WA House RSG - Committee Meeting
(January 10, 2023)

Here are some observations from the Tuesday January 10th Washington State Regulated Substances and Gaming Committee (WA House RSG) Committee Meeting.

My top 3 takeaways:

• Committee Counsel Matt Sterling went over specifics of a bill on licensee contracting, HB 1083, "Concerning terms of payment for cannabis retailers" (audio - 2m, video).
  • Sterling shared the bill analysis indicating the legislation authorized a “contract between a cannabis processor and a cannabis retailer for the purchase and sale of cannabis products to allow the retailer to tender full or final payment to the processor on a date after the products are delivered or received if such full or final payment is within 15 calendar days of the delivery or receipt of the products.”
  • He told members the bill wasn’t retroactive, and was intended to apply to “contracts that are entered or renewed on, or after, the effective date” should the legislation become law.

• Following sponsor comments, several members from the cannabis sector and a software vendor explained that the changes would move the industry towards practices that were common for other businesses and could benefit public safety.
  • 6 individuals registered in support of the bill (testifying, not testifying).
  • Representative Eric Robertson explained to his colleagues how the legislation was “brought to me by the industry” and that “federal banking regulations make [cannabis retail] a cash only business and that becomes somewhat problematic” for both security and logistics reasons. Permitting a transaction to be “done not at the moment…the delivery occurs” was comparable to “what we do with our distributors, and beer and wine…and liquor” (audio - 1m, video).
    • Cannabis retailers have emerged as currency-dependent businesses, making them targets for robberies.
    • At time of publication, there isn’t a cannabis equivalent for alcohol distributors in law or rule.
  • Washington CannaBusiness Association (WACA) Deputy Director Brooke Davies voiced support for what she called a “normal business practice in other legal industries" through a bill she considered improved as compared to 2018 legislation that lawmakers considered. Claiming the bill would limit cash transactions and add “flexibility” for businesses, she said the changes would make the "marketplace more safe and more efficient" (audio - 2m, video).
  • Bethany Rondeaux, Falcanna CEO, also spoke favorably about the bill (audio - 1m, video).
  • LeafLink Policy Director Michael Block said the move was common in the other states in which his company operated and "add[ed] liquidity to cannabis transactions.” He emphasized NET 15 terms would be "just an option for retailers," not a requirement (audio - 1m, video).
  • Terpene Transit CEO Amber Vaughn testified in support, stating her company “currently service[d] approximately 80% of all legal cannabis market deliveries” and believed the bill would “improve safety and security in our marketplace as we'll see decreasing cash payments at the point of delivery.” She mentioned potential reductions to the “environmental impact of transporting cannabis products” and believed the bill would better position the industry for a national marketplace (audio - 3m, video)
    • Ranking Minority Member Kelly Chambers asked Vaughn about the SAFE Banking Act, who told her the lack of federal action on that bill made passage of HB 1083 more “urgent” (audio - 2m, video).

• Two speakers opposed the bill because they expected negative impacts for wholesale licensees, prompting questions from lawmakers over whether established transaction options were sufficient.
  • 6 individuals registered opposition to the bill (testifying, not testifying).
  • Raven Co-Owner and Operations Director; and Washington Sun and Craft Growers Association (WSCA) Board Member Micah Sherman, was "appreciative of some of the logistical concerns" but felt the issue could be better addressed through rulemaking changes by the Washington State Liquor and Cannabis Board (WSLCB). His concern was that the practice of allowing retailers to pay later "shifts liquidity from stores to farmers" who had to effectively offer credit to stores (audio - 2m, video, written comment). Sherman’s remarks led to several follow up questions from committee members over WSLCB policy and the usual timeframe on payments.
  • The Cannabis Alliance Executive Director Burl Bryson was similarly opposed, saying existing rules on methods of payment were sufficient and the bill favored retailers’ needs over other types of licensees (audio - 3m, video).