WA House APP - Committee Meeting
(February 22, 2023)

Here are some observations from the Wednesday February 22nd Washington State House Appropriations Committee (WA House APP) Committee Meeting.

My top 3 takeaways:

• Staff briefed on the effects and fiscal considerations around HB 1614, “Concerning the home cultivation of cannabis,"going so far as to give lawmakers an “illustrative” revenue hypothetical not supported by agency fiscal information.
  • The bill was heard by the Washington State House Regulated Substances and Gaming Committee (WA House RSG) on February 2nd and then recommended for passage on February 16th.
    • The only prior home cultivation bill to be heard by WA House APP was HB 1019, which the committee heard in February 2021.
  • WA House RSG Counsel Peter Clodfelter referenced the bill report in his explanation of the bill impacts (audio - 2m, video):
    • Authorizes adults age 21 and over to produce up to six cannabis plants on the premises of their housing unit, subject to production and possession limits and other restrictions and conditions.
    • Establishes class 3 civil infractions related to plants or cannabis being visible within the ordinary public view or readily smelled.
    • Establishes class 1 civil infractions related to the unsafe storage of homegrown cannabis.
    • Prohibits home grows by family day care providers and foster family homes, retains landlords' rights to prohibit home grows, and modifies the real property forfeiture statute as it applies to cannabis.
    • Prohibits the investigation and enforcement of home grow requirements by the Liquor and Cannabis Board [WSLCB], except for mutual law enforcement assistance upon request in certain circumstances.
  • Committee Fiscal Analyst Matt Mazur-Hart told the committee that there were costs in the revised fiscal note “listed as indeterminate because it's difficult to estimate the number of calls that law enforcement will be asked to respond to for suspected violations.” Another indeterminate impact involved the “revenue in the dedicated cannabis account. There's a chance that there could be less revenue collected because of fewer retail sales at cannabis shops with this new bill,” he explained. “If there was a half a percent reduction in sales because of this bill it would result in a five million dollar reduction to the general fund per biennium,” Mazur-Hart posited. He also outlined expenses that had been estimated (audio - 3m, video):
    • “One-time training cost to train law enforcement officers on the new law and how to enforce it; those are estimated at $570,000 in the 23-25 biennium from local government funds.”
    • WSLCB expenditures to “assist local law enforcement if they’re requested to assist, so they estimated that the cost of that would be a little over one FTE [full-time employee] per biennium. So $294,000 in the 23-25 biennium and then $268,000 in the 25-27 biennium…from the dedicated cannabis account, but…if [WSLCB] exceeds the threshold they have of the cannabis account with inflation, the money may need to come from the general fund.”
  • Chair Timm Ormsby asked for clarification on the revenue estimates Mazur-Hart mentioned (audio - 1m, video).
  • Representative Bryan Sandlin wanted to know where the estimate of a half percent had come from. Mazur-Hart stressed that the number was “purely illustrative, there is no good model to estimate whether that is high, low, just an example of what it potentially could be” (audio - <1m, video).
    • A 2020 document with agency fiscal note instructions notes that "If the cost impact is indeterminate, provide some illustrative information or range of scenarios. Agencies must select the single fiscal estimate that reflects the most likely assumptions and scenario. If no one scenario is likely to occur, pick a number that represents the middle of the range...Include an explanation that will help the reader appreciate the factors that make it difficult to develop a reliable estimate." However, as WSLCB staff did not make any attempt to estimate impacts to cash receipts—or believed there would be none—the example of half a percent equating to $5 million in revenue impacts to the State appears to have been conjectured by Mazur-Hart or other legislative staff. 2023 session instructions for legislative staff regarding fiscal notes doesn’t include guidance on adding illustrative or hypothetical revenue data.
  • Next, Sandlin asked for the “estimated harvest yield on six plants…for usable flower,” to which Mazur-Hart had no answer (audio - 1m, video)
    • The summary of the bill notes adults may not cultivate cannabis unless they possessed “fewer than 16 ounces of useable cannabis, irrespective of source.”

• Two members of the Cannabis Alliance supported the bill which they framed as no threat to cannabis businesses nor the public while continuing the policy goals of the state’s original legalization measure.
  • 15 individuals registered a position in support of the bill (testifying, not testifying).
  • Cannabis Alliance Government Affairs Liaison Lara Kaminsky argued in favor of the bill, saying that members of her association “do not see [home cultivation] as a threat, we see it as a potential support.” Because “gardening cannabis is especially difficult,” she believed the law could have an effect on the cannabis sector akin to the “home brewing boom, and the explosion of craft breweries and craft beer” which resulted in “higher quality craft products.” Kaminsky cited a 2020 study by Timothy Nadreau, Washington State University (WSU) Research Faculty, which found “given the growth of the sector in other states where home production is legal one would be hard-pressed to argue that retail sales would be harmed by legalization of home production. In fact, those states with legal home production have higher growth rates than Washington overall.” She concluded that there was “untapped potential here to foster innovation and improvements in quality that will further lift the state's overall economy” (audio - 2m, video).
  • Alliance member John Kingsbury pointed out that of 20 states with legal cannabis, “17 plus Washington, D.C. have approved small personal use cannabis gardens.” He emphasized, “those 17 states have already conducted the experiment for us…it has not caused youth use to increase, nor has it caused related crime to increase.” He added the policy had not hurt the success of adult-use cannabis markets. Whether or not lawmakers believed the fiscal note was “credible, it's critical to remember that when voters approved Initiative 502 11 years ago, the primary reason cited for the initiative was not to create state tax revenue, but rather to limit the continuing social harms caused by prohibition…this fiscal note seems like a very small price to pay in service of that primary goal” (audio - 2m, video).
  • Two individuals, Jim MacRae (written testimony) and Joshua Rutherford, signed up to speak in support of HB 1614 but weren’t available during the hearing.
    • MacRae offered testimony backing the bill in the February 2nd policy committee hearing.

• For the first time, a Washington Association of Sheriffs and Police Chiefs leader testified as ‘other,’ encouraging changes they felt furthered public safety, followed by a substance prevention advocate who voiced several policy concerns.
  • 21 individuals registered a position opposed, and one signed in as ‘other’ on the bill (testifying, not testifying).
  • Taylor Gardner, Washington Association of Sheriffs and Police Chiefs (WASPC) Deputy Policy Director, acknowledged that WASPC members "prefer the state retain its commitment" to having “this industry remain in a well-regulated commercial setting.” She warned that “public safety threats plague cannabis retailers in the state, and we surely don't like the idea that those threats and crimes go home with people” who grew cannabis for themselves. Were the legislation advanced, Gardner asked that three changes be amended into the measure (audio - 2m, video):
    • “First, we'd ask that this committee consider defining safe storage…we would suggest that you look toward perhaps Nevada's home grow laws”
    • Second, “address what is the basis for a seizure and forfeiture…the bill currently addresses this in the negative only and we'd like to see you address that in the affirmative”
    • “Last but not least, we would like to suggest yet another portion of the law belonging to Nevada which relates to regional access…it would allow home grow only where somebody doesn't live within 25 miles of a retail store.”
      • Such a restriction would have the effect of legalizing cultivation in areas where retail outlets have been prohibited by local governments while leaving gardens criminalized in urban communities where arrest data previously compiled by Kingsbury—with the assistance of WASPC staff—found non-White individuals faced disproportionate odds of arrest for cultivating six cannabis plants or fewer.
    • A spreadsheet of crimes reported by Washington retailers or their employees was created by staff at Uncle Ike’s in 2022. Throughout January and February of that year it lists 60 incidents, with one labeled as ‘unconfirmed.’ At time of publication, the document listed six such incidents in January and February 2023.
    • As retailers don’t have cannabis plants in stores, crimes occurring there were widely attributed to the heavy reliance on cash-only transactions due to federal banking restrictions on cannabis, including in 2022 by elected officials, regulators, and industry members in Washington.
  • Scott Waller, Washington Association for Substance Abuse and Violence Prevention (WASAVP) Board Member, believed “purchase of recreational cannabis through state licensed cannabis retailers was intended to generate revenues for the state, home grows will reduce revenues for the state.” He further felt the law would result in more youth access to cannabis and costs “would increase cost for LCB and would require training law enforcement from already tight local government budgets.” Waller expected that any plant limits "would be impossible to enforce" (audio - 1m, video).