WA House RSG - Committee Meeting
(March 20, 2023)

Here are some observations from the Monday March 20th Washington State House Regulated Substances and Gaming Committee (WA House RSG) Committee Meeting.

My top 3 takeaways:

• Agency request legislation on the regulation of tetrahydrocannabinol (THC), SB 5367, was overwritten by a striking amendment which resurrected a definition of “hemp consumable,” required a “detectable” testing standard, allowed federally-approved products, and explicitly prohibited synthesized cannabinoids among other changes (audio - 2m, video).
  • The Washington State Liquor and Cannabis Board (WSLCB) request legislation was approved by the Washington State Senate (WA Senate) on March 2nd as an engrossed second substitute version which removed language defining ‘hemp consumable’ and classified  “any product with any amount” of THC as ‘cannabis products.’ 
  • WA House RSG members heard the bill on March 13th. Supporters recognized difficulty in setting a level of THC that could be reliably detected or confirmed absent by labs and expressed concerns over the inclusion of synthesized cannabinoids. The Washington State Department of Agriculture (WSDA) representative stated they believed the bill would lead to a drop off in license renewals that would “render our program insolvent.”
  • Ahead of the executive session, committee counsel Peter Clodfelter described the impacts of a striking amendment proposed by Representative Kristine Reeves:
    • (1) Adds a definition of the term "hemp consumable" to hemp statutes. Defines the term as a product that is sold or provided to another person, that is: (a) Made of hemp; (b) not a cannabis product; and (c) intended to be consumed or absorbed inside the body by any means, including inhalation, ingestion, or insertion.
    • (2) Modifies the proposed change to the existing definition of the term "cannabis products" in the Uniform Controlled Substances Act (UCSA), so the definition would include any product intended to be consumed or absorbed inside the body by any means including inhalation, ingestion, or insertion, with any detectable amount of THC (instead of with any amount of THC).
    • (3) Also excludes products that are approved by the United States Food and Drug Administration from the definition of the term "cannabis products" in the UCSA.
    • (4) Removes the proposed new definition of "tetrahydrocannabinol" or "THC," and the proposed change to the existing definition of "isomer" in the UCSA.
    • (5) Prohibits synthetic cannabinoids from being used as additives in cannabis products, instead of requiring the label on a cannabis product package to include the amount of any synthetically derived CBD in a product.
    • (6) Prohibits the production, processing, manufacturing, or sale of any cannabinoid that is synthetically derived or completely synthetic, except for products approved by the United States Food and Drug Administration.
    • (7) Adds a severability clause.

• Once the bill was moved, Co-Chair Sharon Wylie called for discussion on the proposed bill changes and many members made clear their priority was reducing youth access to products containing THC.
  • Setting out the thinking behind her striking amendment changes, Reeves explained “stakeholders have spent an exceptional amount of time working together” while acknowledging her amendment “doesn't facilitate meeting everyone's needs in this process, but I think gets fairly close.” She brought up “work ahead” on laboratory requirements and ensuring “that we get these products inside the regulated market.” Reeves’ intent for the amendment was to get “products that can get kids high out of convenience stores, out of consumer access points” and into a “regulated market in a way that's going to help us prevent those unintended consequences” (audio - 1m, video).
  • Ranking Minority Member Kelly Chambers immediately concurred with Reeves’ intention to get “intoxicating products that are currently available in stores all around the state out of the hands of kids.” She wanted to thwart “any more situations where we have middle…school students overdosing because they're eating a package of something that looks like candy.” Chambers remarked that the amendment could eventually result in laboratory personnel eventually having a “definition of detectable amounts of THC,” while also aligning with “what voters passed in the initiative to legalize cannabis.” Finding that hemp consumables were “intoxicating and I don't think most of the public is aware of that,” she mentioned parents who’d raised “concern[s] about kids overdosing; the impact that fentanyl is having on the streets” in meetings she’d attended. Chambers believed the changes reflected higher “awareness” and “help[ed] move those products to the proper” age-restricted stores (audio - 1m, video).
  • Co-Chair Shelley Kloba "applaud[ed] all the work on this bill," remembering the “frustration” during a 2022 attempt to pass cannabinoid request legislation. She said the situation had arisen due to the 2018 federal Farm Bill which “created this gray area, this loophole” and felt “the federal government seems in no hurry to address it.” Kloba concurred that “intoxicating products belong in [Initiative] 502 and we understand that there can be some hardship there for the hemp industry, but just wanted to remind folks…we do have the opportunity for hemp-based CBD to come into the market.” She recommended a yes vote, partly because hemp licensees had paths for “intellectual property selling that into a 502 licensee, producer or…unlike the…502 licenses, who cannot sell outside of the borders of this state, hemp does already have that opportunity.” Kloba promised to “continue to work on other opportunities for hemp because we do want that business side to succeed” (audio - 2m, video).
  • Assistant Ranking Minority Member Eric Robertson “thank[ed] folks for educating us when this was first presented. It was quite confusing to me. It was very complex.” Thanks to public testimony and his fellow committee members, Robertson had “gotten to a place whereof I can make an informed decision” to back the amendment (audio - 1m, video).
  • Representative Melanie Morgan conveyed she’d be a “very soft ‘no’ on the amendment, “it's an exclusion in terms of the hemp industry, and I would have liked to see that where we could have all met somewhere in the middle, and made both sides happy.” However, she wanted the committee, in addition to “three of us being on the [Washington State House Agriculture and Natural Resources] committee,” to “take a deeper dive into hemp” in the future. She agreed the topic was “very complex, very deep, and trying to understand” and a balance of all the interests involved hadn’t been achieved (audio - 1m, video).
  • Wylie looked ahead, finding “we have our work cut out for us after the session….this is one of the top things that we need to talk about.” The overlap with members on the agricultural committee “helps, we have relationships with a lot of stakeholders, and I think we're going to continue to work hard” (audio - <1m, video).
  • When the vote was taken, Morgan was the sole dissenting voice vote on the amendment (audio - 1m, video).

• During final remarks before the committee passed the amended SB 5367, two members promised to work with hemp stakeholders but confirmed that the cannabinoid bill was about keeping THC content, regardless of source, in the licensed and taxed adult use market.
  • Reeves remarked that what "started as a complicated question for me" had become clear after talking with her colleagues and stakeholders (audio - 2m, video).
    • “This bill does not negate the work that we need to do in helping elevate and support the hemp industry in our state, but that's not really what this bill is about. This bill is really about making sure that as a parent, I know that there are not substances in my community, and my grocery store, in my convenience store, that my kids can get access to because they look like candy, because they look like something fun to eat.”
    • This reflected her view of the “underlying work that I think my community has sent me here to do.” Even as she didn’t “want to negate the fact that we have a lot more work to do in the hemp industry, in supporting them in their work,” she asked for a ‘yes’ vote.
  • Chambers seconded the sentiment that “there is still work to do with the hemp…industry,” but “there are pathways for them to participate in the 502 marketplace.” She argued that “now that we have a better understanding of where we are with this bill…that sets the stage…for next steps and what we can do in those other arenas” (audio - 1m, video).
  • During the final vote on SB 5367, Morgan and Representative Jim Walsh voted without recommendation (audio - 1m, video).
    • Given a fiscal note estimating over a half million dollars in costs over the first biennium after implementation, the bill would likely be referred for a fiscal committee hearing by the Washington State House Appropriations Committee.

Here are some observations from the Monday March 20th Washington State House Regulated Substances and Gaming Committee (WA House RSG) Committee Meeting.

My top 3 takeaways:

• A briefing on SB 5080, "Expanding and improving the social equity in cannabis program," covered two amendments on local government objections and “technical or clarifying” modifications (audio - 4m, video).
  • Passed following amendment by the Washington State Senate (WA Senate) on February 28th, the request legislation from the Washington State Liquor and Cannabis Board (WSLCB) included some recommendations from the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF). The committee heard the bill on March 14th.
    • At time of publication, the WSLCB social equity program was accepting applications for equity retail licenses until March 30th.
  • Committee Counsel Peter Clodfelter told members the proposed substitute bill had one amendment offered by Representative Kristine Reeves, a striking amendment, H1688.2:
    • (1) Requires the legislative authority of an incorporated city or town, or county legislative authority, to send any written objection relating to the physical location of a proposed new retail cannabis outlet seeking to be licensed, instead of allowing for an official representative or representatives of an incorporated city or town, or county legislative authority, to send the written objection. 
    • (2) Specifies that for purposes of the proposed authorization for local governments to submit written objections against, and prevent the issuance of, new cannabis retail licenses based on a preexisting local ordinance limiting outlet density, a preexisting local ordinance is an ordinance enacted and in effect before the date the applicant submits an application for a cannabis retail license to the Liquor and Cannabis Board (LCB) identifying the premises proposed to be licensed. Prohibits objections related to the physical location of a proposed premises by a local government based on a local ordinance limiting outlet density that is enacted after the date the applicant submits an application for a cannabis retail license to the LCB identifying the premises proposed to be licensed. 
    • (3) Restructures the proposed provision that says nothing in the uniform controlled substances act limits an incorporated city or town, or county legislative authority, from enacting an ordinance prescribing outlet density limitations, to instead authorize an incorporated city or town, or county legislative authority, to enact an ordinance prescribing outlet density limitations. Provides that an ordinance may not affect licenses issued before the effective date of the ordinance prescribing outlet density limitations.
    • However, Reeves also offered amendment - H1692.2 incorporating “technical and clarifying changes” to the striking amendment:
    • (1) Corrects a reference to a date range in the context of which cannabis licensees who meet social equity applicant criteria may be eligible for technical assistance grants, so that both date range references in the technical assistance grant program would be to cannabis licensees holding a license issued after April 1, 2023, and before July 1, 2024.
    • (2) Adds a reference to "cannabis production" to a provision where only cannabis retail and processing business activity are referenced, to specify that licenses issued through the social equity program may generally be located in any city, town, or county that allows cannabis retail, cannabis production, or cannabis processing business activities, as applicable, at the proposed location.
    • (3) Amends the definition of "social equity goals" to also reference goals of increasing the number of cannabis producer and processor licenses (not only cannabis retailer licenses) held by social equity applicants from disproportionately impacted areas.
    • (4) Moves the amended definition of "social equity plan" to the definition section of the Uniform Controlled Substances Act and corrects related references.
  • Ranking Minority MemberKelly Chambers delved into whether technical assistance provided through the Washington State Department of Commerce (WA Commerce) had to come from businesses that would “meet social equity criteria.” Clodfelter said they didn’t, and Chambers clarified that applicants were free to “choose whichever professionals to help them with” technical assistance needs (audio - 2m, video).
    • Clodfelter noted that WA Commerce officials were also in charge of a roster of mentorship businesses, which had to be “at least 51% minority or women owned,” and wasn’t changed by the bill.
      • Find more mentor information by signing up through the SocialEquityWA portal.
    • Chambers represented the Washington State House Republican Caucus on WA SECTF.

• Committee members contemplated a striking amendment "reducing barriers to access,” but first discussed an amendment to that striker, approving both without objection.
  • Vice Chair Chris Stearns moved amendment H-1688.2 (audio - 1m, video), but members first had to choose whether to include Amendment H-1692.2 (audio - 1m, video).
    • Reeves described the alterations to her striking amendment as coming from the “great work of our staff in being able to catch some inconsistencies between the House version and the Senate version” and “provide[d] for some technical cleanup” (audio - <1m, video).
    • Chambers conveyed that her caucus “agree[d] and recommend a ‘yes’” (audio - <1m, video).
    • The amendment was added to H-1688.2 by unanimous voice vote (audio - <1m, video).
  • Looking at the amended striking amendment, Reeves talked about the need to address “two specific pieces.” First “making sure that as we onboard these new social equity licenses that we're doing so with transparency, and with collaboration at our city, town, and county level” authorities, she said. Additionally, the striker “focuses on making sure that we're reducing barriers to access for folks” while also “limiting folks’ opportunity to create barriers” for applicants (audio - 1m, video)
    • Chambers thanked Reeves for the "improvements to the bill," viewing the alterations as providing “these new licenses…some certainty about where they can open…and they're not just derailed by a councilmanic action that they weren't anticipating” (audio - <1m, video)
    • Amendment H-1688.2 overwrote SB 5080 following a unanimous voice vote (audio - <1m, video).

• Final remarks revealed that concerns remained over the anticipated speed of licensing, however most members offered comments on potential positive impacts of increasing equity in the cannabis sector and promised continued engagement from legislators related to the program.
  • Reeves’ perspective was that SB 5080 was “facilitating the undoing of historic marginalization and exclusion of communities who have been engaged and involved in this industry for decades” while also "right-sizing the industry.” The bill would also help in “starting to rebuild trust” in government and regulators, because “there's always opportunity to correct our historic wrongs,” she argued. Reeves wanted to ensure ”when we talk about equity and inclusion, we mean equity and inclusion for everyone.” She thanked those who had been involved in the effort, highlighting the WA SECTF appointees from her caucus, Representative Melanie Morgan and Representative Debra Entenman, “because this bill doesn't come before us without the long hours, and the commitment to doing this work with intentionality, and so really want to commend this bill” for passage (audio - 2m, video).
    • Morgan served as WA SECTF Co-Chair prior to resigning in July 2022, with Senator Rebecca Saldaña—SB 5080 sponsor—elected to succeed her as Co-Chair that August, at which point Entenmen had been appointed to represent WA House Democrats on the task force.
  • RepresentativeJim Walsh made clear “I like this bill, but I'm going to vote ‘no,’ and let me tell you why.” He appreciated the amendments, but “I'm still not confident that this program is going to move forward fast enough,” and remained especially concerned “about the bureaucratic nature of some of the Department of Commerce activities intended to support the applicants, and I'm worried…that could turn into a delay game.” Walsh wanted “improvement to how some capital is made available to these applicants up front to better increase, not only the speed with which they'll open their doors, but…their ability to absorb the usual expenses” of retail operation (audio - 2m, video)
    • Walsh also spoke in support of having “some of the definitions and who qualifies to be modified slightly…to make it crystal clear that the people first in line ought to be those who are running dispensaries/medical shops, and were forced to close…that's within the scope of the bill as drafted,” but he believed it could be more “plainly stated.”
  • Co-Chair Shelley Kloba backed the legislation, but saw "a little bit more work to do" since “I'm a little concerned about…just having been on a city council, the public process and the timelines that are…written into our Open Public Meetings Act.” She alleged there was some debate over ensuring “they do have the time to do their work, but not excessive time” (audio - 1m, video).
    • Paul Jewell, Washington State Association of Counties (WSAC) Policy Director, offered favorable testimony on the proposal but worried about the time frame for county governments to lodge an objection to an equity business.
  • Co-Chair Sharon Wylie respected that “bureaucracies come from civil service, which come from laws that were invented to create slowness in change in government to keep the Boss [William M.] Tweeds from hiring their cousins as the cops and firing everybody else.” She felt the government should “move slower than any of us would like,” but she’d “learned an enormous amount from my colleagues and their lived experience, from the stakeholders who spent time speaking with me” and she was prepared for a longer commitment to cannabis equity (audio - 1m, video).
  • SB 5080 was approved by the majority of WA House RSG members, however Chambers, Walsh, and Assistant Ranking Minority Member Eric Robertson voted without recommendation against the measure (audio - 2m, video).
    • With millions of dollars in spending outpacing expected revenue identified in the fiscal note, a next step for the bill would likely be fiscal committee consideration by the Washington State House Appropriations Committee.