis industry.” She was further curious about “additional training” Hernandez thought could be useful (audio - 3m, video). 
    • He replied that “finding a property” that was suitable for his business had been one challenge as he had little capital and discovered land owners charged cannabis licensees more than they would for a “non-cannabis business.” Business space ended up costing Hernandez “upwards of six figures” to secure land use “entitlements.” However, as a renter, “even once you get it, you don't own it” and instead his efforts profited “someone that already owns the property and is already wealthy.”
    • After so long in the industry, Hernandez was confident in the training provided by Humble Root, but new businesses could benefit from “basic cannabis knowledge as well as medical cannabis knowledge” that would help new employees “solidify that relationship with” customers.
  • Mosqueda’s next question was directed to Reckling. She wondered “what existing training programs are out there” to help advance the cannabis sector. Moreover, she wanted a better sense of the academy curriculum, including ways they increased opportunities in the industry “through an equity lens” (audio - 5m, video).
    • Reckling offered that he was “a patient first" and had been involved in medical cannabis prior to adult-use legalization. The Washington state cannabis sector had “no required training for any budtender,” though some states did require training. He commented that a 2015 medical cannabis law merging the medical and recreational markets had mandated training for medical consultants. Reckling believed the Academy’s 20-hour course for consultants was the most comprehensive program of its kind in any legal cannabis state.
      • Training is a requirement for budtenders in Illinois, and other companies offer cannabis training curriculum with the promise it can increase odds of employment and potential pay in the industry.
    • However, stores weren’t required to carry medically compliant product, Reckling noted, and could choose to “opt-in.” Telling the committee he’d visited a retail store where staff couldn’t identify anyone in charge of training them, he figured “we owe it to the public to make sure” budtenders knew “what they’re handling,” especially for first time customers ("or first time in a long time").
    • Reckling said his training modules all had educational content “focused on the social injustice [history] of cannabis” and he considered it an “on-going crime" that “over 40,000 people are in jail” for cannabis offenses. This context was important for "empathy" and "understanding," he said, feeling that the “community of cannabis should be the most diverse community you can belong to.” 
  • Councilmember Sara Nelson wanted to know more about the training costs for Reckling’s curriculum and who paid. He replied that most employers paid for the training after hiring individuals to become store medical consultants, but some people proactively paid for the course because they were interested in the field (audio - 3m, video) .
    • Nelson asked what the cost was, and Reckling responded that it was $399 with bulk discounts for training multiple staffers. He asserted costs had been “kept low” in part by offering it online.
  • Mosqueda asked Hernandez what he’d want “as a business owner” when it came to making training available and affordable for “folks to be able to go through” (audio - 2m, video). 
    • He answered that Sacramento officials had provided “workshop training programs for people that wanted to join the cannabis industry.” Hernandez didn’t feel the program was as “built out” as Reckling’s courses at the academy.
    • Stressing the academy’s diverse faculty, Reckling compared cannabis training with “getting into a job in tech" where information was changing “all the time.”
  • Nelson wanted to find out more about the CORE program’s funding. Hernandez told her it had come through a state grant to cities and counties for cannabis equity (audio - 1m, video).
  • The final question from Mosqueda was about city-level programs and any single factor that had been most useful for enhancing social equity (audio - 5m, video). 
    • Hernandez replied that early access to the market had been the most important single thing which helped his company beat out bigger competitors. Without that prioritization, he felt “I wouldn’t be here today.” He further noted that reducing local taxation of cannabis had been another concern of licensees in his state. Hernandez pointed to San Francisco, where officials placed a “two-year moratorium on the city tax” on cannabis. Authorities in Sacramento were considering a similar move specifically targeted to help equity licensees.
    • Reckling advocated to “lower the barrier” for criminal record expungement in Washington, as criminal histories “follow” people trying to operate legitimate businesses. He wondered if it was a “disservice” to give underage persons criminal records when other “deterrence efforts” like monetary sanctions might serve the same purpose. 
    • “Access to capital is huge" as well, observed Reckling, who offered the Muckleshoot Tribe as a community using the “exceptional” tribal model of compacts to allow cannabis businesses to be owned by the public “rather than a few individuals.” He talked about how the academy had partnered with Muckleshoot’s retailer Joint Rivers on a six-week “educational event” open to their “whole community” after which the tribe hired retail staff from those who’d participated.
      • Learn more about the Muckleshoot Tribe cannabis compact which was signed in March 2017.

Here are some observations from the Wednesday April 6th Seattle City Council Finance and Housing Committee (City of Seattle - City Council - Committee - Finance and Housing) Committee Meeting.

My top 4 takeaways:

• At the end of 2021, committee members took an interest in expanding opportunities for cannabis retail staff and diversity in license ownership as part of an evaluation of social equity in the Seattle cannabis sector.
  • Equity in the sector was brought to the committee’s attention in December 2021 during a presentation by City of Seattle Department of Finance and Administrative Services (FAS) staff covering their Race and Social Justice Initiative (RSJI). 
    • Established in 2020, the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) recommended increasing equity in license ownership and offered guidance to the Washington State Liquor and Cannabis Board (WSLCB) in the implementation of a retail social equity program. At publication time, the group last met on April 26th and was scheduled to next convene on June 28th.
  • On February 16th, the committee heard from a panel of cannabis retail employees and stakeholders.
  • On March 2nd, the committee dug into other municipal equity programs and heard a briefing from FAS representatives. The briefing featured various possible goals and benchmarks for equity in the city’s cannabis sector.
  • Earlier during the April committee meeting, members heard from representatives of a Sacramento cannabis delivery company licensed through that city’s equity program and a Seattle cannabis staff training company.

• A Washington State Liquor and Cannabis Board (WSLCB) board member and the head of the agency's licensing division went over the history, current efforts, and future of the state equity program with committee members.
  • Board Member Ollie Garrett said that when she joined the board in August 2016, agency leaders were new at regulating cannabis and “didn't know what they didn't know.” One of the things that was missing was “an equity program” (audio - 2m, video).
    • She indicated that a 2020 agency request bill, HB 2870, established a social equity program along with the WA SECTF, where she had served as the appointee for WSLCB since October 2020. Prior to that, Garrett commented that WSLCB leaders organized three virtual “community meetings” to learn from the public “what they thought worked, what didn’t work.” She said the board had heard about “how not having a social equity program impacted, the mostly African American community, but the minority community at-large” in addition to “concerns they had throughout the licensing process.”
    • Garrett then introduced Director of Licensing Becky Smith to brief about “where we currently are, and going.”
      • Smith briefed about her division’s cannabis licensing system at the first agency community engagement in September 2020 and provided a similar review to WA SECTF members in January 2021. She gave a description of the development of the application process to WSLCB leaders on April 13th.
  • Smith started off by making clear the retail social equity program to be administered by WSLCB leaders was “not accepting applications”; people could “buy a business” with a license but not apply for one at the moment. The purpose of the social equity program was to “increase the number of cannabis retail licenses held by a social equity applicant” which she remarked was intended to reduce “the accumulated harms suffered by individuals, families, and local areas that were subject to severe impacts in the war on drugs.” Smith added that she or her staff had attended “all the task force meetings” (audio - 14m, video, presentation).
    • The law mandating the equity program authorized WSLCB to “reissue retail licenses that have been forfeited, revoked, cancelled or not previously issued,” Smith reported. She observed the agency lacked the power “to increase that number of retail licenses for the program” and that while the program had 40 licenses available, only two were allotted for the city of Seattle. Smith told the committee that rules were being drafted to allow for more mobility for equity licenses within a county, making it possible eight more retail stores could be issued “in King County” and located in Seattle if city zoning permitted.
      • It’s the understanding of Cannabis Observer that the former license of Dank’s Wonder Emporium in Lacey had been included among cancelled licenses due to an alleged traceability violation, but in early June an appeals court ruled that the license had been cancelled in error. The ruling could be further litigated and it’s unclear if the reversed cancellation may impact the total number of available retail equity licenses.
    • Smith noted that WA SECTF recommendations on program implementation had been given to agency officials in January and that staff hosted a Listen and Learn Forum dedicated to draft social equity rules on March 23rd. She acknowledged that agency leaders had accepted “all of the task force recommendations with the exception of the scoring rubric” to which they’d proposed “a race neutral alternative.”
      • Read about the final approval of WA SECTF recommendations on cannabis licensing from September 2021. 
    • Smith pointed to other changes underway at the agency like a social equity webpage and later noted that their website featured “licensing resources” like suggested business structures, “local requirements,” and restrictions.
    • She turned to revisions in rules on the “criminal history” of applicants as a strategy to “reduce unintentional barriers to enter into the legal cannabis market.” Smith admitted agency staff may have done an inadequate job of laying out “all of the background around applying for the criminal history, so folks might have unintentionally [taken] themselves out of applying for a license in the very beginning.” She described rule changes as allowing for checks “without having to do, like, a gotcha" for older or juvenile offenses a person might have left off an application. Smith also believed that the rulemaking project made the internal review process applied to license applications “transparent.” Licensing division staff had “reviewed 16,500 criminal history records” over the prior eight years, and "only 43" were denied licensure based on their criminal history, she added. 
    • Offering an updated graph of “self-identified race of majority or equal interest” retail license holders from August 2021, Smith mentioned that “only two stores in the city of Seattle” were majority owned “by people of color.” She then showed a slide on the self-identified race of producers and processors.
    • Once social equity program rules were in place, Smith anticipated an application process similar to others carried out by her division. “We’ll open a window in the fall of this year, we’re hoping for September of 2022,” she reported, which would stay open “for 30 days.” Equity applicants would then be passed to “a third party contractor” which WSLCB representatives were crafting a request for proposals (RFP) to identify. Smith stated the contractor would “review and score” applicants for prioritization moving forward. With “such a small amount” of licenses available through the program, she expected “quite a few folks” would apply and “we’ll have a double-blind lottery” to figure out “who’s processed, and in what order.” Smith then relayed that applicants passing this stage would receive “a preliminary letter of approval” to help them secure a location and local approval. Applicants at this stage could also work with staff for the Washington State Department of Commerce (WA Commerce) to “look into” possible funding support, such as the cannabis equity technical assistance grant program.
      • The social equity rulemaking project at WSLCB was withdrawn on May 11th, suddenly needing “additional research and analysis to make sure that we align with the intentions” of the program. Agency staff had mentioned that a revised CR-102 would be offered for board approval on June 22nd, and affirmed the window for equity applicants was expected to be delayed.
    • Smith called attention to another recommendation from the task force which agency officials were moving forward on, hiring an “ombudsman" for social equity applicants “to help them through the licensing process.”
      • At publication time, WSLCB had a continuous job listing for a Cannabis Social Equity Case Manager, and the board previously sought to hire a Senior Licensing Specialist to handle equity applications.
    • After social equity rulemaking concluded in the summer, Smith asserted that licensing staff would conduct some educational outreach before the application window began.

• Committee members posed three questions to the panel about geographic “flexibility,” more taxation, and qualifying criteria for equity applicants.
  • City Councilmember and Vice Chair Lisa Herbold sought confirmation about “the new flexibility, as it relates to the geographic distribution of equity licenses,” specifically whether the two retail licenses allotted to Seattle could end up being moved elsewhere in King County due in part to zoning as well as the “high cost of real estate" in the city (audio - 2m, video). 
    • Smith said this possibility was “absolutely correct," adding that equity applicants didn’t have “a time limit” to find a location once they’d secured the preliminary letter of approval. “They could take a year” or more to find a location.
  • Councilmember Sara Nelson remarked that “the proponent of this proposal, UFCW 21, has begun talking” with city council members about plans for a city equity program. This plan included a tax on cannabis items projected to “generate five to six million dollars a year,” which she estimated would be a tax increase of between $90,000 and $110,000 per store in Seattle. Nelson said, “I’m told by” members of the Craft Cannabis Coalition (CCC) that business owners face taxes of “about 47 to 49% of revenue,” mentioning costs like an FAS licensing fee of $6,000, a 37% excise tax at the state level, and a 10.25% sales and use tax. She asked Garrett about the "barriers and costs" to starting a cannabis business, noting her role as “President of Tabor 100” which focused on African American business development around Seattle: “so I would just like to know what your opinion is” of the UFCW 21 plan for “an additional tax” (audio - 4m, video).
    • City Councilmember and Committee Chair Teresa Mosqueda spoke up to signify the proposal was something being considered by council members and staff of the Seattle mayor’s office. She said there was “a broad coalition” of groups weighing in with the city, including the National Association for the Advancement of Colored People (NAACP), and that the UFCW 21 plan hadn’t been endorsed by either the mayor or city council. Mosqueda stated there wasn’t so much as a “draft law” agreed to thus far.
    • Garrett’s answer was “not on behalf of WSLCB" but as leader of Tabor 100: “anything that increase[s] tax or cost to a small businesses”---which included “100%” of cannabis retailers—could pose “a harm” to a business.
    • Check out the UFCW 21 cannabis equity page.
  • Since race wasn’t a factor the WSLCB application process would likely consider, Mosqueda asked whether “geographic location” was being considered as a way of “defining folks who’ve been disproportionately harmed by the war on drugs,” particularly for Seattle’s “central district” which was targeted in the drug war (audio - 4m, video).
    • Garrett noted some applicants could qualify by having resided in a disproportionately impacted area (DIA) around the state, and the board had also heard about central district residents who were dislocated due to gentrification. She indicated their process had been diligent in “taking those things into consideration.”
    • Smith conveyed that the scoring rubric would consider nine criteria, including having lived in a DIA, with points awarded to the applicant based the length of time they resided there. Other applicant factors being evaluated were having a drug conviction on their record or that of a family member, along with time incarcerated for a drug offense and household income level, she added. Another factor being considered was if the applicant had formally run a medical cannabis “garden between 1998 and 2016, or do you have any previous cannabis business experience that would” make the applicant’s business more “viable.” Lastly, Smith identified applicants having held “or currently hold a state cannabis license, or are you a title certificate holder” would have their prioritization impacted, although the agency’s proposed scoring rubric adds points for applicants who don’t hold a cannabis license. She mentioned that equity applicants would also be asked some things “they won’t receive points for” while also having to create a social equity plan “to enhance a community,” something which was "required by law" for equity applicants only.

• Committee Chair Teresa Mosqueda concluded the discussion by promising their discussions with staff of the mayor’s office and city departments as well as stakeholders would continue (audio - 1m, video).
  • She expected to “compare notes” with WSLCB representatives to consider their equity applicant criteria in relation to any standards used in a city council proposal on the topic. Mosqueda believed this collaboration would be part of developing an “equity lens, not just in Seattle, but across the state.”
  • Mosqueda assured those listening there would be updates about the committee’s cannabis equity work, including “a possible draft” for a city equity program.
    • At time of publication, none of the Finance and Housing Committee meetings held since April have featured cannabis equity agenda items, according to the council calendar.