WA Senate LBRC - Committee Meeting
(January 31, 2019)

Here are some observations from the January 31st Washington State Senate Labor and Commerce Committee (WA Senate LBRC) morning Committee Meeting.

My top 3 takeaways:

• The Committee hosted a public hearing for SB 5155, “Allowing residential marijuana agriculture.”
  • SB 5155 is the companion bill to HB 1131; the first public hearing for that bill was in the House Commerce and Gaming Committee on January 21st.
  • Richard Roger, Senior Committee Counsel, guided members through the bill’s effects (audio – 2m, video). From the Senate Bill Report:
    • Authorizes a person to grow up to 6 marijuana plants on the premises of their housing unit. An single housing unit may not have more than 15 plants.
    • Sets new limits for the possession of useable marijuana, marijuana-infused products, and marijuana concentrates.
    • Requires that all plants and products must be labeled and identify the owner.
    • Allows a property owner to prohibit cultivating plants by a renter or lessee.
    • Protects marijuana and marijuana products, and the property on which they were produced or possessed under the new authorization, from seizure and forfeiture.
  • Senator Maureen Walsh, sponsor of SB 5155, offered a strong endorsement of her bill. She described home growing as a “rights issue” allowing adults control over what kind of cannabis they put in their body. She stated that cannabis was “not an easy product to grow” before explaining that prohibition of cultivation implied a distrust of citizens that wasn’t justified (audio – 5m, video).
  • Don Skakie, Homegrow Washington activist, spoke to the bill’s ability to “bring people to the right side of the law” who were growing already. He reminded members that the state had reaped economic benefits from I-502, and the bill continued a law enforcement emphasis on diversion from large cannabis operations. Skakie disputed the conflation of personal small grows with large grows supporting criminal networks. He also pointed to pesticides as a reason some adults may wish to grow their own (audio – 2m, video).
  • Erik Johansen, a concerned citizen from Thurston County, said although he was unhappy I-502 didn’t include home grow rights, he voted for the initiative in 2012 because cannabis commercialization was “a step forward.” He argued actual legalization of the plant was unrealized so long as people couldn’t grow their own (audio – 1m, video).
  • John Kingsbury, with Homegrow Washington, began by noting how common home growing rights were in other legal cannabis states. He said the bill’s plant count was in line with most of those jurisdictions and added, “I have yet to hear a horror story involving six plants.” He described the difficulty of growing quality cannabis in quantity before noting that the ability of teens to have relatives buy them 502 cannabis hadn’t notably increased youth cannabis use. In considering the decriminalization message of I-502 he concluded with a question “Should we make felons of people who grow a few plants for their own use of a substance we sell like beer?” (audio – 1m, video).
  • Captain Monica Alexander with the Washington State Patrol (WSP) Office of Government and Media Relations spoke to the concerns of law enforcement. She said legal home grows would limit police ability to pursue other types of cannabis grows. “Instead of customers being driven to the retail market, they would grow their own and/or buy [from] illegal, but unregulated, private grower.” She concluded WSP would lose “the ability to take enforcement action on illegal production” if the bill became law (audio – 1m, video).
  • James McMahon, Policy Director with the Washington Association of Sheriffs and Police Chiefs (WASPC), echoed opposition. Complimenting the bill sponsor, McMahon said they agreed to disagree about the legislation. His first objection was that grows in houses could be targeted for burglary the way legal and illegal marijuana operations already were. He said the risk to children increased “substantially” with legalized personal gardens. He also claimed that home grows would put Washington in a “dire” situation with the federal government. Citing an opinion piece from Annette L. Hayes, former U.S. Attorney for the Western District of Washington, McMahon warned that the state wasn’t doing enough to combat large, criminally organized grows. He concluded it was better to reform pesticide rules for commercial cannabis than let adults grow their own (audio – 6m, video).
    • Walsh said the bill wasn’t trying to burden law enforcement (“I, frankly, think the bill will make your burden less”) then pointed out people might not have to steal plants if they could grow their own. McMahon agreed it was “certainly a possibility.” Conceding all people weren’t responsible, Walsh maintained, “I don’t think we should be assuming people are going to be bad actors in this.”
    • Senator Rebecca Saldaña, a co-sponsor of SB 5155, was open to strengthening the ability of law enforcement to intervene in criminal grows. She said otherwise lawful citizens grew already, and the bill could “bring them in” to reasonable compliance. Saldaña stated the legislature was working with state agencies on improved pesticide rules and she wanted improved labeling of products, but that plants themselves were not usable drugs with the appeal of packaged and cured products. Alexander agreed “most people are good” but that her neighborhood had seen a house fire caused by a “huge home grow” and there wasn’t a way for the state to know if people were growing more than the bill’s limits.
  • Chris Thompson, Director of Legislative Relations for the Washington State Liquor and Cannabis Board (WSLCB), said he “appreciated” the views of the legislation’s supporters. “We’re not opposed to the legislation,” Thompson claimed before laying out concerns about diversion, who would enforce limits, and who would respond to complaints. He also had technical concerns with phrasing and the ability to seize plants beyond the bill’s limits, and claimed a belief that the legal market adequately met consumer needs (audio – 2m, video).
  • John Novak, a co-founder of Viper PAC and 420leaks, was grateful for sponsors and people who had worked on the issue for years. He claimed that while contributing to SB 5155’s development, he grew concerned about its impact on the state getting federal funds and explained that the definition of “ultimate user” was key to reducing that possibility. Novak testified that as long as cannabis was a Schedule 1 substance under Washington’s Controlled Substances Act, the legislature needed to expand “ultimate user” protections relating to cannabis to “all lawful consumers, not just the home growers.” Warning that personal limits on plants and possession developed decades ago necessitated updating the seizure and forfeiture limits, Novak said discrepancies would be exploited by federal multi-jurisdictional officers (audio – 3m, video).
  • Jim MacRae, founder of Straight Line Analytics, said he was for the bill because he doubted the cleanliness of cannabis in the state market. He said data collected justified consumer distrust of the market. “One fifth of the time you buy regulated product and use it you’re getting pesticides right now.” (audio – 2m, video)
  • Jedidiah Haney, an Olympia cannabis advocate, began by quoting Genesis 1:29 and noting the plant's history before citing Dr. Ethan Russo’s study of cannabis finding no lethal dose and a pain management potential that rivaled more habit-forming opioids. He concurred with earlier testimony on the commonality of home growing in other legal states and the U.S. Virgin Islands (audio – 2m, video).
  • Peggy Button said home growers weren’t a concern of the Department of Justice (DOJ), citing their lack of enforcement in other states. Pointing to ongoing problems with cannabis testing facilities, she said the public can’t know what’s in 502 products now. Button concluded the bill lets people learn about cannabis in a constructive way (audio – 2m, video).
  • Nik Grobins, an owner of Hefty Harvest Garden Supply, said he’d lost business, employees, and seen competitors leave because of an inadequate customer base. Grobins had also seen sales decline from licensed producers, indicating to him 502 producers are going under as well (audio – 1m, video).
  • Bailey Hirschburg, who represents Washington NORML on the WSLCB Cannabis Advisory Council (CAC), spoke to his experience on I-502’s New Approach campaign, stating “absolutely there were going to be next steps.” His position was that complaints could be initially questioned to determine if a garden or behavior witnessed was criminal before police intervene. He asserted the federal government should explain the benefits of Washington’s continued home grow criminalization rather than rescind memos of policy guidance without consulting the state (audio – 2m, video).

• The Committee hosted a hearing for SB 5318, “Reforming the compliance and enforcement provisions for marijuana licensees.”
  • SB 5318 is the companion bill to HB 1237; the first public hearing for that bill was in the House Commerce and Gaming Committee on January 28th.
  • During the January 29th WSLCB Board Caucus, Board Member Russ Hauge publicly claimed to have had an unusual conversation with Vicki Christophersen, the Executive Director and Lobbyist for the Washington CannaBusiness Association (WACA), just after the public hearing.
  • Staff explained the bill’s impacts (audio – 1m, video). From the Senate Bill Report:
    • Modifies how the Liquor and Cannabis Board (LCB) may enforce laws and rules against regulated marijuana businesses, and how these businesses may comply with laws and rules.
    • Requires rulemaking by the LCB regarding enforcement procedures, with specific components, such as to address de minimis violations.
    • Requires and authorizes rulemaking by the LCB regarding penalties, with limits, such as on the effect of cumulative violations, and on what types of violations may result in license cancellation when a heightened evidentiary standard is met.
    • Requires the LCB to consider aggravating and mitigating circumstances, and to deviate from prescribed penalties accordingly.
    • Limits the LCB’s authority to issue violations in certain circumstances involving unpreventable employee misconduct, if the licensee has a documented, thorough internal-compliance program.
    • Prohibits the LCB from considering any violation from before June 30, 2018, as grounds for negative licensing actions, except for specific types of violations, including sales to minors and diversion of product, when a heightened evidentiary standard is met.
    • Modifies the settlement conference and agreement process to make settlement agreements binding in certain circumstances.
    • Expires certain new provisions on August 1, 2024.
  • The bill sponsor, Senator Ann Rivers, testified that the legislation mimics enforcement reforms enacted by Labor and Industries (L&I) making cannabis license enforcement less complaint driven (audio – 4m, video). Co-sponsor Senator Guy Palumbo labeled the bill “extremely important” as it dealt with “de minimis violations.” (audio – 3m, video)
  • Seth Dawson, representing the Washington Association for Substance Abuse and Violence Prevention (WASAVP), was granted the privilege to testify first, spoke on multiple bills at once, and responded to lawmaker questions (audio – 9m, video). He spoke in opposition to SB 5155.
  • Vicki Christophersen, speaking for the Washington CannaBusiness Association (WACA), called on the committee to support the bill because of “dozens and dozens” of licensees fearful of WSLCB enforcement, which she described as “out of control.” Christophersen asserted the agency’s own data showed that “many hundreds” of licensees had one or no visits by enforcement officers, but “69 of them had over 50 visits from enforcement; one over 118 times.” Christophersen said this was because enforcement centered on complaints, which she argued were made by competitors or disgruntled staff targeting businesses. She called on WSLCB to reform and urged passage of the bill (audio – 2m, video).
  • Chris Masse, a Partner at Miller Nash Graham and Dunn, said her firm encountered what Christophersen described. Masse claimed any violation WSLCB found while investigating complaints—even if it wasn’t the subject of the complaint—could be quickly acted on. Masse said fighting the agency is expensive and cumbersome for licensees, leading many to settle for lesser charges which eventually accumulate. She said businesses were concerned about safety, but needed a “reset” on enforcement histories (audio – 2m, video).
  • Brooke Davies testified that she was speaking for “a licensee that is afraid to come forward themselves…out of fear of retaliation from the WSLCB.” Davies explained the “locally based licensee” employed 150 workers, “the majority of whom make slightly more than minimum wage,” and had elected to put $200,000 of their own money into the business to make payroll in January 2018. Davies claimed WSLCB Enforcement issued two True Party of Interest (TPI) violations to the licensee and inferred a nexus with the timing of the WSLCB Board’s adoption of an Interim Policy on personal funds (BIP 06-2018) three weeks after the violations were issued. Davies expressed concern over the threat to the livelihood of their employees and asked for passage of SB 5318 (audio – 2m, video).
    • At the January 28th public hearing for the companion bill in the House, Tammi Hill, Corporate Counsel for CannEx Capital Group, said Northwest Cannabis Solutions, one of Washington’s largest producers, faced losing their license because the owner injected their own money into the business before getting WSLCB’s approval. Hill also pointed out this was a policy the agency was already reforming (audio – 3m, video).
  • Wendy Hull, owner of producer/processor Fairwinds, says she supports the bill to change the culture of WSLCB, while hoping to collaborate with them to improve education and compliance. Hull called enforcement consistency the “biggest challenge” licensees face asking for processes aside from violations to resolve problems. She concluded that administrative violations can impact licensee’s evaluation by banks (audio – 2m, video).
  • Andy Brassington, CFO of Evergreen Herbal, “strongly supported” the bill saying that licensees have proven an openness and commitment to a legal industry. Saying “known good actors” didn’t deserve an aggressive enforcement posture he felt harkened back to “reefer madness.” Brassington argued those testifying were good actors and the bill moved towards “more predictability, uniformity; less subjective interpretation” and fixed a broken process (audio – 2m, video).
  • Chris Thompson, speaking for WSLCB, was not in opposition to the legislation, recognizing a general concern from the industry. But the agency still had problems with the bill’s current draft, he said. Their enforcement activities were geared towards assistance and information, but Thompson said they were amenable to “restructuring and expanding” their protocols. Still, he insisted some actions weren’t complaint driven, and “60% of the time we go out and see a violation we don’t write up the violation.” (audio – 2m, video)
  • Jim MacRae opposed the bill as written. MacRae agreed the complaint-driven enforcement culture at the agency “need not be that way, particularly in a data-rich world.” He claimed WSLCB failed to protect the public from pesticides and asked why production in excess of licensed canopy was not being enforced. MacRae said the amnesty for all violations issued before June 30, 2018 was “too broad” (audio – 4m, video).

• The Committee also hosted public hearings for three other cannabis-related bills: SB 5298 (“Regarding labeling of marijuana products.”), SB 5201 (“Authorizing marijuana retailers to sell certain products and merchandise.”), and SB 5678 (“Creating additional training requirements for licensed marijuana retailers and their employees.”)
  • Committee staffer Richard Roger took committee members through SB 5298 (audio – 1m, video). From the Senate Bill Report:
    • Allows additional information on labels for marijuana products to assist consumers in making purchases of the products.
    • Provides labels may include a structure or function claim describing the intended role of a product.
    • Specifies examples of allowable terms that may be used on labels.
    • Prohibits labels from claiming to diagnose, mitigate, treat, cure, or prevent any disease, containing false or misleading statements, or being especially appealing to children.
    • Provides marijuana products are not in violation of state law or rule solely because its label or labeling contains directions or recommended conditions of use.
  • Senator Rivers told members she sponsored the legislation because of how WSLCB was enforcing product claims, saying some legal businesses “felt guilty” about describing a product’s effects (audio – 3m, video).
  • Seth Dawson spoke in opposition to SB 5298 (audio – 9m, video). Asked by Senator Saldaña about what kind of product statements were acceptable, Dawson maintained that SB 5298 diluted labeling rules.
  • Wendy Hull described her company’s product line as “medically focused.” Fairwinds’ product names included “Deep Sleep,” “Digestify,” “AM/PM Relief” and Hull said its important for consumers “to understand what it is they’re buying.” She argued that WSLCB’s interim policy (BIP 08-2018) was too limiting and could impact public safety as consumers can’t be told they’re buying a “sleep aid product.” (audio – 1m, video)
  • Andy Brassington offered a view that the bill was an appropriate response to WSLCB’s interim policy that stifled therapeutic claims. Promising the bill was carefully crafted based on “well-established rules and guidelines at the federal level” Brassington cautioned against creating product rules substantively different from other industries (audio – 2m, video).
  • Mindon Win, Chief of Staff and Communications for botanicaGlobal, testified on behalf of producer/processor botanicaSeattle in support of the bill and expressed a belief it would better serve consumers. He suggested current policies hindered “accurately characterizing” their products and that SB 5298 was based on Food and Drug Administration (FDA) standards for disease claims (audio – 1m, video).
  • Jim Mullen, owner of Vancouver retailer The Herbery and President of WACA, said customers often ask for products to deal with pain. He described accurate names and descriptions as “critical” to assisting customers (audio – 1m, video).
  • Chris Thompson said WSLCB was sympathetic to the the public and industry’s need to communicate about products. However, Thompson said WSLCB had worked with the Department of Health (DOH) on recent changes and that his agency was concerned about losing rulemaking authority (audio – 3m, video).
  • Jim MacRae clarified that he signed in on the bill neutrally but actually supported it due to recent “regulatory overreach” by WSLCB on packaging and edibles on top of aggressive implementation of emergency rulemaking. MacRae argued the speech in question was similar to what other consumer goods were allowed to claim (audio – 1m, video).
  • Committee staff explained SB 5201 (audio – 2m, video). From the Senate Bill Report:
    • Authorizes licensed marijuana retail outlets to sell marijuana merchandise, cannabidiol products, and other products not intended for consumption.
    • Requires the Liquor and Cannabis Board to establish marketing standards to ensure products are not intended to appeal to minors or otherwise encourage marijuana use by minors.
  • Senator Palumbo, the sponsor, called it a “good little bill” saying it didn’t change accessibility by youth, but allowed retailers to sell things besides cannabis products (audio – 1m, video).
  • Seth Dawson spoke in opposition to SB 5201 (audio – 9m, video). Arguing that all advertising had a negative impact on children, Dawson didn’t have an easy answer when asked by Senator Lisa Wellman about how SB 5201 could be amended to permit licensees to appropriately market their business.
  • Jim Mullen said he supported the bill and was particularly interested in hemp/CBD products as a way of staying competitive with non-cannabis licensed businesses currently offering them (video).
  • Chris Thompson testified that previous bills on the topic were “considerably narrower” and the agency had concerns about being required to investigate products like synthetic cannabis or ensuring products contained less than 0.3% tetrahydrocannabinol (THC). He warned that cannabis product “visibility” was already impacting norms and youth perceptions. Committee Chair Karen Keiser asked Thompson for suggested language (video).
  • Eric Gaston, President of the Cannabis Organization of Retail Establishments (CORE) and a CAC member, praised SB 5201 saying it promoted licensee branding as a way to grow their customer base just like other sectors. He also said vendors would have another channel to distribute products such as cannabidiol (CBD) (audio – 2m, video).
  • Logan Bowers, owner of Hashtag Cannabis and a CORE member, shared that many licensees face challenges and claimed the bill offers valuable options. He claimed to observe consumer confusion about the difference between CBD products available in 502 stores, which have to include THC, and CBD-only products sold by non-licensees (audio – 1m, video).
  • After Acting Chair Senator Curtis King put forward a successful motion to suspend the 5-day notification rule for SB 5678 (audio – 1m, video), committee staff described the agency request bill (audio – 1m, video). From the Senate Bill Report:
    • Requires the Liquor and Cannabis board to develop a budtender permit
      and training curriculum.
    • Requires employees of licensed marijuana retail businesses to have the
      permit, if they are involved in the sales or service of marijuana products to
      the public.
  • Seth Dawson spoke in support of SB 5678 (audio – 9m, video).
  • Justin Nordhorn, WSLCB Enforcement Chief, testified to the bill’s similarity to Washington’s Mandatory Alcohol Server Training (MAST) program. He said budtenders would need to re-apply every two years keeping them “updated on laws and rules” in a constantly changing field. Nordhorn described SB 5678 as a “training” bill to help budtenders be successful. Asked who would do the training, Nordhorn replied it would be overseen by WSLCB to keep the curriculum updated and was similar to informal guidance the agency already gave licensees (audio – 2m, video).
  • Vicki Christophersen, speaking on behalf of WACA, said they opposed the bill “at this time.” Saying the industry would welcome budtender training, she nonetheless spoke to a lack of faith in WSLCB to manage it in a way that helped retailers. Christophersen said the agency needed to handle traceability, licensee penalties, pesticide regulations, and packaging and labeling problems before introducing more “unpredictability.” She urged the committee to revisit the bill next year (audio – 1m, video).
  • Jim MacRae admitted he was changing his “neutral” position to “con” since a listed justification for the bill was to decrease access to minors yet budtenders without permits sold cannabis to minors at a much smaller rate than MAST licensed staff. MacRae said the bill increased a “permitting regulatory scheme” that wasn’t justified (audio – 1m, video).
  • Logan Bowers, testifying as a licensee and CORE member, said his organization didn’t oppose the principle of the legislation, but warned some of their staff lived paycheck-to-paycheck and couldn’t afford a new hurdle in starting employment. Bowers said it wasn’t clear what problem the bill addressed. He concluded that licensees prefered optional “support services” to supplement training employees already received (audio – 1m, video).