WA Senate LCTA - Committee Meeting
(October 17, 2022)

Here are some observations from the Monday October 17th Washington State Senate Labor, Commerce, and Tribal Affairs Committee (WA Senate LCTA) Committee Meeting.

My top 3 takeaways:

• Following a spike in reported robberies at Washington retailers, including at cannabis stores earlier this year, state lawmakers sought to get more information and consider possible legislative strategies to combat the problem.
  • Retail theft in 2021 was estimated by the Retail Industry Leaders Association and Buy Safe America Coalition to have cost $68 billion, with $2.7 billion in Washington State.
    • In January 2022, the owners of Uncle Ike's shared a spreadsheet of cannabis store robberies and burglaries in Washington they’d identified dating back to February 2017 which showed 208 alleged crimes at publication time.
  • Legislators offered several bills seeking to address the subject, including HB 1656 regarding the statutory definition of theft, though no retail theft legislation was passed by lawmakers. A budget proviso to fund a state task force to review the problem was approved by senators, but not included in the final budget passed on March 10th.
    • A cannabis-specific bill, SB 5927 ("Concerning the safety and security of retail cannabis outlets") had been passed by senators on February 10th, but momentum was stopped following a public hearing and recommendation for passage by the Washington State House Public Safety Committee (WA House PS). WA House members offered various reasons for the inaction.
  • Washington State Liquor and Cannabis Board (WSLCB) members grew increasingly concerned before budtender Jordan Brown was killed during a robbery of a Tacoma cannabis shop. The board convened dedicated safety forums where other officials and industry representatives coordinated on approaches to reduce the likelihood of the crimes. Agency officials also lobbied for federal banking reforms that might help retailers move away from operating as cash-only businesses. Director of Enforcement and Education Chandra Brady helped organize training and security assessments for cannabis retailers.
    • On August 2nd, Director Rick Garza brought up a briefing by Brady to members of congress the week before at an event hosted by the U.S. Cannabis Council (USCC). On August 10th, another agency leader lauded Brady for describing WSLCB efforts to reduce occurrence of the crimes to federal officials at the USCC event. The USCC Twitter account quoted Brady as saying “We believe that the root cause of these violent robberies is that these stores have to use cash.”
    • Two teenagers accused of a string of cannabis store thefts—including the murder of Brown—pled not guilty to the crime on April 20th. Allegations had also been made that the pair murdered Brown after being placed on house arrest in relation to another cannabis robbery.
  • Local government and police responses to theft varied.
    • The King County Council approved formation of a cannabis safety task force on May 17th.
      • WSLCB and King County Sheriff’s Office panelists explained their activities, and delays in activities, to a council committee on September 7th.
    • On June 23rd, Washington Attorney General Bob Ferguson announced the formation of the Washington State Organized Retail Crime Task Force (WA ORC Task Force) with a mission to “improve coordination and collaboration among law enforcement agencies to address these multi-jurisdictional crimes that endanger employees and cause significant economic harm to our state.”
  • Calls for retail crime legislation, as well as reports of cannabis stores targeted for robberies, continued at a slower pace since Brown’s death in March. 

• Representatives of the Washington State Office of the Attorney General (WA OAG) provided an update on the Washington Organized Retail Crime Task Force and fielded a couple of questions from senators.
  • WA OAG Chief of Staff Mike Webb set out to explain the status of the task force, “some of the goals, some of what we've accomplished thus far, and what we hope to accomplish going forward” (audio - 9m, video, presentation).
    • He said Washington was “the 10th state with a statewide organized retail crime task force. Nine of those are in the Attorney General's office, one of them is with the equivalent of the state patrol, and that's in California.” He credited the input of other states, in particular the Illinois program run by Attorney General Kwame Raoul, for motivating Ferguson to form their task force.
      • Find out more from the Attorney General Alliance initiative on the issue, and a March 12th list of established task forces published by Loss Prevention Magazine.
        • The Attorney General Alliance also had a dedicated cannabis initiative with a scheduled project meeting in Las Vegas on November 16th.
    • Webb emphasized that the group was “focused on organized retail crime, not shoplifting, not economic crimes.” The task force would look at incidents with “multiple offenders” indicative of what he called a “sophisticated scheme…and certainly stealing for the purpose of reselling it for a profit; not for personal use.” He showed “some examples of recent news items involving organized retail crime that we've seen in our state” to show “that this is a statewide problem that demands a statewide response.” The task force had identified “four goals”:
    • Increase coordination and collaboration
      • Webb indicated the first task force meeting on July 7th drew “well over a hundred individuals representing…state, federal, and local law enforcement agencies…from across the state” as well as worker representatives, those from the retail community, “small business representatives, and we have representatives from most of the online marketplaces.” He told the committee the next meeting would be held on November 30th to enable participants to “identify both successes, but certainly challenges,” along with “what would help [them] address the problem.”
      • Additionally, “we're engaging in listening sessions right now between meetings.” He explained this covered dozens of retailers and “tomorrow we meet with Amazon and that will be the last of…the major online marketplaces.” Task force officials were also continuing to meet with counterparts in other states, state and local law enforcement, as well as the Washington State Fusion Center (WSFC), added Webb.
    • Center workers’ voices
      • Worker representation was “very valuable in this debate,” Webb remarked, because beyond the impact theft had on businesses “what is sometimes less obvious is the impact that it has…on workers.” He said there was concern because “it's a safety issue for them. It's also an employment issue…it goes to worker morale.” Moreover, “protecting consumers is a major goal of the Attorney General's office,” Webb assured senators.
        • UFCW 3000 was the only labor organization with members present on the task force. A panel from the group featuring Political and Legislative Director Dustin Lambro also spoke during the senate work session (video).
          • Lambro made comments to Seattle lawmakers on behalf of cannabis sector workers on March 2nd.
    • Research reforms and best practices
      • Webb reported that task force members had partnered with the Washington Retail Association on the development of their Organized Retail Theft Resource Guide, as well as with the “King County prosecutor's office in supporting their efforts to develop similar guidance.” Similar resources were being developed for law enforcement agencies, he noted.
        • Find out more from the Washington State Crime Prevention Association (WSCPA) and Washington Organized Retail Crime Association (WORCA).
      • One suggestion he offered was that when businesses had “video evidence of a crime, the prosecutor is going to want that…eventually.” Webb advised businesses to “provide that right away, don't wait for law enforcement to ask for it…That's a key piece of evidence, and if it's been deleted that's gonna really hurt any criminal prosecution.” He elaborated there was “different guidance depending on the size of the business and…what level sophistication you have, what resources you're able to put into fraud prevention.”
    • Increase law enforcement resources to combat the problem
      • Webb described how the task force was “trying to help prosecutors differentiate between shoplifting or economic crime and organized retail crime.” He felt there was an “appropriate criminal justice response for both, but…if somebody is stealing because of a substance use disorder that may well be an appropriate case for diversion [from prosecution]. You certainly want to handle that case a lot differently than you handle a sophisticated…retail crime theft ring where you want to devote significant resources to that case because that's going to be a complex prosecution and you're going to want to do what you can to try to get at all the actors that are benefiting.”
  • Assistant Attorney General Barbara Serrano was introduced to the committee by Webb as “a prosecutor in our office and she's one of five individuals that the attorney general has designated to work on this issue on a part-time basis.” Along with Serrano, he identified “two consumer protection Assistant Attorneys General, Ben Carr and Joe Kanada, and…our Policy Director Sahara Fathi, and our Policy Analyst Jamie Tugenberg” (audio - 4m, video).
    • Serrano discussed having worked “to encourage and improve cooperation between the online marketplaces with law enforcement…and the retailers, getting everybody working together, and we're also trying to improve data collection.” Accurate statistics were important as “there are a lot of retailers who are not reporting these incidents either because they don't think anything will happen…and the problem with that is that it doesn't allow us to get a really good picture of what is happening in the community,” she said.
    • Providing “a contact tip sheet and guidelines for law enforcement and prosecutors” was another approach the task force had undertaken, Serrano stated, as “these cases require a lot of leg work talking to witnesses.” She added that “our goal has always been to move beyond the folks who are going into the stores and stealing the goods. We want to get to the folks who are fencing the goods online, and the folks who are really profiting from these enterprises.”
    • Police agencies “suffering from loss of officers, officers who are leaving their jobs, positions that aren't filled” compounded the length and complexity of organized retail theft investigations, Serrano argued. And the difficulty she saw was ensuring “these types of crimes receive priority” as a routine “fallback position” of many “police departments and prosecuting..attorneys is to focus on violent crimes, but we know from the data that these types of crimes really have an impact…on the retailers, the community at large, safety of the employees, and the safety of the public.” Serrano claimed that the King County Prosecutor’s Office was “handling many of these cases and they have one deputy prosecutor who is assigned to retail crime,” with a caseload suitable “for three people.”
  • Webb concluded by reporting that WA OAG was in the process of drafting a “formal budget request” in order to fund a statewide Organized Retail Crime Unit with full time staff. “We’re requesting funding for two full-time prosecutors, four investigators, and one data analyst. It's about three million dollar biennial request, $1.5 million annually,” he said, suggesting that amount was commensurate with similar units in Michigan and Arizona. Webb’s belief was that “there is a tremendous deterrent value if we can do a couple of high-profile prosecutions of sophisticated retail crime. That will really send a message that the state is taking this seriously, and investing resources into…combating the problem” (audio - 2m, video).
  • Senator Mark Schoesler asked, given a focus on "professional" theft operations, "how does the policy of not prosecuting under certain thresholds fit into fighting…organized retail theft?” (audio - 3m, video)
    • Webb made clear “we're not setting prosecution thresholds" but were “devoting resources to this issue.” He anticipated that “local law enforcement, local prosecutors…there is an appropriate criminal justice response to all theft, but in terms of getting folks together to talk about the issue and to figure out best practices and reforms…we think our resources are best served focusing on the organized aspect of the crime.”
    • Schoesler felt that since retail theft “at dollar one is against the law,” if a local government didn’t “prosecute under a threshold to, say, a thousand dollars, does that not hinder…your ability to get to the problem?” Webb wouldn’t speak for local prosecutors, but “there is a brazenness to some of these crimes, it is alarming there. And so I think that's something that…we need to wrestle with, and that the legislature and policy makers need to wrestle with” concerning organized thefts specifically.
  • Vice Chair Steve Conway found that regardless of whether it was a state-level or local crime, “we have a real crisis…in our criminal justice system right now.” He asked Webb whether it was generally better to fund local prosecutors or state prosecutors (audio - 4m, video).
    • Webb argued that “the resource challenges at the local level are real and significant” and their request for a dedicated prosecutorial unit was “not even close to allowing us to sort of handle all the investigations, the prosecutions in the state. Not even close.” However, he did perceive “an amplifier of having a well…centralized resource that can serve as a connector and a facilitator” for local prosecutors.
    • Chair Karen Keiser remarked that officials were contemplating “the full gamut of this organizational crime and whether there should be a private right of action available for retailers to pursue recourse from online sales that are being transacted without any oversight.” She urged Webb to consider “bringing in the department of financial institutions” to the task force due to a “correlation between what's going on here and…in the old days when pawn shops were unregulated.” Webb replied that it was “an excellent, excellent suggestion.”

• Following panels from other retail sectors, members of the Craft Cannabis Coalition (CCC) spoke to the challenges organized theft posed for cannabis shops, as well as their staff and customers.
  • Chair Keiser acknowledged the “major robberies at our retail cannabis locations…including one worker who was killed in Tacoma” before welcoming CCC Executive Director Adán Espino who had “some ideas to propose” (audio - 2m, video).
    • Espino thanked the committee for the opportunity to speak, introducing “CCC member Shea Hynes of Lux Pot Shop.” He further offered his gratitude to the committee and senators for passing SB 5927 earlier that year, and to WSLCB, whose staff he said had “stepped up to assist stores by bringing in security consultants to advise stores, organizing law enforcements for briefings, organizing public awareness campaigns, and elevating store owner and employee voices through this partnership.” He also noted CCC leaders worked with the agency on “policies to pursue in the upcoming legislative session such as protecting store employee and owner privacy after a robbery, affordability of store security costs, and organizing data collections after robberies.”
  • Hynes, the Co-Owner of Lux Pot Shop, a “family-owned and operated retail cannabis store here in Seattle,” was grateful to committee members for hearing about “the armed robberies that my industry’s facing” (audio - 4m, video).
    • Indicating that he’d been involved in the cannabis industry “for over a decade,” Hynes stated he’d only faced serious security concerns since the “beginning of the year [when] three armed…robbers came into our store with guns.” He alleged “in 2022, the first half year, there was more robberies in the cannabis space than all of 2020 and 2021 combined.”
    • Hynes recognized the financial impact robberies had on business owners, but suggested that the real effect of the crimes was “impact to the people. The trauma to our staff is just immeasurable.” He mentioned the impact of staffer Jordan Brown’s death in March, remarking “we've had shootouts with police; we've had robbers murdered, we've had a staff member shot five times and miraculously he survived.” Hynes found the situation was “completely out of control.”
    • Lux Pot Shop had been “hiring armed security, closing our stores early,” getting customers in their stores “in a controlled fashion,” but he still wanted “support from our state leaders.” Hynes called cannabis businesses “often misrepresented” as consistently “highly profitable businesses and it's just not the case. We're small businesses with one of the highest taxations of any business in America.” He relayed that retailers suffered from “the inability to deduct business costs on our [U.S. Internal Revenue Service] tax return, you pay tax on all money and so it effectively means we have about a 90% tax rate for…every dollar that comes in our store.” What was left had to cover his operational expenses, including security, he commented, making it “quite frankly impossible for a lot of the smaller retailers to make the type of improvements they want to see.”
    • Hynes thanked legislators and WSLCB staff “for the responsiveness on this issue…they continue to work to help small businesses like mine” and he looked “forward to continuing the work together and this upcoming legislative session.”
    • Hynes previously testified on SB 5927 and signed in on other cannabis billsduring the 2022 session.