WA Governor - Bill Action
(May 1, 2023)

Here are some observations from the Monday May 1st Washington State Office of the Governor (WA Governor) Bill Action.

My top 4 takeaways:

• SB 5080, "Expanding and improving the social equity in cannabis program," was the third bill passed since 2020 addressing social equity among cannabis license holders in Washington.
  • Previously, elected officials had adopted two bills related to social equity in the cannabis sector:
    • HB 2870, a bill that began as Washington State Liquor and Cannabis Board (WSLCB) request legislation, was signed into law in March 2020 and set up the framework for what would become the agency social equity program. That law also established the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF).
    • HB 1443, signed into law in May 2021, expanded the membership and recommendation topics for WA SECTF and extended the due date for their final report to lawmakers delivered at the end of 2022.
    • HB 2022 was introduced in January 2022 based on an initial set of WA SECTF recommendations, but wasn’t approved by legislators.
  • SB 5080 was first heard in the Washington State Senate Labor and Commerce Committee (WA Senate LC) on January 10th, along with further public comments on January 12th, before members recommended passage after amending the bill on January 31st.
    • Washington State Senate Ways and Means Committee (WA Senate WM) members heard public testimony on February 13th and proposed additional changes when recommending passage on February 20th. 
    • Washington State Senate Rules Committee (WA Senate RULE) members placed SB 5080 on the chamber’s calendar on February 28th, and senators approved an engrossed second substitute version of the bill.
  • On the House side, the engrossed second substitute of SB 5080 was first heard by members of the Washington State House Regulated Substances and Gaming Committee (WA House RSG) on March 14th, who then recommended passage with further amendments on March 20th.
    • The Washington State House Appropriations Committee (WA House APP) hosted a public hearing on the bill on March 30th, and members recommended passage without further amending on April 4th.
    • SB 5080 was calendared for floor action which occurred on April 10th when members voted on the bill as amended by WA House RSG, and passed an engrossed second substitute iteration of the measure.
    • On April 13th, senators concurred with the changes made in the other chamber and sent a final version of the bill to the governor’s office.

• The last bill report summarized impacts of the final version of the proposal, which modified aspects of the social equity program as well as wider cannabis licensure practices.
  • Definitions
    • ‘Disproportionately Impacted Area (DIA)’ was amended to mean a U.S. Census Bureau“tract within Washington State where community members were more likely to be impacted by the War on Drugs” as determined by WSLCB staff “in consultation with the Office of Equity, using a standardized statistical equation to identify areas with demographic indicators…LCB must periodically assess these areas for demographic changes in the composition of the population over time. DIA must include areas in the top 15th percentile in at least two of the following demographic indicators: 
      • the area has a high rate of people living under the federal poverty level; 
      • the area has a high rate of people who did not graduate from high school; 
      • the area has a high rate of unemployment; or
      • the area has a high rate of people receiving public assistance.” 
    • ‘Applicant’ was amended to mean individuals submitting applications with “at least 51 percent ownership and control by one or more individuals who meet at least two of the following qualifications:
      • lived in a DIA for a minimum of five years between 1980 and 2010; 
      • has been arrested or convicted of a cannabis offense or has a family member who was; 
      • had a household income in the year prior to submitting an application…less than the median household income within Washington State as calculated by the U.S. Census Bureau; or 
      • is both a socially and economically disadvantaged individual as defined by the Office of Minority and Women's Business Enterprises.”
    • ‘Social Equity Plan’ was moved to the “definition section in the Uniform Controlled Substances Act, elements [were] amended to reference a cannabis licensee instead of an Applicant, and other elements are removed.”
    • ‘Social equity goals’ were “amended to include the goal of increasing the number of cannabis producer and cannabis processor licenses held by Applicants from DIAs.”
  • Social Equity Program 
    • Beginning in 2024, “all cannabis licensees are encouraged but not required to submit a [Social Equity] Plan to LCB. If the cannabis licensee is not an Applicant and does not hold a current social equity license, LCB must reimburse…an amount equal to the annual cannabis license fee” once “per licensee and only for one license in the case of a licensee holding more than one.” 
    • Equity businesses may “be located in any city, town, or county allowing cannabis retail, production, or processing business activity regardless of” where the license was originally allotted or the maximum number of licenses per county.
    • Added a third-party contractor (TPC)---at time of publication the Ponder Diversity Group—into statute as having responsibility for using the applicant scoring rubric created by WSLCB staff to prioritize licensure, and WSLCB must “rely on the score provided by the TPC. LCB's discretion to deny an application under the Program based on not meeting social equity goals is conditioned upon the advice of the TPC.”
    • Authorized WSLCB to “issue or reissue the following licenses that were forfeited, revoked, or cancelled to an Applicant under the Program” until July 1, 2032, including “up to 100 cannabis processor licenses immediately,” along with “up to ten cannabis producer licenses, which must be issued in conjunction with a cannabis processor license” starting in 2025.
    • “An Applicant is no longer required to include a Plan in their application materials to receive a forfeited, revoked, cancelled, or unissued license.”
    • Conditional upon legislative approval, WSLCB may “increase the number of cannabis retailer and cannabis producer licenses for the Program based on the most recent census data and the annual population estimates published by the Office of Financial Management” every three years until July 1, 2032. More tangibly, “between January 1, 2024, and July 1, 2032, LCB may issue up to 52 cannabis retailer licenses under the Program.”
  • Technical Assistance Grant Program
    • “To qualify for a grant, a cannabis licensee must hold a license issued after April 1, 2023, and before July 1, 2024.”
  • Cannabis Licensing Fees
    • Equity licensees were exempted from the “annual fee for issuance, reissuance, or renewal of any cannabis license under the Program” until July 1, 2032.
  • Rulemaking
    • Before adopting rules to implement SB 5080, WSLCB leaders “must consider advice on the Program from individuals the Program is intended to benefit. Rules may require social equity licenses to only be transferred to, or assumed by, Applicants for at least five years from licensure.”
    • As well, “In determining the maximum number of retail outlets licensed in counties, LCB must consider written input from an incorporated city or town, or county legislative authority when evaluating concerns related to outlet density.” The board could also make rules for “identifying how local jurisdiction input on outlet density will be evaluated.” Any local government “ordinance prescribing outlet density limitations” won’t impact existing licenses, though the agency “must adopt rules establishing a threshold of the number of licenses created in the Program that can be located in each county.”
  • Recognizing Objections from Local Authorities 
    • No more cannabis licenses can be issued in a jurisdiction where:
      • “LCB receives a written objection from the legislative authority of an incorporated city or town, or county legislative authority, relating to the physical location of the proposed premises;
      • the objection is received by LCB within 20 days of notifying the…authority of the proposed cannabis retail location; and
      • the objection is based on a preexisting local ordinance limiting outlet density in a specific geographic area.”
    • Ordinances were considered to be preexisting if “enacted and in effect before the date the Applicant applies for a cannabis retail license to LCB, identifying the premises proposed to be licensed” and not “based on an ordinance enacted after the date the Applicant applies to LCB.”
  • Washington State Joint Legislative Audit and Review Committee (JLARC)
    • JLARC staff were tasked to determine “whether current levels of cannabis production align with market demand and capacity, including the impact of any additional cannabis producer licenses granted under the legislation” due by June 30, 2025. 
  • An extended retail licensing application window for the program closed on April 27th, and at time of publication qualifying applications were being scored and prioritized by Ponder Diversity Group staff, a process originally expected to continue through May. Staff at the agency had indicated that awarding of licenses wasn’t expected before “June and July” before the window was extended, meaning that issuance may stretch later into the year.
    • The licensing process was modified so that equity applicants do not need to secure a lease before being licensed.

• Governor Jay Inslee was joined by the bill sponsor, Senator Rebecca Saldaña, Representative Debra Entenman, and several guests as he provided comments on the impacts of the enrolled bill (audio - 5m, video).
  • Before he signed, Inslee called SB 5080 “a culmination of a multi-year effort” that would permit WSLCB to “increase the number of social equity licenses. This means more individuals disproportionately impacted by previous cannabis criminal charges can participate and thrive in the industry.” He thanked Saldaña, Entenman, and others. Among more than a dozen guests in attendance were:
    • WSLCB Board Member Ollie Garrett, Director Rick Garza, and Director of Legislative Relations Marc Webster
    • Black Excellence in Cannabis (BEC) Co-Founder Peter Manning and Vice President Mike Asai
    • Paula Sardinas, Washington Build Back Black Alliance (WBBA) President 
    • Entenman and Saldaña both served on WA SECTF, with Saldaña serving as co-chair since August 2022. Garrett represented WSLCB on the task force and Sardinas was a former co-chair of the group.
  • Inslee asked Manning’s children, Safar, Yasmin, and Zion to help him hold the bill documentation for signing. Upon signing, he told the trio they were “helping bring a little more equity in our society.” As attendees filed out, Inslee congratulated Garza, remarking he was “glad we’re making progress” on equity in the cannabis sector.
  • Following the signing of the legislation, WSLCB released a statement thanking legislators and supporters, while calling the bill a “major step in what has been a four-year effort by the LCB, led by board member Ollie Garrett, to create a more diverse and equitable cannabis industry in Washington state.” The announcement lauded SB 5080 for expanding “the scale of the current Social Equity Program” and increasing effectiveness “by allowing additional retail stores over time, allowing social equity licensees more flexibility to locate a store, while also maintaining local control over zoning and outlet density.”
    • Garrett mentioned planning for the statement on April 18th.
  • The same day as the bill action, Inslee announced that he wouldn’t run for a fourth term as governor in 2024.

• The bill joined 2023 session law set to take effect in 90 days, though subsequent rulemaking and actions by WSLCB were expected.
  • A legislative overview explains that: “From the Governor's desk, bills go to the Secretary of State who assigns a session law chapter number.” Session laws are incorporated into RCW, and take full effect 90 days after final adjournment of the session in which it is enacted.
    • With the 2023 session concluding on April 23rd, the definition changes, fee waivers, ordinance enactments, and some deadlines in the bill would take effect on July 23rd. However, WSLCB rulemaking outlined by the law would not formally be filed before this date, a process which may take multiple months to complete.
  • Additionally, Section 8 in the text of the bill as passed stipulated that “Section 4 of this act expires July 1, 2024,” and Section 9 stated “Section 5 of this act takes effect July 1, 2024.”
    • Sections 4 and 5 involved previously scheduled changes to RCW 69.50.345 due to a 2022 law, HB 1210, "Replacing the term 'marijuana' with the term 'cannabis' throughout the Revised Code of Washington."