WA House RSG - Committee Meeting
(February 14, 2023)

Here are some observations from the Tuesday February 14th Washington State House Regulated Substances and Gaming Committee (WA House RSG) Committee Meeting.

My top 2 takeaways:

• Staff reviewed HB 1822, “Concerning complimentary products provided by short-term rental operators to guests,” and responded to member questions (audio - 2m, video).
  • Committee Counsel Peter Clodfelter highlighted details from the bill analysis:
    • Establishes an annual permit ($75) to be issued by the Liquor and Cannabis Board [WSLCB] to a short-term rental operator to provide a complimentary, pre rolled useable cannabis product to rental guests who are age 21 or over.
    • On February 9th, the committee hosted a public hearing on HB 1731, “Concerning complimentary liquor by short-term rental operators,” and approved a substitute version of that bill on February 13th.
      • Although a 2022 Institute on Taxation and Economic Policy (ITEP) analysis of cannabis tax revenue showed Washingtonians paid more cannabis taxes than alcohol taxes, officials hadn’t licensed on-site consumption services, set up special licensing / temporary permitting options on par with alcohol policies, nor incorporated cannabis into the state smoking in public places law.
  • As the bill was similar to HB 1731, Clodfelter mentioned that the fiscal note for HB 1822 matched the expected implementation costs: $224,679 between fiscal years 2024-25, “primarily related to having to do some change of contracts related” to the WSLCB systems modernization project (SMP).
    • After the first two years, costs were projected at $7,647 annually, he noted. Clodfelter further indicated that “if both bills were passed there would be some cost savings to some of the required” SMP updates. 
    • He told lawmakers that fees generated by HB 1822 were anticipated to be $22,500 annually.
  • Co-Chair Shelley Kloba asked how the permit aligned with laws allowing adults to “gift” cannabis products up to half the allowed possession amounts. Clodfelter replied that a “key difference” was that existing law explicitly defined sharing as being for “noncommercial purposes” and that short-term rental operators were in a “commercial setting so that current ability to transfer cannabis…probably would not apply here” (audio - 1m, video).
  • Ranking Minority Member Kelly Chambers mentioned that “some short-term rentals have…space for 12, 14, 16 guests” and wondered if there was a maximum amount of complimentary pre-rolled cannabis products authorized under the bill. Clodfelter explained that the “authorization is only for adults who are 21 or over…so it would be limited by that” (audio - 1m, video).

• The sole public commenter provided supportive testimony, suggesting that simple “parity” with an alcohol bill amounted to a “groundbreaking” start to cannabis hospitality.
  • Three individuals registered a position supporting the bill (testifying, not testifying) and Ramsey Doudar of Patients and Users for Reasonable Policy (PURP) registered a stance of ‘other’ (written testimony).
  • Representative Melanie Morgan, the primary sponsor of HB 1822, stated that the legislation was about “parity in all of the substances that we regulate" so that short-term rental operators could “participate in offering the best service that they can offer their clients.” She said the proposal also assisted “small business owners that we currently have operating here in the state of Washington that perhaps” weren’t aware that offering either alcohol or cannabis to guests was “illegal activity.” Morgan also believed “this is a simple change to boost tourism” in Washington (audio - 2m, video).
    • Representative Kristine Reeves wanted to understand where the fee money collected from rental operators would be allocated. Clodfelter responded that the bill directed that money to the dedicated cannabis account, however an amendment from Representative Tina Orwall proposed to direct fees to the domestic violence prevention account. Morgan noted that she took inspiration from Orwall since “she's a social worker, and I'm a domestic violence advocate” (audio - 1m, video).
    • Kloba commented that because lawmakers were “always concerned about costs containment,” she wanted to know if WSLCB operating expenses related to the permits would be deducted before fee revenue went to the domestic violence prevention account. Clodfelter reported that all of the fees would be directed to that account, and speculated that “some of the funding might come from the budget to LCB” to administer the permits (audio - 2m, video).
  • Bailey Hirschburg, Washington chapter of the National Organization for the Reform of Marijuana Laws (WA NORML) member, observed that “aside from our legal retail stores, Washington isn’t really a hospitable place for cannabis consumers. There's no way we would claim ourselves to be leaders in social use and responsible consumption policies.” He indicated having found other states legalizing cannabis “fold cannabis into private spaces that are non-residential, or even sometimes public spaces. We don't seem to have an appetite for that, either at the regulatory or frankly, at the legislative level,” meaning “we're losing a huge amount of tourism and economic engagement” (audio - 3m, video).
    • It was in this light that Hirschburg called HB 1822 "almost groundbreaking by allowing anything besides adults to go back to their homes” for private consumption. He called it a “common sense move” to continue to limit cannabis to “private spaces instead of being out on the street or in…vehicles,” which he called a “far worse” venue for cannabis consumption.
      • Though acceptable on private property, cannabis consumption can be restricted in rental agreements, and is prohibited in any federally subsidized housing.
    • Hirschburg advised changes to improve the bill:
      • “Section 1(1) limits guests to the pre-rolled usable cannabis product. Some of them might not want to smoke. We should make an exemption that allows them to have a single serving of an infused edible product or an infused beverage.” This was “about 10 milligrams or less and I think some of the rental operators might enjoy being able to maintain a non-smoking property…and still offer this service to their guests.”
      • “Requiring any rental operator who has this license and is doing this to actually disclose to the people how limited consumption is…We don't want to put a joint in someone's hand and [imply] they can go out on the street, go into our parks, go into frankly any place that's not a private home and use this. And I think…we can have a pretty short direct statement that lets a rental operator communicate this to their guests.”
      • “When you guys heard HB 1614…involving home cultivation of cannabis,” the bill included a “provision to not have it in daycares or foster cares...that same provision should apply here. It may not apply to a lot of these renters, but if some of them have children in their home, or have children on the property, and they have strangers that have been given cannabis products; I don't see how that's the look that we want to encourage.”
    • Hirschburg authored 2019 legislation establishing cannabis social use policies. In March 2022, he presented on the topic to the Washington State Legislative Task Force on Social Equity in Cannabis Licensing Work Group. The wider task force included consumption lounge and special event licensing options among their formal recommendations to legislators. The licensed concept wasn’t featured in SB 5080, WSLCB legislation to enact other task force recommendations.
  • Representative Greg Cheney asked staff whether RCW 69.50.4013 pertaining to cannabis delivery “needs to be amended to that to make this operational.” Clodfelter answered that Cheney was “correct in pointing out that…the bill does not amend other statutes in the Controlled Substances Act other than…creating” the permit and “authorizing the activity.” He continued, stating that “there could be references to this added in other areas” of the act should legislators determine “that's necessary” (audio - 2m, video).
    • Hirschburg spoke up to say “for other alcohol permits, they have explicit language that involves the person procuring and maintaining storage of the alcohol product before raffles, or auctions, or other types of licenses,” feeling this meant committee members had “some things you could work…from if you wanted.”